Based on the books that I have been read firms grew large to exploit economies of scale. Entrepreneurship avoided "hierarchies" with their attendant agency costs. It primarily shortened both the innovation cycle and the product cycle. Hierarchies control over resources and the creation of barriers to exit.
Gradually more of the economics literature is addressing the question of most advantageous scale and optimum diversification. For this manner internet world can be a learning tool for the new form of organizational control.
""Alliances," "partnerships," "market teams" are the new lexicon as entrepreneurs struggle to match resources with unpredictable needs. Big companies such as Cisco Systems are forming alliances as well as acquiring companies to keep their options open. Meaning the companies system is more of knowledge-based competition not on assets. Because assets can not be acquired but can go home at night
