60 Pages Posted: 8 Jun 2012 Last revised: 7 Apr 2013
Date Written: May 3, 2012
What is “small” in the eyes of the law? In fact, there is not one standard definition. Current lax legal definitions of firm’s size are inconsistent and overinclusive. They result in data distortion that reinforces favoritism toward small entities as studies on the contribution of small business to the economy are greatly dependent on those studies’ delineation of the term “small.” Therefore, I argue that the current focus on size in legal definitions is a waste of time and money. In this time of huge deficits and rise in economic inequality, a lot of money is being spent based on the entrenched belief that small firms are the essence of our economy, which is not necessarily true.
This paper lays out the policy considerations that underlie the favorable regulatory treatment granted to small firms throughout the law. It provides a comprehensive survey of legal definitions of small entities and concludes that the historical emphasis on magnitude and the creation of legal demarcations concentrated on “smallness” are erroneous. The recent integration of federal commerce and trade agencies is the first step toward this proposed shift from size-centered to goal-driven approach.
Keywords: small business, size, entrepreneurship, legal definition, public policy, health reform, Small Business Administration, economic inequity, tax, regulation
JEL Classification: K34, K20, H25, H81
Suggested Citation: Suggested Citation
Eyal-Cohen, Mirit, Down-Sizing the Little Guy Myth in Legal Definitions (May 3, 2012). Iowa Law Review, Vol. 98, p. 1041, 2013; U. of Pittsburgh Legal Studies Research Paper No. 2012-12. Available at SSRN: https://ssrn.com/abstract=2050590