ABSTRACT While considering the contribution of Small-Business Research on Small-Business Policy, the author concentrates on competition, economic growth and employment. Smaller firms have to face a strategic competitive disadvantage for the reasons of economies of scale, economies of scope and market dominance vis-a-vis the large firms. This causes at the politician level a conflict between short-run efficiency and long-term economic freedom in a decentralized market. Examples are given from the retail-trade sector and some highly diversified industrial establishments. Dealing with the growth policy it is concluded that improvements of a supply-side oriented policy are needed to promote and intensify structural change. By empirical results, elaborated by the German Small Business Research Institute, it is evident that labour costs have an extremely high impact on small-business growth. Also, the small-business sector has not the access to capital market which would be needed to finance growth; growth poli...