BIG COMPANIES ARE BETTER FOR THE ECONOMY…

According to the conclusions of an EU-funded project, bigger companies are more productive, they pay higher wages, enjoy higher profits and are more successful in international markets.  A corollary of this is that a country’s economic performance can be linked to its number of big corporations. Companies in Spain and Italy are, for example, on average 40% smaller that those in Germany.

In all the countries in the survey (Austria, France, Germany, Hungary, Italy, Spain and the UK) the exporting firms are also found to be larger and to do more R&D.  The report suggests that barriers to R&D and trade are mainly to blame for slowing down company growth. Countries that face higher trade costs provide fewer opportunities for businesses to become large, as does the relative absence of R&D spending.  Trade and innovation are shown to be interdependent: for example, a reduction in trade costs tends to stimulate innovation and allows firms to become larger.  This in turn makes it easier for the firm to bear the fixed costs of R&D.

Background information at http://ec.europa.eu/research/social-sciences/projects/373_en.html

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