Introduction

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Introduction: A revised introduction to "Small and Big Business"

Author:: Steindl, Josef

Scope:: Typoskript, 20 Blätter

Year of publication:: 1972

Source material date:: [04.1972]

Language:: English

Description:: Twenty five years after the first publication of this little book I do not find myself in full agreement with everything it contains... My chief amendment concerns an error in interpreting the statistics of U.S. corporations which show that fixed capital in relation to turnover increases with the size of the firm (chapter III, Table IX, p.24). (Auszug S. 1)

Note:: Beim Typoskript handelt es sich um eine neu verfasste Einleitung zum Buch "Small and Big Business" (1945) vermutlich zwecks der italienischen, spanischen oder portugiesischen Ausgabe des Buches.

Related work:: Steindl, Josef (Hrsg.): Economic Papers 1941-88. London: Macmillan, 1990 Steindl, Josef: Small and Big Business. Economic Problems of the Size of Firms. Oxford: Blackwell, 1945

Topic:: Firm and market structure

JEL Classification:: D24 [Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity] D43 [Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection] L11 [Production, Pricing, and Market Structure, Size Distribution of Firms]

Shelfmark:: S/M.3.7

Access:: Free access

Introduction Twenty five years after the first publication of this little book I do not find myself in full agreement with everything it contains. Since I have no time to re-write it completely I better leave it as it stands and try to explain in the following what amendments I should have liked to make. My chief amendment concerns an error in interpreting the statistics of U.S. corporations which show that fixed capital in relation to turnover increases with the size of the firm (Chapter III, Table IX, p. 24). This does not demonstrate, as I wrongly concluded, that the larger firms have a higher capital coefficient^ in the accepted sense of the term. It is due to a different fact, namely, the greater vertical integration of the larger firms. In fact, as far as the higher size classes are concerned, Table IX shows that the apparent rise in capital-output ratio is strong in paper (where the large concerns own forests), metals (where they own mines) and chemicals (where vertical integration also plays a large role) while the other industries show no increase. In the lower size groups the increase is general and can easily be explained by the fact that with increasing size hiring is replaced by owner ship of buildings, shops, plant, premises, etc., just as purchase of transport services, etc., is sometimes replaced by ownership of the means of production. By stretching the term a little, all this can also be regarded as vertical integration. As far as production technique as such is concerned, there is now a large amount of evidence, especially engineering data, to show that with (2) increasing scale of production the capital-coefficient decreases . In fact, this is only an application of the principle of large scale economies which operates in the production of the equipment no less than in its operation, and frequently even more so. More particularly, it is due to the "economies of Or capital-output ratio, as I called it. The present use of the terms "capital coefficient" and "capital-intensity" for capital per unit of output and capital per man had not been firmly established then. (2) For example, D. Weintraub: Effects of Current and Prospective Techno logical Developments upon Capital Formation. American Economic Review, Supplement, March 1939. J. S. Bain: Barriers to New Competition. Cambridge Mass. 1956. C. F. Pratton: Economies of Scale in Manufacturing Industry, Cambridge Uni versity Press, 1971. J. Haldi and D. Whitcomb: Economies of Scale in Industrial Plants, Journal of Political Economy, Aug. 1967

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