It’s the age old question – Does size matter? Well my guess is that just like almost any of the key questions in life… it depends.
Let’s look at some business examples and you can decide:
Size and economic development
When it comes to economic development, it appears that size does matter in the minds of economic developers. Most economic development agencies spend the bulk of their time and energy in the recruitment of BIG companies. It looks really good when you go to justify your existence to the legislature and you can show that you brought in 1,000 jobs to your state by recruiting someone like Google to your town. They might just approve your budget for next year. Yet comparatively little attention is given to saving or helping to start up one small business. It’s funny really – since as a group, small businesses – in every state – are the single largest employer group. Even bigger than the Feds or the state itself. Take a look at the composition charts at YourEconomy.org to see what I mean.
Size and Innovation
How about Innovation? So often we hear that the greatest innovations come from small companies since the big ones are too mired down in red tape and inertia to create the new and novel. Maybe not. This is the list of the top companies by patent awards. Click on the links for each of the companies listed below to browse their innovations. IBM, Samsung, Canon, Microsoft, Intel , Matsushita, Toshiba ,Fujitsu, Hewlett-Packard, Hitachi, Micron, Seiko Epson, General Electric, Fujifilm, Infineon Technologies, LG, Texas Instruments, Honda (Source: IP.com)
But patents are only one measure of innovation and perhaps one that is understated. There are many inventions that never make it through the patent process. It is just too time consuming and expensive for many small companies, not to mention that actually enforcing a patent claim can cost thousands if not millions of dollars. As one small business person told me last week: “Big Company X is violating our patent. We called to inform them of it and requested further discussion as to either stopping or paying us a royalty – there response was – Sue me. We could never afford to do that and they knew it.”
Innovations are inventions that actually make a difference in the marketplace. Again, size has it’s advantages since bringing a product to market takes LOTS of capital (money) to cast a wide net. Yes there are firms that started small and then grew rapidly through innovation and acceptance. But they are the ones that beat odds that would put a Las Vegas casino consistently in the money.
How about innovation compared to country size? Big countries with lots of universities and leading economies have the advantage. Right? Maybe, Maybe not. If we measure innovation by the number of patents per capita, there are some very interesting results, just take a look. Some of the smallest countries and with equally small economies, top the list. The economic big guns, the Japan, the UK, United States, Canada, China, rank as #19, #38, #40, #41, and #60 respectively.
So when it comes to innovation, BIG has the advantage of resources but perhaps small has the advantage of greater personal motivation and reward for the innovator.
Size and Business Agility
Here small has the advantage according to most business books. Small companies are nimble, and can adjust their plans much more quickly than their behemoth brethren. So on the surface it’s advantage to the Smalls. Yet, we often forget that it takes more than cutting through bureaucracy to create agility – it takes the resources to bank roll changes in direction. Here the advantage is almost always to the bigger firms whose access to capital on a short term basis provides many more avenues to resources. The smaller company may be able to make a decision faster – but the bigger one can get it funded and in action faster. So in this case – again, it depends.
So with all that said – Does size matter – it almost always depends. But one way or another each type of organization has its advantages and disadvantages. So perhaps the answer comes down to what Mark Twain once said about what really matters.
“It’s not the size of the dog in the fight, it’s the size of the fight in the dog.”
Thanks for stopping by. Stay tuned…
Joan Koerber-Walker