Which of the following BEST explains why small businesses can be so effective in fostering innovation?

A) SBA's venture capital program provides funding needed for rapid new product development.
B) Entrepreneurs typically prefer to work in small businesses rather than large ones.
C) Employees of small businesses tend to be more creative than those of large businesses.
D) Small business' flexibility allows them to react quickly to changing market needs and trends.
E) Small businesses don't need to adhere to all the regulations that larger companies do.

D
Explanation: D) Smaller companies are often better poised to take risks, more flexible to explore innovative technologies, and better equipped to push through inventions than larger firms with bureaucracy and culture that may make them more resistant to change.