|Size is a constraint to growth and carries with it diseconomies of scale. Most big companies are cumbersome; they are just waiting to be extinct. We analysts are always told of the advantages of size: market share, market power, and dominance. In reality, it is quite the opposite. Smaller firms have better cost controls, are more flexible, and tend to be more niched. They lead the new developments and market changes. And smaller companies with more dynamic growth attract the best personnel. Investors should not be lead astray by companies that claim their mammoth size is a favorable attribute. Corporate bulk is usually a negative.
Source: Full of Bull: Do What Wall Street Does, Not What It Says, To Make Money in the Market
by Stephen T. McClellan, CFA, Wall Street Investment Analyst
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