Business and Biology
The question of the similarities and differences between business and biological systems was raised at HN.
The market / biology comparison is interesting, though probably needs some work.
Firms, at least to a certain size, are about increased specialisation. That is, they focus on doing one thing. Rather than predator/prey relationships, firms have exchange relationships, arbitraging off of distinct specialisations and differential capabilities, with much of that being supply-chain related.
(A recent discussion of semiconductor fabrication noted that an end-product device might comprise of 1,000 or more individual steps, and 70 or more logistical (that is, shipping) links before reaching the final purchaser.)
Individual organisms are, at least to a first approximation, generalists as compared to businesses. They must source food or sustenance, provide for circulation, metabolism, health, etc. Plants have structural and photosynthetic requirements. Many animals have sensing, neurological, mobility, and defence functions. The largest individual organisms still occupy only tiny fractions of the Earth's surface individually --- whales, fungi, slime molds, clonal trees. Past a certain point, organisms simply cannot coordinate at large scale within a single entity.
So the reason single firms fight amongst others of similar stripe is because each is attempting to control a highly specialised niche.
(There's another question of just where and how businesses become extensive. The question of organisation of industry by type or sector goes back to Quesnay and in modern variants seems to be seen as 4--5 distinct levels. I'd argue that it's network-based firms which are most likely to be expansive, though that includes a fairly broad notion of just what a network is. See: https://old.reddit.com/r/dredmorbius/comments/74dm5o/seeking_research_on_inclusive_measures_of/)
The scale question is interesting. Yes, individual human firms are far larger than the alrgest organisms. But the range of scales found in nature remains larger. You can look at length, volume, mass, or metabolism.
The smallest bacteria are about 0.2 μm in length, which (assuming density of water) is about 3*10^-17^ kg
The largest blue whale is 30m in length, and 17,000 kg.
(There are larger organisms, giant sequoia trees, slime molds, clonal trees. They shift the calculus by a few more orders of magnitude, but my point is proved sufficiently here.)
That's a length difference of about 150 million (10^8^), and a mass differential of about 507 billion billion (10^20^). On either measure, the range from smallest to largest firm would be smaller, if only because the human population has not yet reached 507 billion billion.
(In looking at metabolism, values are harder to find, especially for bacteria. A blue whale has a basal metabolic rate of about a half-million kilocalories (food calories) per day, with a _total_ expenditure larger than that. The metabolism of mammals scales as BMR=KM^2/3^, that is, to the 2/3 power of mass --- larger mammals are more efficient at using energy, if less efficient at passing through mouse holes. Economic metabolism is at the rate of approximately $1,000/barreloil, or $1,000 / 1.5 million kilocalories, or about $1 per 1,500 kilocalories.)
By absolute magnitude, the largest firms are of course larger than the largest animals or plants. Much of that comes from an ability to both organise and process inputs at a much larger scale. For an organism to operate at global scale, it would need to physically be global scale. A firm virtualises many of its coordination activities through communications --- a sort of "spooky action at a distance", if you will. James Beniger, The Control Revolution (1986) (one of several books by the same title), listed in the Reddit post above, discusses much of the development of this. In a sense, a firm is a financial, legal, commercial, social, technical, and organisational virtual construct.
What firms can do that organisms cannot is incorporate other freestanding entities within themselves. "Mergers and acquisitions" is not a chapter you'll find in a biology text. It's an extraordinarily common business practice. If not always a successful one.
Geoffrey West, Scale looks into the question of magnitudes as well.
Adapted from an HN thread: https://news.ycombinator.com/item?id=27038999
#business #markets #biology #scale #metabolism #BlueWhales #MergersAndAquisitions #JamesBeniger #TheControlRevolution
