Of Small vs. Large
Greetings:
Harvard Business School’s professor, James Heskett, has authored a recent essay that considers the value of small business in society.
Do small businesses contribute to the needed growth of an economy as much as large businesses? Politicians love to emphasize the value of smaller businesses. What do we lose by excessive allegiance?
For years I argued that small businesses are important politically and socially, but not as much economically. As Heskett says, less efficiency and slower technological are weaknesses. Emphasis should increase for the value of larger firms when educating those who wish to pursue a career in business (whether a manager/owner or technologist). I would add government officials to the list.
From a public policy perspective, this issue plays out because rarely does one see economic developers who simultaneously understand the dynamics of each market — small and large businesses. Professionals and politicians (and citizens) tend to focus on one or the other. Policy battles over development conflate the social need to feel good about small business with the economic need to ensure that large businesses thrive (without behaving unethically).
The distinction is important. Remember, while maybe a large percentage of new jobs come from small business, 95% of new businesses fail within 5 or 10 years throwing employees back out on the street. We all want to start the next Google or Facebook, but they soon become big. Such events are rare. An early death is more typical for a small business. At best, the firm does not grow, and thus does not necessarily contribute to the demands of an increasing population.
Just a thought to consider. We may not like large businesses because of the power each can wield. However, that can be managed. We will not provide for ourselves or our children by hoping there are enough small businesses around to feed, clothe, house, or transport us. Large can be beautiful if properly regulated. Small is great because it provides one road to personal freedom if survival occurs.
Best regards,
Michael
