Big Firms And Small Firms

Economies of scale: Large companies can produce products at a much lower cost than small ones because the cost per unit drops as the volume of output rises

There are various internal and external factors that can influence the development of innovations positively or negatively. External factors may include firm size, market structure, degree of industry concentration, and macroeconomic factors. Size of the firm tend to be more positive related to innovation in manufacturing and profit-making organizations as compared to non-profit making organization, and relationship that involves size and innovation will become stronger if a non-personnel or a long transformation measure of size has been applied, as compared to application of a personnel or a raw measure of size. Depending on the competition within the market for example a positive competition with favorable atmosphere, the firm will be successful in its kind of innovation. The way industries have been structured and how they change over time may have effect to the innovation among organizations. Their standards, the institutional setting and the process of liberalization and privatization also affect innovation.

In the last several years, as we have seen some of the major financial conglomerates collapse, when Wall Street carries some negative connotation, investors’ attention turns to the companies who work primarily with Main Street, specifically those folks who create capital and own assets. A lot of these businessess would not strike you as super wealthy, yet it is the small businesses that proved to be the most resilient during the hard economic times.

However this latter argument ignores the fundamental advantage that big firms enjoy over small firms: economies of scale. Given the capital intensive nature of the energy industry it is most likely that large firms enjoy cost advantages that smaller firms will be unable to achieve; we can predict that the MES of an energy firm exists at an extremely high output level and so has a downward sloping long run average cost curve as seen below:

Bigliardi, B. (2013). The effect of innovation on financial performance: A research study involving SMEs. Innovation: Management Policy & Practice, 15(2): 245-256.

A corporation is independently owned by shareholders; they are larger companies with multiple employees. Some examples of corporations would be; airline companies, soda companies, Google, Hasbro and many more. A conglomerate is a large corporation that has several smaller companies. Business associated with a conglomerate are unrelated and offer different products or services. "John Rockefeller of Standard Oil, Alfred Sloan of General Motors and Gerald Swope of General Electric are some of the business tycoons credited with revolutionizing business practices, which contributed to the organization of today’s conglomerates."(Keefer).

There is a range of both empirical and theoretical evidence to indicate that there is a clear correlation between economic growth and innovation, with the OECD calling the innovative effort “the sine qua non of growth”. This conclusion is the result of the fact that in order to foster economic growth one must either increase inputs or improve the productivity of these inputs. Furthermore, new advances in technology provide consumers with new and cheaper products, act as capital inputs to improve the quality and efficiency of the production process, improve environmental sustainability and facilitate network growth through communications technology. It is clear that the key role of Veblen’s engineers would be to innovate as much as possible to enhance the productive capabilities of the business machine, and that given result of innovation is to improve economic growth and development such actions should be

Technological change is a fundamental driver of economic development and performance, not only at the level of firms and industries but also economies. Innovation is the organizational process through which new

The small business marketplace is extremely dynamic and the changes are fast. Here are some encouraging facts from the US Small Business Administration on small businesses. There are about 30 million small businesses in the United States and employ just over half of the country’s private workforce. They employ a staggering 40% of high tech workers such as computer professionals, scientists and engineers. More than half of the small businesses are home-based businesses and two percent of them are franchises. One of the most important aspects is the fact that a majority of innovations in the United States come from small businesses.

The economy’s motivation of small businesses stability as compared to large businesses that are well established, also the financial assistance of other organization including the government.

If the small firm is actively involved in international trade as are most little firms in specific areas in Europe, case in point then worldwide business is an extremely important subject to study particularly if consolidated with cutting edge European dialects. One of the enormous brakes on the advancement of little firms is the way that a large portion of those that could stretch globally neglect to do so in light of the fact that they fail to offer any staff at administration level with the abilities to help them grow abroad.

The smaller companies could produce a wider variety of sausages of specialty dinner sausages in smaller volumes though the smaller companies lacked the larger production desired by their customers. If a company were to try to become an economy of scale it would have to make sausages more cheaply at larger volumes than smaller volumes. The company would also have to be able to reduce costs like R & D over the bigger sales volume.

The societies in the world are facing severe social and economic challenges. The 2008-09 downturn in the economy has led to lessened potential growth output, rise in unemployment and soaring public debt. To recover from this, it was necessary that the nations come up with sustainable growth sources. The search for new sources comes to an end when the countries have adopted a productivity growth infused with innovation. Innovation is the introduction of a significantly and newly improved product, method or process. It holds the access to boost productivity. All change contains a degree of novelty. (Glaister, 1996) The Oslo Manual gives account for three types of innovation. An innovation can be novel to the firm, novel to the market or novel to the world itself. The first type includes the circulation of the present innovation in the business. It is when the innovation has already for use in other companies. The change becomes new to the market when the firm is the first to introduce it to the market. An enormous range of factors like economy, government service, education or health, therefore, affects innovation. It can occur in any sector of the economy. (www.aaas.org) The current framework applies to change in business and sometimes in the public sector. The paper discusses innovation in the public sector in small-scale industries. The macroeconomic policies affect the

Companies live and breathe innovation; or, at the terribly least, notice it basic to their success. Such companies are those that others ought to emulate for they recognize that to do business, as Peter Drucker prompt in an exceedingly recent Harvard Business review article, “Every firm—not simply businesses—needs one core competence: innovation.”

Increasing returns are the natural outcome of decreasing output costs and have external and internal factors which influence economies of scale (Ossa, n.d.). Economies of scale are influenced externally by industry size, rather than firm size and include