The authors suggest that productivity growth may begin to rise in the future when workers become more adept at using new technology. Small firms can be divided into two groups. The second are those who rely upon customers and suppliers for their sources of ideas for innovation. While they too rely on networks for ideas, their networks focus more heavily on relationships with other firms that belong to the same firm. Most of the differences between small and large firms are explained by the fact that firms of different size specialise in different parts of the production process.
Small firms are more flexible but can suffer from cost disadvantages due to scale.
They also network with customers in order to adopt their suggestions for new innovations. The presenter, John Baldwin, responded that the study had examined incidence variation by firm size, but not across industries. He added that the study had followed the precedents set by much of the literature on innovation which is couched in terms of incidence rather than dollar amounts. The seminar examined the productivity slowdown in Canada in light of the New Growth Theory. Indeed, TFP in the Canadian business sector seems to have been stagnant since the mid-1970s.