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January 4, 2014 10:00 am GMT
We live in the age of cryptocurrency heists, Chinese moon landings, eco-disasters and electronic cigarettes. Sounds like something out of a cyberpunk novel. Well, a cyberpunk novel without the brain implants, but don’t worry,those are coming, too.But one big cyberpunk theme that hasn’t come to pass is the rise of mega-corporations — those huge multinational conglomerates, likeRobocop‘s OCP, that owned everything from baby food companies to police departments. Corporations are arguably more powerful today than ever before. But the economy isn’t dominated by a handful of megalithic conglomerates. it consists of hundreds or thousands of smaller, more specialized firms. Our cyberpunk future-present is dominated instead by a new power structure: the mega-network. The Incredible Shrinking Firm Science fiction is more about the present than the future, as the saying goes. And in the late 1970s and early 1980s — when the original cyberpunk stories were written — Wall Street was in love with conglomerates. But the love affair was over by 1990, according to a 1994 paper published in the American Sociological Review aptly titled “The Decline and Fall of the Conglomerate Firm in the 1980s.” These diversified firms performed poorly on the stock market, and relaxed antitrust regulations meant that growing vertically was a safer legal bet than it was in the 1960s and 1970s, when conglomerates first took off. Many companies sold off their assets, becoming leaner and more focused on core competencies. Conglomorates are still popular in Asia and other parts of the world, but the U.S. business community generally agreed that conglomerates were a big mistake. The fall of the conglomerate corresponded with white-collar downsizing, the rise of “permatemping,” and a general tendency towards smaller firms. But before we can answer why companies trended smaller, we should answer a more basic question: why do companies exist at all? In 1937 Ronald Coase wrote a groundbreaking essay titled “The Nature of the Firm.” He set out to answer a question that vexed economists of his time: If markets were efficient, why was there a need for firm as all? Why didn’t all economic activity take place at the level of the individual, with everyone contracting everyone else? Coase concluded that there were transactional costs associated with doing business, such as negotiating contracts and protecting trade secrets. But a company could minimize those transaction costs by making it possible to avoid negotiating a contract for every single transaction,
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/OnBupRKSiQI/
Forget Mega-Corporations, Heres The Mega-Network
We live in the age of cryptocurrency heists, Chinese moon landings, eco-disasters and electronic cigarettes. Sounds like something out of a cyberpunk novel. Well, a cyberpunk novel without the brain implants, but don’t worry,those are coming, too.But one big cyberpunk theme that hasn’t come to pass is the rise of mega-corporations — those huge multinational conglomerates, likeRobocop‘s OCP, that owned everything from baby food companies to police departments. Corporations are arguably more powerful today than ever before. But the economy isn’t dominated by a handful of megalithic conglomerates. it consists of hundreds or thousands of smaller, more specialized firms. Our cyberpunk future-present is dominated instead by a new power structure: the mega-network. The Incredible Shrinking Firm Science fiction is more about the present than the future, as the saying goes. And in the late 1970s and early 1980s — when the original cyberpunk stories were written — Wall Street was in love with conglomerates. But the love affair was over by 1990, according to a 1994 paper published in the American Sociological Review aptly titled “The Decline and Fall of the Conglomerate Firm in the 1980s.” These diversified firms performed poorly on the stock market, and relaxed antitrust regulations meant that growing vertically was a safer legal bet than it was in the 1960s and 1970s, when conglomerates first took off. Many companies sold off their assets, becoming leaner and more focused on core competencies. Conglomorates are still popular in Asia and other parts of the world, but the U.S. business community generally agreed that conglomerates were a big mistake. The fall of the conglomerate corresponded with white-collar downsizing, the rise of “permatemping,” and a general tendency towards smaller firms. But before we can answer why companies trended smaller, we should answer a more basic question: why do companies exist at all? In 1937 Ronald Coase wrote a groundbreaking essay titled “The Nature of the Firm.” He set out to answer a question that vexed economists of his time: If markets were efficient, why was there a need for firm as all? Why didn’t all economic activity take place at the level of the individual, with everyone contracting everyone else? Coase concluded that there were transactional costs associated with doing business, such as negotiating contracts and protecting trade secrets. But a company could minimize those transaction costs by making it possible to avoid negotiating a contract for every single transaction,Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/OnBupRKSiQI/
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