The latest Middle Market Indicator (MMI) data, from the National Center for the Middle Market, tells a nuanced story about U.S. middle market firms: strong revenue growth to close out 2025, but with a catch. That growth is concentrating at the top, favoring larger firms over smaller ones. Employment is lagging behind revenue — a gap that points toward AI quietly displacing or reducing roles once held by workers. And when it comes to where companies are directing their investment dollars, AI has overtaken spending on personnel, facilities, and training combined.
These trends matter for any business. But as a law professor who studies social enterprises and a clinician who advises them, I'm most interested in what they mean for companies trying to do well and do good at the same time — businesses that answer to a bottom line and a mission. How does the shifting business landscape reshape a company when profit isn't the only thing at stake?
Uneven Growth is Troubling, Especially for Social Enterprises
MMI data shows smaller middle market firms (revenue range of $10M to $50M) reporting 10.5% in revenue growth, compared to 13.4% of those in the larger ($100M - $1B) bracket. Scale, capital access, and operational sophistication are increasingly decisive and may even be divisive, as it becomes tougher for smaller middle market firms, which often is where social enterprises fall, to grow.
By their very nature, social enterprises operate under blended performance metrics that include both mission and margin. That dual accountability is a strength with consumers — numerous studies confirm that buyers prefer brands that reflect their values — but it can become a liability when capital is tight and competition is scaling fast.
Investors and stakeholders who understand this dynamic have an opportunity: social enterprises with clearly communicated values carry long-term staying power that pure-profit firms may not. But that power needs capital to survive long enough to matter. Social enterprises may need to seek investment earlier and more often than they historically have, without losing the mission that makes them worth investing in.
“More With Less” is a Challenge and an Opportunity
Nearly 27% of survey respondents said finding skilled workers is extremely or very difficult. At the same time, 18% of respondents said they would direct additional funds toward AI investment. Together, those two figures tell a story: AI may be replacing or reducing roles previously held by workers.
That’s generally easier for bigger firms to do than smaller firms, where workers often have multiple roles and where even very small workforce reductions can affect company-wide culture. This shift is particularly a problem for hyperlocal businesses and social enterprises, which may be in the position of replacing local talent with outsourced technology. But it’s also a problem for bigger, non-social enterprise firms, which may face practical and legal difficulties in adopting technology and modifying their workforce.
While AI is likely to affect nearly every industry, it will affect some more than others, and growth of those sectors will continue to be uneven. It will be interesting to see if this disparity widens over time.
AI is Everywhere; Just Ask Anyone
That investment in AI is outpacing spending on personnel, facilities, and training is not surprising. However, that outpacing may tighten a capital environment for businesses that need those other three factors to scale. It also may shift risk exposure toward data governance, cybersecurity, algorithmic bias, and regulatory compliance with tools that could be disruptive to existing regulatory schemes.
Data privacy remains the single biggest risk concern of those adopting AI, with 30% of MMI survey respondents citing it as their top concern. And, with technological advancements benefiting both security actors and threat actors, that risk is not going anywhere anytime soon. I often tell student entrepreneurs: Founding a company using AI to improve existing workflows is a good idea, but founding a company using AI to improve existing data security workflows is a great idea.
Conclusion
While dramatic increases in technology have allowed many firms to do more with less and grow quickly, smaller firms and social enterprises risk being left behind due to limited resources and scalability constraints. It is worth watching if the slowdown in growth for smaller middle market firms is a bump in the road or a roadblock. In any event, ample opportunities exist for creative solutions to help mission-driven businesses leverage technology and keep up with the Joneses.
Michael Murphy
Director of the Entrepreneurial Business Law Clinic (EBLC) at The Ohio State University Moritz College of Law