Bigger, Sure. Better? Well...

Is bigger good or bad? That's the question on the minds of a host of people in America these days, from media moguls and banking CEOs to politicians, foreign competitors, and average citizens wondering about jobs, delivery of services, and prices. Like it or not, corporate bigness is destined to become one of the hottest public-policy questions in the years ahead. A new wave of mergers and acquisitions is generating the kind of mass and concentration unseen on the economic front since the late 19th century.

The great irony is that much of this race to bigness is being propelled by the same information technology that futurist Alvin Toffler and other techno-libertarians predicted would lead to smallness--empowering individuals and entrepreneurs to work independently on the Internet with speed and flexibility unmatched by Big Business. Big is supposed to be dead.

Forget it. Corporate America is discovering what the military has known for at least a decade: that information technology allows for much more effective command and control of size and complexity. And most big companies that want to get bigger have the green light: Washington will permit it, and Wall Street will finance it.

So industry after industry is finding bigness a solution to its problems. Banks look to mergers for cost-saving. Media companies try to lock in distribution and product. Retailers are striving for economies of scale. Transportation, utilities, telecom, consumer goods, pharmaceuticals, and software are all moving to consolidate, concentrate, and grow bigger.

But the fact that bigness is seen as the salvation for every business problem makes the current merger wave suspect. The monopoly wave of the turn of the century, the oligopoly wave of the 1920s, the conglomerate wave of the 1960s, and the debt-fueled wave of the 1980s all ended in a burst of excess and the dashed dreams of many an empire builder.

The markets, good trustbusters by and large, will determine whether bigness has once more gone too far. It may be that in the new global marketplace, the need for size has grown significantly. For new bigger companies, much will depend on whether managers can work the information flow within behemoth corporations. But markets must remain free to act. They will give the only reliable signals of whether the new information technology and globalization mean that U.S. companies must get ever bigger to succeed.

This is the question that politicians also ponder. Already, a chorus of complaint against Big Business can be heard on the sidelines from both conservatives and liberals who blame it for exporting jobs and keeping wages stagnant. Bigness is a big issue, once again.

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