RISKS AND SIDE EFFECTS OF DIGITIZATION
The Gap Between Large and Small Companies Is Growing. Why?
Summary
Technology is fairly recent in terms of history. Since its creation, its made our lives generally better. However, there are unforeseen consequences that may have adverse and unintended effects on the economy. It’s advancement has led it to be used by powerful corporations. With such powerful corporations using technology to their advantage, small companies have little to no chance of becoming large and profitable. This means the end of regulation, innovation and competition by powerful corporations manipulating technology in their favor with their resources and power.
A study by Harvard Business Review noted the large difference of median market values between the biggest and smallest public companies. Examining the chart it’s evident that there has been a constant growth of the size difference between small and large companies since the 90’s except for the recession years of 2008 – 2009. This major difference is not because of major successes of a few companies such as Amazon or Apple, but rather it’s the median values which proves how the differences between small and large companies could spell the end of innovation.
The difference can be attributed to various factors, and an important one is technology. It is a source of debate whether technologies are benefiting small companies and helping them catch up to the largest corporations or if said larger corporations are leveraging this technology to help themselves and make the gap between large and small companies even wider. I believe that larger companies are using the technology to make the gap wider with the evidence being the massive difference of R&D (Research and Development) spending between large and small companies.
In the same study of the differences between large and small companies, Harvard Business Review noted the difference of spending between large and small companies on R&D. From the 1980s to 2017 there was an increase in the difference of large company spending and small company spending of $100 million. This helps prove the major difference large and smaller companies have in terms of technologies and shows how large corporations priorities R&D spending.
Our Position
This supports our teams debate position that technology is having an adverse effect on the economy by highlighting the increasing gap between larger and smaller companies. This can have a negative effect on the economy in the long term as it spells out the decline of international competitiveness and innovation.