Scale, scope and entrepreneurship
To exploit the economies of scale and scope in multi-product technologies, enterprises in advanced capitalist countries grew in the last 150 years in three directions. By substituting in the place of traditional entrepreneurs professional managers, they developed organisational capabili-ties to co-ordinate effectively activities that were widely dispersed geographically and function-ally. They promoted rapid innovation by resorting to systematic Research and Development ef- forts. And, finally, they enhanced control over their markets by introducing innovations whose application required large-scale investment. In the course of these transformations the material standards in the respective countries rose to unprecedented levels. But simultaneously they led to losses in market co-ordination be-cause these transformations increased market imperfections. As a result the economies of scale and scope appear to be negatively related to the ratio of co-ordination to innovation in the econ-omy. Hence, to the extent that policy makers strive to achieve the priorities of citizens, they are advised to allow for the implications of this relationship to the best of available information.
References listed on IDEAS
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- Link, Albert N, 1980. "Firm Size and Efficient Entrepreneurial Activity: A Reformulation of the Schumpeter Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 88(4), pages 771-782, August.
- Rosen, Sherwin & Nadiri, M Ishaq, 1974.
"A Disequilibrium Model of Demand for Factors of Production,"
American Economic Review,
American Economic Association, vol. 64(2), pages 264-270, May.
- M. Ishaq Nadiri & Sherwin Rosen, 1973. "A Disequilibrium Model of Demand for Factors of Production," NBER Books, National Bureau of Economic Research, Inc, number nadi73-1, November.
- M. Ishaq Nadiri & Sherwin Rosen, 1974. "A Disequilibrium Model of Demand for Factors of Production," NBER Books, National Bureau of Economic Research, Inc, number nadi74-1, December.
- Eliasson, Gunnar, 1984. "Micro heterogeneity of firms and the stability of industrial growth," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 249-274.
- Acs, Zoltan J & Audretsch, David B, 1987. "Innovation, Market Structure, and Firm Size," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 567-574, November.
- Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September. Full references (including those not matched with items on IDEAS)
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