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3 reasons big is back

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in Best-Practices Leadership,Leaders & Managers

The argument rages as to whether big or small companies are better catalysts for innovation.

Economist Joseph Schumpeter argued both sides, saying in 1909 that small companies were more inventive, but in 1942 that big firms have more incentive to invest in new products because they can scale up quickly to big demand. Also, in a competitive market, inventions are quickly imitated, so small operations often can’t keep up and their investments don’t pay off. Big is back:

1. Economic growth is increasingly driven by big ecosystems like tech.

2. Globalization puts more of a premium on size. It’s not just multinationals, but state-backed companies.

3. The most important factors for innovators involve vast systems, like education and health care, or giant problems, like global warming. To make even a dent, you usually have to be big.

— Adapted from “Schumpeter: Big and clever,” The Economist.

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