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| Author: | Zhao, Bingyue |
| Title: | Gigantism-dangerous pursuit of the scales of enterprises (original in Chinese) |
| Journal: | China Reform (c)
1998 : 8, p.6-8 |
| Index terms: | COMPANIES BY SIZE ECONOMIES OF SCALE CONGLOMERATE COMPANIES CHINA |
| Language: | chn |
| Abstract: | Goals of asset reshuffle are not to expand the scale of enterprises, but to promote their operation, adjust economic structure. The core is to raise effectiveness. Economies of scale are based on market substituted costs. If costs of scale are higher than market transaction costs, such pursuit of scale is not helpful but harmful. The cornerstone of modern economy remains to be division of labor. Diversified operation must take into account the basic law of division and the competition determined by the law. The blind expansion of enterprises or economic scale will only lead to "puffiness" and "bubbles". Consequently, we have to be practical and realistic as well as to be on guard against "gigantism" in the course of asset reshuffle and the pursuit of economy of scale. |
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