BUSINESS: When Small Businesses Rule the World

David Musick (
Thu, 9 Jan 97 21:02:52 UT

Michael Lorrey posted a piece taken from HotWired with the libertarian saying
he was against large corporations. He said "You even reject the idea that a
corporation is an authoritarian system of organized economic power.... a
diseased market economy in which a handful of megacorporations grow like a
spreading cancer sucking the life from people and nature. Is the disease
running out of control? You bet it is. And the patient is dying."

The main flaw with the idea that authoritarian megacorporations are going to
take over the world is the belief that running a business as a monolithic,
authoritarian system is an efficient way of doing business compared to other
ways. Smaller companies are far more efficient; they are more flexible and
becaues they aren't huge, they can't afford to waste their money on
inefficient ways of doing things. Advanced information technologies are
making it possible for very small companies to compete with the
megacorporations, where they can offer goods and services at a lower price
than the megacorporations, since they are fundamentally more efficient.

Until fairly recently, very large organizations have been more successful than
the alternatives that were available, but that is changing now that more
successful alternatives for organizations are appearing. What we're seeing
now is a lot of very successful small companies springing up all over the
place, competing with the Big Boys. They generally use a lot of information
technology and contract out lots of their work to other companies, such as
shipping companies, answering services, printing companies, etc., while they
each focus on what they're good at. The information technologies that are
developing are making it increasingly easier for a small company to contact
and do business with other small companies and to insure that their efforts
are coordinated. Since each small group of people is responsible for their
own company and will not get enough business if they do not perform well
enough, only the really competent companies will remain in business. In a
megacorporation, if one department does badly, they are usually subsidized by
the corporation as a whole, and thus they hurt the entire corporation, and
there is not as much immediate accountability for the actions of the people
responsible for poor performance.

What I believe we're going to see is lots more small business springing up all
over the place, becoming very successful, and the huge, monolithic
megacorporations are going to have to adapt quite radically to even stay in
business. They're going to have to dismantle their companies and start
contracting out nearly all of their work to smaller companies. That way, if
their printing department sucks, they just switch to a new printing
department, just like all the small companies do. This ability to hire and
fire 'employees' so quickly is mainly what gives small companies such
flexibility and efficiency. If the people at Kinko's don't do a good job for
Bob's Computer Shack, well then Bob will stop using them and use some other
printing service, essentially firing a whole team of employees and hiring a
whole new one, with no expenses for training. What a deal!

The era of Huge Organizations is nearly over. I don't see how they can last
with all the little guys scurrying around, snatching up business opportunities
all over the place, starving the Big Boys. Because they are more effiecient,
small companies will have lower prices than huge ones, and they will attract
more business. I predict the dissolution of huge companies and countries
within ten to twenty years. From what I'm aware of, this is the most likely
course of action humans will take. We shall see.

- David Musick

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