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Governing Business Activity: Small and Big Firms Relationship


A small firm is a company that has less than 50 employees and having an annual turn over of 5.6 million Euros or less. A small firm is also characterized by current assets whose total is fixed on its balance sheet of 2.8 million Euros or less and usually has a localized geographical area. On the other hand, big firms have more than 50 employees working for them with an annual turn over of more than 5.6 million Euros or more. A big firm’s current assets total is fixed on more than 2.8 million Euros and normally cover a big geographical area (Longenecker, 2008).

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Relationship between small firm and big firms

According to a survey carried out by Rothwell and Zegveld (1982), small and large firms cannot work in seclusion from one another. From the survey, 84% of all New Based Technology Firms (NTBFs) cooperate with big firms in one or, more areas which range from Research and Development (R & D) to marketing. Small and big firms benefit through networking with each other, the small firms gain in terms of expertise and access to markets, the bigger firms on the other hand gain in terms of new technology. Small firms often have to make a decision whether it is appropriate for them to utilize a particular supplier when buying a given item.

This would depend on what product is being purchased if it is a specific product there is no need to have more than one supplier for that product (Rothwell and Zegveld, 1982). On the other hand, upon buying a component part that is to be used in many products several suppliers may be required. A small firm may choose to buy from a specific supplier for several reasons namely superiority of a product, qualification of a discount on a large order, a small order is also another reason since it would not be practical to obtain small orders from different suppliers. Lastly, a frequent purchasing firm could qualify for immediate treatment of orders and receive management advice, market information as well as preferential treatment in times of crisis (Culpepper, 2002).

Big firms like UPS, Dell, FedEx, and Office Depot have made offers to reach out to small buyers. This kind of help could come along way in strengthening the small firms and hence they become customers (Beisike, 2007). However, despite this offers it is good for small firms to shop around and determine the pros and cons of obtaining products from a certain supplier so that they do not feel duped into a bad deal. Customers of small firms do not just happen they are made to happen. This is whereby small firms identify their potential customers and ensure they retain them through good and quality services. Potential customers are obtained by a chain supply of customers whereby good marketing are employed. Also good products are meant to be produced by small firms so that there can be a positive impact on the customers and thus retaining them. Small firms should also have a competitive pricing of their products different from their competitors and thus retaining customers (Bangs, 2002).

The retail sector counts for small firms who sell their products directly to their customers. The retail sector obtains its products from wholesalers or directly from the manufacturer who amount to big firms. In this way firms in the retailing sector really need big firms for their supplies (Bromley and Thomas, 1993). Large firms need small firms in terms of expertise whereby we find that owners of small have worked in a big firm at one point and hence they have the technological know- how required by the big firms (Beiske, 2007).


It can therefore be concluded that whereas the small and the big firms could be different and independent in their operation in their own rights, there is a mutual dependence that must be struck to achieve health business environment.


Bangs, D. (2002). The Market planning guide, New York: Kaplan publishing.

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Beiske, B. (2007). Innovation in High- Technology Companies: The small Firm’s Perspective with Reference to the Mobile Phone Sector, New York: GRIN Verlag.

Bromley, R. & Thomas, C. (1993). Retail change: contemporary issues, New York: Routledge.

Culpepper, P. (2002). Creating Cooperation: how states develop human capital in Europe, New York: Cornell University.

Longenecker J. (2008). Small Business Management, New York: Cengage Learning.

Rothwell, R. & Zegveld, W. (1982). Innovation and the small and medium sized firm: their role in employment, New York: Kluwer- Njihoff.

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StudyCorgi. (2021) 'Governing Business Activity: Small and Big Firms Relationship'. 26 November.

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