Small Business

Review: ‘Big Is Beautiful’ Questions the Virtues of Small Business

The national consensus in favor of all things small is reflected in a dizzying array of local and national laws that provide either affirmative benefits or valuable exemptions. Both authors are inveterate policy wonks, having spent much of their careers at a succession of public and private think tanks, and devote half the book to discussing the history of these rules and justifying alternatives to our current regulatory approach to antitrust, tax and dozens of other topics.

Possibly inspired by the wide popularity of “net neutrality,” “Big Is Beautiful” defends many of its often radical policy proposals under the benign-sounding principle of “size neutrality.” Although these arguments are often interesting, they are weakened by caricaturing the positions of those who take a different view and the overuse of policy jargon. For instance, they name their own philosophy “national developmentalism” and describe opponents of their approach to antitrust enforcement as “neo-Brandeisians” who, if they “get their way,” will “break up most large companies into medium-sized ones.”

Regardless of the validity of their specific policy prescriptions, the data synthesized by Mr. Atkinson and Mr. Lind does call into question the wisdom of prevailing attitudes toward small business relative to large not just in law but in society. A look at recent trends in where graduates of top M.B.A. programs go to work reflects this increasing antipathy toward large firms.

Until recently, upward of 60 percent of graduates from top M.B.A. programs headed to investment banking or management consulting jobs. Nowhere has the decline in the attractiveness of these industries to M.B.A.s been starker than my alma mater, Stanford Business School, where only 1 percent of the most recent graduating class went into investment banking.

Given that Stanford is in the heart of Silicon Valley, it should be neither surprising nor worrisome that today almost as many graduates decide to start their own company as those who go into consulting (20 percent).

But the preference for small business extends well beyond Stanford. At a recent symposium of leading business schools held at Columbia Business School, the dean of Harvard’s Business School revealed that 60 percent of its graduates now elect to work for companies with no more than a few hundred employees. This shift toward smaller companies as employers of preference seems to be encouraged by the business schools themselves. At the same conference, Wharton’s dean suggested a form of “affirmative action” to assist small-company recruitment efforts.

If Mr. Atkinson and Mr. Lind are correct that big businesses are the prime driver of productivity while also maintaining a better record on social issues, it is at a minimum worth pausing before rejoicing over the rejection of large corporations by the most promising M.B.A.s. Large corporations themselves, as the recent Facebook scandals attest, bear much of the blame for the increasing disfavor in which they are held. But even if some of the contempt has been earned, “Big Is Beautiful” succeeds in highlighting why it is in our collective interest to find ways to help the biggest corporations earn back our trust, and attract more of our best graduates.

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