The Between Large Firm And Small Firm Variants Of Industrial Restructuring

1185 Words Sep 26th, 2015 5 Pages
Write about the differences between the large firm and small firm variants of industrial restructuring. Also, about the conditions that necessitated them.
Capitalism has been founded on the idea of large firms. Till 1970s, maximization of profits through large firms was a natural model of economic organization under capitalism. The Fordist model of industrialization was based on mass production of homogeneous goods using assembly line production technology, standardized work routines de-skilling and homogenization of labour force. Such an organization secured increase in productivity through economies of scale. However, there were social, economic and technical limits of Fordism. Technically, there is a limit to raising productivity through economies of scale, de-skilling workers and labour intensification. Economically, there is limited market for homogeneous goods as income rises. Moreover, rate of profit starts falling as the organic composition of capital rises i.e. as the ratio of constant capital to variable capital rises. Socially, there is a growing pressure on profitability, on managerial prerogative and public finances as imposed by the growing demands of the mass worker (Clarke, n.d.). There have been a lot of debates around whether large firm or small firm is the best way of industrial organization. In the late 1970s contrary to this mass production industrial organization other alternatives emerged that focused on industrial reorganization and restructuring.…

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