Business, Management and Accounting
4 years ago

Small Dutch manufacturing firms thrive by compensating for size disadvantages.

Scales research reports
Are small firms really sub-optimal?: compensating factor differentials in small dutch manufacturing firms
David B. Audretsch, George van Leeuwen, Bert Menkveld, Roy Thurik

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Small firms in the Netherlands use a strategy called compensating factor differentials to overcome their size-related cost disadvantages. By paying and using their resources differently than larger firms, small firms can be successful. A study of over 7,000 Dutch manufacturing firms showed that this strategy is common in Europe. While small firms may seem inefficient at first, they can actually improve over time and become more productive and better at compensating their employees as they grow older.