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I don't see it that way. I see it as a society that that imposes big rules on big companies in a way to help keep many companies smaller. Maybe the details do

by ap22213 14y ago

I don't see it that way. I see it as a society that that imposes big rules on big companies in a way to help keep many companies smaller. Maybe the details don't work out well. Perhaps 50 is too small. There are probably other issues in the details, but in principle, it seems interesting and useful.

tomp 14y ago
> in a way to help keep many companies smaller That's an interesting idea, but mostly unnecessary - in most economies, the majority of the economic output is produced by "small companies" (including contract workers), so such incentive does not seem to be needed. And if it were needed, you shouldn't encourage the existence of small companies by preventing the successful companies from growing larger, but by enabling entrepreneurs with setting up new companies without much hustle! By effectively imposing a limit on the company size, you just incentivize business owners to bundle up a bunch of small companies (as you correctly noticed in your original post), however, that is a purely bureaucratic dead-weight cost to the employer, and therefore to the employees and to the society, that produces no actual value, only takes it away! No wonder lawyers thrive in this environment!
- lmm 14y ago
  >That's an interesting idea, but mostly unnecessary - in most economies, the majority of the economic output is produced by "small companies" (including contract workers), so such incentive does not seem to be needed. Your fact contradicts your point. Productivity-per-worker is enormously higher in small companies. If a country could get all its workers working in small companies rather than most of them wasting their abilities in large companies, imagine how much more productive it would be. >By effectively imposing a limit on the company size, you just incentivize business owners to bundle up a bunch of small companies (as you correctly noticed in your original post), however, that is a purely bureaucratic dead-weight cost to the employer, and therefore to the employees and to the society, that produces no actual value, only takes it away! Successful companies would just go ahead and actually split into smaller companies - unless you're scrambling for every cent, the costs of the duplication involved are pretty minimal, and the benefits can be huge as the income from more successful projects is reinvested rather than being used to prop up failing ones. It may hasten the demise of some zombies, but that's no bad thing.
  - tomp 14y ago
    I'm no expert in economy, management and logistics, but I imagine that companies become large because of economies of scale, not because of productivity of scale. It's hard to mass-produce cars in a company of 49 workers (or 490, for that matter). Also, 5000 workers might be less efficient (per head) than 50, but at least you know that if 10 are missing (sick leave/vacation/...) at any given time, your production will continue uninterrupted.
    - lmm 14y ago
      As facile as it sounds, companies generally become large by growing. If you're making money it's natural to hire more workers to increase your profits, even if that means you're making less money per worker. As your workforce gets bigger there's not enough to do on your core product, so you start to branch out... and before you know it you're where Cisco is today. "economies of scale" - aka cost synergies - only really become a reason for enlarging companies if you're talking about mergers between mature companies, long past the point where they were really economically productive. Growth seems to be the measure of success, both for investors and entrepreneurs, so I don't see this stopping any time soon. But imagine a world where, once companies got to the 20-50 person stage, they started paying dividends rather than expanding. There are probably other limiting factors, but if everyone was working in such a company and they were as successful as they are now, productivity would skyrocket.
- learc83 14y ago
  Not mention that increased regulation often results in larger companies because they are more able to handle said regulation. Take toy manufacturers for example. They must send there products to an independent lab to have it certified lead free. The guy in his basement making kid size rocking chairs and selling 50 per year has a much harder time paying this, than Mattel. The end result is a tend towards larger companies who can better handle the regulatory burden.
danmaz74 14y ago
And what good is there in having many small companies instead of one bigger company?
- yardie 14y ago
  Funny, every large company I've worked at tried to emulate a bunch of small companies. Need X widget from the X widget department? You can't just send an email and say make me 500 widgets. No, an internal purchase order has to be created and "money" is transferred from X Widget developers to X Widget makers. Hell, even the IT department has gone this route where your division has to license an exchange or IMAP server through the IT department.
  - dagw 14y ago
    Sounds depressingly familiar. My department gets most of if its server infrastructure under the radar from external companies since getting the IT department to set up a server for our needs is far too slow and expensive.
- ap22213 14y ago
  Sorry, I thought most people here liked smaller companies. A few advantages, off the top of my head: * more market diversity (e.g. more niche offerings) * less consolidation of power (e.g. Apple / Oracle / Google / Microsoft, etc) * more social incentive to reduce corporate-to-corporate transaction costs * improved specialization * increased competition * development of new market sectors Currently, small companies don't work as well as big ones because of the transaction cost overhead. It seems to me that if a society could reduce transaction costs between corporations, better services and more specialization could emerge. In my experience, small groups are more agile and able to do an incredible amount of work. Why do you need 1,000 - 100,000 people in one company?

