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Extinction of the Little Guy

By Gordon Mott , Marvin R. Shanken | From Gene Hackman, Sep/Oct 00

There's never been anything like it in history. In the past few years, we've seen mergers that would have boggled people's minds even in the empire-building days of the robber barons: Time-Warner and AOL. Chrysler and Daimler-Benz. Citigroup and Travelers. Seagram's and Vivendi. Even France's Seita and Spain's Tabacalera in the tobacco industry. These combined corporate juggernauts have created powerhouse enterprises that make competing against them a real challenge.  

On the one hand, the mergers make perfect sense. There are economies of scale in management and manufacturing. The global economy usually calls for bigger corporations. Each company may bring diverse strengths to the combined business, especially when they are strong in different regions of the world.  

Consumers often benefit from these mega-corporations. Think about the easy access and low prices that chain stores such as Wal-Mart, Barnes & Noble or CompUSA bring to any community. Or even the contributions of, or Microsoft, which, although a prime target of the Justice Department's antitrust division, helped to bring the personal computer into millions of homes. Whether by merger or tremendous growth, the success of big businesses enhances the notion that Bigger is Better. And so, the merging and expansion continues.  

But there's a part of us that wonders where the world is headed. So much of America's heritage is based upon the sanctity of the small businessman--the mom-and-pop shop owners, the maverick with the dream, the family farmer--creative and independent entrepreneurs who pushed the limits of common business practices, constantly seeking ways to make their services better than the next guy's. Businesses were passed down through generations, and each heir faced his or her own challenge of how to make it more successful without losing its character. (Some of the retail chains mentioned above grew out of small family businesses.)  

Look at the cigar business. From farmer to manufacturer and distributor to the retail tobacconist, small- or family-owned businesses dominated the industry for much of the twentieth century.  

The dangers of big business are known, but often overlooked or just rationalized away. Wall Street has a way of homogenizing all once-creative enterprises. When a business reaches a size in which economies of scale make it feasible to buy in bulk, the result is often lower prices, but usually at the cost of a more limited selection. Also, as a company grows, the layers of bureaucracy make it increasingly difficult for its employees to be innovative.  

The bigger the business, the more likely it is that it will continue to acquire smaller companies as part of its long-term business strategy. It swallows its competitors, many of them family-owned businesses, either by making buyout offers that few rational business owners can refuse, or crushing them in the marketplace. The small business becomes part of a corporation, usually publicly owned, and its unique character gets lost in the new culture. Or it vanishes entirely.  

Maybe there's nothing that can be done (or, some would argue, should be done) to slow the incorporation of America and the world. Yet something important is being lost in this rush towards conglomeration: the pioneering spirit of the solo risk-takers and mavericks who built America, back in the days when decisions were made by individuals with dreams, not committees with flow charts.  

So the next time you go out, don't automatically shop at the biggest retailer with the lowest prices. Don't always opt for the cheapest promotion. Stop at the small grocer. Attend an independent movie theater. Shop at your local deli. Pick up your prescriptions from a small local pharmacist. Buy your produce from the local farmer co-op. Patronize your local tobacconist. By supporting the little guy, you're helping to maintain a vital part of America's heritage. And, maybe, just maybe, you'll help to challenge the idea that bigger is always better.