NYT Excerpt: Do Big Companies Grow By Innovating, Or By Abusing Their Leverage?

In his New York Times Magazine column this week, Adam Davidson looks at Penguin-Random House merger through a broader lens: The fate of commerce in the digital age. Here's an excerpt.

There are two competing predictions about commerce in the digital age. One is that companies will get smaller and more disruptive as nimble entrepreneurs can take on giant corporations with little more than 3-D printers and Web sites. The other envisions a few massive companies — like Procter & Gamble, Apple and Nike — that design everything themselves, have it manufactured cheaply in Asia and use their e-commerce sites to gather information about their customers.

Nearly the exact same conflict occurred more than a century ago in the decade that straddled 1900, which was also a period of rapid technological change. In just a few years, 1,800 small companies were swallowed up as the electrical-power, telephone, auto, steel and chemical industries grew from patchworks of tiny companies into conglomerates. In "The Great Merger Movement in American Business 1895-1904," the Yale economist and historian Naomi Lamoreaux wrote that back then everyone worried about the same thing that authors, editors and book buyers worry about now: Are large companies good for the economy? Do they grow through efficiency and innovation or by abusing their leverage?

Read the full column here.

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