Why do large corporations behave so badly, when smaller companies often do not?
If it is true that many small companies try to behave reasonably well and decently and fairly, why does scaling up to become a large corporation so often produce bad or even terrible and extremely destructive and selfish behaviour?
This is ChatGPT’s answer:
As companies grow larger and their reach expands, they often face different incentives and challenges from smaller companies. These can include a greater focus on maximizing profits, pressure from shareholders to deliver consistent financial returns, and increased competition in their markets. Additionally, larger companies often have more resources, power, and influence, which can lead to the exploitation of workers, suppliers, and the environment. They may also engage in unethical or harmful business practices, such as monopolistic behavior or price fixing, in order to maintain their market dominance and profits. Furthermore, the decision-making processes within larger corporations can become more bureaucratic, with power and influence concentrated in the hands of a few individuals, who may prioritize their own interests over those of others. The impact of these factors can lead to negative consequences for stakeholders and the larger society.
This is a fascinating answer. At a meta-level, I am constantly surprised at how close ChatGPT comes to thinking reasonable thoughts – yes, all right, I admit that means thoughts like mine – and yes, ChatGPT has a tendency to reinforce the questioner’s biases, but still it could have disputed the latter premise of the question. For instance, I asked it the following:
Me: Is it true that large corporations often produce bad or even terrible and extremely destructive and selfish behaviour?
AI: It’s not accurate to say that all large corporations produce bad or terrible behavior. However, it is true that some large corporations have engaged in unethical or harmful practices that have had negative consequences for their stakeholders and the larger society. This can include exploitation of workers, environmental degradation, monopolistic behavior, price fixing, and other practices that prioritize profits over the well-being of others. It’s important to recognize that there are also many large corporations that strive to behave responsibly and ethically, and that take into account the interests of all their stakeholders. However, the actions of a few bad actors can have a significant impact and contribute to a negative perception of large corporations as a whole.
It likes caveats, which is reasonable, though I didn’t say all, I said ‘often’ and I am not very keen on the ‘bad apple’ or ‘few bad actors’ analogy, but if I wanted to dispute that I would have to do some more determined research. This answer, though softened by caveats, is still pretty strong and I think quite helpful. For the moment, despite the above caveats, I think it is perfectly reasonable to say that quite a lot of large corporations do behave very badly – just think of global food corporations like Cargill and ADM:
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- Price fixing: Both Cargill and ADM have been implicated in price fixing scandals in the past. In the 1990s, ADM was fined for price fixing in the lysine market, while Cargill was implicated in price fixing in the citric acid market.
- Environmental degradation: Both companies have been criticized for their impact on the environment, including their role in deforestation and habitat destruction associated with their agricultural operations.
- Exploitation of workers: Cargill and ADM have been accused of exploiting workers in their supply chains, including those working in the production of palm oil and other commodities.
- Antitrust violations: Both companies have faced allegations of anti-competitive behavior, including allegations of monopolistic practices in certain markets.
These examples of corporate bad behavior demonstrate the potential for large corporations to engage in practices that have negative consequences for communities, the environment, and other stakeholders. While these are not representative of the practices of all corporations, they highlight the importance of holding corporations accountable for their actions and ensuring that they act in an ethical and responsible manner.
If this were a full article not a blog post, I would need to check every one of the above assertions, but they sound all too likely.
Part of the message that I think is indisputable is that size matters, and large size leads to bad behaviour. Thinking about the evolution of humans, where would we ever have got the genes or the training to handle enormous amounts of power and develop negative feedback techniques to restrain ourselves from committing devastation against other humans, animals and lifeforms? Like our easy addiction to sugar, nicotine and other powerful chemicals, nature has not given us defences against these things because they were never a problem. Until very recently, there was no easy access to sugar and Purdue wasn’t peddling lies about fentanyl, which is 50 to 100 times more potent than morphine. Purdue paid hundreds of millions of dollars in fines for ‘misbranding’, but the horrors and misery they and others have caused still continues apace. Yet another genie that won’t go back in the bottle.
Once again, it is hard to see any solution to the large corporation problem other than to break them up and cap the size of a corporate entity. Only government can do this, and despite noises being made about some of the tech giants and despite the EU trying a bit harder than most, still any large corporation can get away with almost anything it likes. The irony is that the same medicine should be applied to countries – if they get too big, break them up into smaller, less powerful and malevolent nations. You’re laughing. I’m laughing, in a grim sort of way. But though this normally doesn’t ever happen by peaceful means*, it doesn’t mean that it is not the right thing to do. In fact, if you want so-called sustainability, this would be probably have to be high on the last of tough and very unpopular actions to take.
* I don’t count the break-up of the Soviet Union as an example of right-sizing because it still left us with Russia. One hardly need say more. I was living in Czechoslovakia, just before it split apart, and I don’t include that as an example because I don’t think Czechoslovakia was too big. It was probably a good size and seemed to me at least to be fairly culturally coherent.