We often view the relationship between large and small enterprises as adversarial. This dynamic is epitomized by the so-called Walmart effect, where the arrival of a large retailer can threaten local businesses by out-competing them, leading to closures. As small businesses disappear, the economic landscape becomes less diverse, often resulting in fewer job opportunities and lower wages. The arrival of large chains in such scenarios can undermine the vibrancy and economic resilience that small enterprises typically provide.
While this Walmart effect is well documented, a study by McKinsey Global Institute, "A Microscope on Small Businesses: Spotting Opportunities to Boost Productivity," recognizes an important productivity symbiosis between large and small businesses. This link is particularly pronounced in sectors like manufacturing or travel accommodations where there is little difference in productivity in relation to business size. This robust correlation means that when large firms improve their productivity, SMEs tend to follow suit, and vice versa.
