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Another interesting installment of posts about small firms, large firms, employment and investment:

Is small business a Good Thing? | Flip Chart Fairy Tales

Small business is, apparently, the Backbone of Britain. And the Backbone of Europe. And the Backbone of America. And the Backbone of Australia. If I could speak another language, I could probably find lots of other places that small business is the backbone of.

We like small businesses. They are much less stuffy than the boring old corporates. They are swift and nimble, unlike the lumbering bureaucracies which take ages to make simple decisions. Small businesses are efficient and decisive because they can't afford to carry fat. Who'd want to `work for the man' in a big dinosaur company when they could be working for a swashbuckling dynamic micro business?

The reality is a bit more complex, though. Small and medium-sized firms, defined by the EU as those with fewer than 250 employees, are actually not that efficient at all. They tend to have lower levels of productivity than larger firms. As the Economist explains:

by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 6th, 2012 at 02:13:23 PM EST
that sounds like a "knows the price of everything and the value of nothing" argument.

Lots of small firms create an entrepreneurial environment which throws up the large growing companies. Cut off the supply and everything stagnates.

Everything in balance grasshopper

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Mar 6th, 2012 at 02:47:53 PM EST
[ Parent ]
Well - it's much easier to industrialise wealth extraction at larger scales.

It's also worth asking how many 'productive' employees were off-shored to happy lands of cheap wages and minimal employer obligation.

And of course 'growth' isn't always a social benefit. WalMart may be 'efficient', but taken as a whole - especially when you include the political leanings of the family who own it - it's hardly a social good overall.

Especially not for some of its suppliers.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Mar 6th, 2012 at 03:28:43 PM EST
[ Parent ]

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