15 
innovative than others for reasons of internal organisation. 
The big concerns have often a monopoly (or oligopoly 4 ) 
position which-reduces' their interest in technical progress. 
More important probably, *|hey tend to be overconfident as 
a result of a successful past, and to become rigid due to 
traditions and routine which again is / stered by a history 
of success, 
I think this factor is more important than other more con 
ventional diseconomies. In this book I played down dis 
economies too much, and this was an error. In principle it 
must be recognized that the growth of the firm leads to 
serious inconvenience. The mere geographical size of the 
market increases, and with it cost of transport to the 
customer. The plant itself covers more space, therefore 
there is more internal transport, Much more important, 
* 
with the increase Afe.the number of people cooperating 
the difficulties of communication between them increase 
disproportionately.'® This leads to increasingly diversified 
hierarchical structures de 
and to loss in efficiency. 
hierarchical structures designed to save comunication Miaes 
The computer is a 
help in improving communication, and 
H.A. Simon, Decision Making and Operational Design. 
J.G. March and H.A. Simon, The Dysfunction of Bureaucracy 
_in I Organisation Theory. Ed. Pugh, Penguin Books 1971.