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

2. dimension* 1 : If the surface area of a container (related to the cost) increases with the square of a certain factor, the volume (related to capacity) increases with the cube of this factor. As a consequence the cost of equipment K is given by K = a x b where x denotes capacity, a a constant and b the so-called scale factor which according to the above reasoning should be around 2/3; in practice it takes different values for different kind of plant, in most cases rather lower than one, the difference indicating the amount of the economies of scale. The scale factors (b) are much used in practice by engineers making estimates of the cost of equipment. According to the engineering data, automation also decreases the capital coefficient, increasing at the same time the scale of production. This is partly explained by continuous running in three shifts, but more basically by the con tinuity of utilisation inherent in the technique itself. All this is not to say that the capital-coefficient never increases with size. In fact, there are cases when it must so increase: for example, large units (of presses, etc.) are used even though they increase the capital coefficient and yield a lower return on most ordinary jobs, because certain jobs cannot be performed at all without the very large equipment. Again, the capital-coefficient will depend inter alia on prices of equipment and wages. In development countries where modern large scale equipment is imported the price relations may cause the capital coefficient to be quite different from what has been quoted above. In advanced countries, however, the decline in the capital-coefficient with size seems predominant. There are certain general factors which act in the opposite direction: An increase in scale (and consequently, markets) involves additional investment in transport and communication, power, etc., in short, an infra-structure increasing disproportionately more than the firm's capacity. The burden of this investment is, however, ordinarily not borne by the firms, but for the greater This may partly explain data given by A. K. Sen: Choice of Techniques, Oxford 1960 (Appendix C) and G. K. Boon: Economic Choice of Human and Physical Factors in Production, Amsterdam 1964.

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