The Gap Between Large and Small Companies Is Growing. Why?
— August 16, 2019
By Vijay Govindarajan, Baruch Lev, Anup Srivastava and Luminita Enache
Contrary to the popular notion, we find that large corporations are more and more likely to maintain their dominant positions, while small corporations are less and less likely to become big and profitable. And part of the reason for this growing corporate divide between big and small firms is the growing R&D expenditures of large firms. Our results support Lou Gerstner’s thesis that the elephants are not basking in their past glory, but can indeed dance and are even becoming nimbler.
Read the full Harvard Business Review article.
Baruch Lev is the Philip Bardes Professor of Accounting and Finance.