Reply to post: Re: "Mega Corp" proves command and control can work!

Govt control? Hah! It's IMPOSSIBLE to have a successful command economy

Gary Bickford

Re: "Mega Corp" proves command and control can work!

It's true that most large corporations operate internally as mostly command economies, and many or most of the complaints that people have with large corporations as customers, employees and other stakeholders can be directly tied to that aspect - they are the same complaints heard about socialist economies. For example, since the feedback loop based on value given and value received is broken, personal influence and backroom deals are essential to getting things done within a corporation - a recent business book discussed the importance of recognizing that every corporation has two structures, the formal hierarchy, and the network of people who get things done. In the outer world this is how corruption becomes essential and endemic in every socialist economy - since you can't buy what you need, you have to bribe, cajole, or be related to someone who can help. We see over and over again how command decisions within corporations - that were often strongly opposed by people within and without the corporation - cause inordinate damage to the company and others - HP has a chain of disasters; Time Warner's merger with AOL; and many others. A recent study showed two things: nearly all major corporate mergers fail, for reasons that were known in advance; and corporate heads, even knowing this commonly convince themselves that "we'll be different" - but they're wrong in the end.

Any economist will tell you that above a certain size, nearly all corporate growth comes from mergers and acquisitions, not internal growth - this shows that these large command economies are failing at what one might consider their primary purpose. These 'successful' large corporations are growing by purchasing those smaller businesses that have been doing all the real growing. The majority of new jobs are also created by small business, while the majority of job losses are the result of 'downsizing' or merger-related layoffs by large corporations.

High tech has some occasional exceptions, including growing by acquiring technology as well as business per se, but even there mergers and acquisitions are primary factors.

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