The Bigness Complex Redux: Horizontal Ownership Concentration and Efficiency Conundrums

Abstract

This cliometric study evaluates efficiency outcomes from America’s telecommunications sector acquisitions, based on data for 1988–2001, as the sector’s horizontal acquisition processes have repeated themselves. Sector ownership has been comprehensively reconcentrated. Concepts from the size and structural capital literatures enable defining mechanisms to establish causality between horizontal ownership influence and efficiency. For the measure of size, smaller-sized firms display positive efficiency impacts, while medium-sized firms display lower performance than average and large-sized entities display substantially lower performance. Entities experiencing a lesser level of structural capital influence enjoy better performance, while entities experiencing a medium level of structural capital influence experience lower performance than average and entities experiencing a high level of structural capital influence experience much lower efficiency. The evidence implies that negative motivations associated with size and power acquisition may be spilt over to acquired entities, and increasing negative size impact suggests these motives have strengthened as larger controlling entities have brought more units under their ambit. Restraining concentration is a fundamental policy concern to restore competitive economy fundamentals and prevent ruining America’s entrepreneurial spirit.