Are Small Firms Really Sub-Optimal?: Compensating Factor Differentials in Small Dutch Manufacturing Firms
The advent of a growing share of small firms in modern economies raises some intriguing questions. The most intriguing question undoubtedly is why so many smaller firms, which have traditionally been classified as sub-optimal scale firms, can exist. The authors suggest that, through pursuing a strategy of copmpensating factor differentials, that is by remunerating and deploying factors of production differently than their larger counterparts, small firms are able to compensate for inherent-siza cost disadvantages.
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