There's an active debate going on in academia, think tanks and businesses around who is better positioned to win in the new economy, big companies or small companies.
The Harvard Business Review's Economies of Unscale: Why Business Has Never Been Easier for the Little Guy argues in favor of small businesses. Key quote:
A series of breakthrough technologies and new business models are destroying the old rule that bigger is better. By exploiting the vast (but cheap) audience afforded by the Internet, and taking advantage of a host of modular services, small becomes the new big. The global business environment is decomposing into smaller yet more profitable markets, so businesses can no longer rely on scaling up to compete, but must instead embrace a new economies of unscale.
MarketWatch's The Biggest Economic Threat? Big Companies disagrees, saying:
Most sectors of the economy are dominated by larger and older firms, who use their competitive advantages to stifle innovation by smaller and younger rivals. There’s always been a battle between the old and the new, but lately it seems the old is winning. Larger companies are increasing their market share, so that most sectors of the economy are becoming more concentrated.
This article points to a recent Brookings study showing a steady decline in new firm formation. Key quote from their conclusion:
... these trends fit into a larger narrative of business consolidation occurring in the U.S. economy - whatever the reason, older and larger businesses are doing better relative to younger and smaller ones.
The point of view that smaller and entrepreneurial firms are winning is very popular here in Silicon Valley and also in the global futurist community, where forecasts pronouncing the death of big businesses have been made for decades.
Academics and think tanks tend to favor the point of view that entrepreneurship is suffering and big firms are winning.
So which side is winning?
Our work indicates both.
We've done a lot of work on what we call barbell industry structures.
These industry structures consist of a relatively few giant corporations on one end, a narrow middle consisting of a shrinking number of mid-sized firms, and a large and growing number of small, micro and one person (solopreneur) firms on the other end.
Almost all of the industries we've studied exhibit the Barbell Industrial Structure. In barbell industries both very large and very small firms are thriving. See our Industry Structure category for examples.
More importantly, our recent research shows that ecosystems comprised of large and small firms working together are emerging as powerful competitors in many industries.