by ap22213 14y ago

tomp 14y ago

> in a way to help keep many companies smaller That's an interesting idea, but mostly unnecessary - in most economies, the majority of the economic output is produced by "small companies" (including contract workers), so such incentive does not seem to be needed. And if it were needed, you shouldn't encourage the existence of small companies by preventing the successful companies from growing larger, but by enabling entrepreneurs with setting up new companies without much hustle! By effectively imposing a limit on the company size, you just incentivize business owners to bundle up a bunch of small companies (as you correctly noticed in your original post), however, that is a purely bureaucratic dead-weight cost to the employer, and therefore to the employees and to the society, that produces no actual value, only takes it away! No wonder lawyers thrive in this environment!

lmm 14y ago
>That's an interesting idea, but mostly unnecessary - in most economies, the majority of the economic output is produced by "small companies" (including contract workers), so such incentive does not seem to be needed. Your fact contradicts your point. Productivity-per-worker is enormously higher in small companies. If a country could get all its workers working in small companies rather than most of them wasting their abilities in large companies, imagine how much more productive it would be. >By effectively imposing a limit on the company size, you just incentivize business owners to bundle up a bunch of small companies (as you correctly noticed in your original post), however, that is a purely bureaucratic dead-weight cost to the employer, and therefore to the employees and to the society, that produces no actual value, only takes it away! Successful companies would just go ahead and actually split into smaller companies - unless you're scrambling for every cent, the costs of the duplication involved are pretty minimal, and the benefits can be huge as the income from more successful projects is reinvested rather than being used to prop up failing ones. It may hasten the demise of some zombies, but that's no bad thing.
- tomp 14y ago
  I'm no expert in economy, management and logistics, but I imagine that companies become large because of economies of scale, not because of productivity of scale. It's hard to mass-produce cars in a company of 49 workers (or 490, for that matter). Also, 5000 workers might be less efficient (per head) than 50, but at least you know that if 10 are missing (sick leave/vacation/...) at any given time, your production will continue uninterrupted.
  - lmm 14y ago
    As facile as it sounds, companies generally become large by growing. If you're making money it's natural to hire more workers to increase your profits, even if that means you're making less money per worker. As your workforce gets bigger there's not enough to do on your core product, so you start to branch out... and before you know it you're where Cisco is today. "economies of scale" - aka cost synergies - only really become a reason for enlarging companies if you're talking about mergers between mature companies, long past the point where they were really economically productive. Growth seems to be the measure of success, both for investors and entrepreneurs, so I don't see this stopping any time soon. But imagine a world where, once companies got to the 20-50 person stage, they started paying dividends rather than expanding. There are probably other limiting factors, but if everyone was working in such a company and they were as successful as they are now, productivity would skyrocket.
learc83 14y ago
Not mention that increased regulation often results in larger companies because they are more able to handle said regulation. Take toy manufacturers for example. They must send there products to an independent lab to have it certified lead free. The guy in his basement making kid size rocking chairs and selling 50 per year has a much harder time paying this, than Mattel. The end result is a tend towards larger companies who can better handle the regulatory burden.

danmaz74 14y ago

And what good is there in having many small companies instead of one bigger company?

yardie 14y ago
Funny, every large company I've worked at tried to emulate a bunch of small companies. Need X widget from the X widget department? You can't just send an email and say make me 500 widgets. No, an internal purchase order has to be created and "money" is transferred from X Widget developers to X Widget makers. Hell, even the IT department has gone this route where your division has to license an exchange or IMAP server through the IT department.
- dagw 14y ago
  Sounds depressingly familiar. My department gets most of if its server infrastructure under the radar from external companies since getting the IT department to set up a server for our needs is far too slow and expensive.
ap22213 14y ago
Sorry, I thought most people here liked smaller companies. A few advantages, off the top of my head: * more market diversity (e.g. more niche offerings) * less consolidation of power (e.g. Apple / Oracle / Google / Microsoft, etc) * more social incentive to reduce corporate-to-corporate transaction costs * improved specialization * increased competition * development of new market sectors Currently, small companies don't work as well as big ones because of the transaction cost overhead. It seems to me that if a society could reduce transaction costs between corporations, better services and more specialization could emerge. In my experience, small groups are more agile and able to do an incredible amount of work. Why do you need 1,000 - 100,000 people in one company?