The size of a company is an economic key figure that is intended to reflect the size of an individual company for purposes of comparison.
In business administration in 1955 has Werner Sombart personal , (number of employees) real (capacity factors of production or quantity of the raw materials) and capital characteristics (existing working capital) proposed as criteria of farm size. Erich Gutenberg defined it in 1956 as the "extent of the total use of combined means of production", Walther Busse von Colbe as the "extent of the actual or potential economic activity". In the scientific literature, a connection between company size and capacity is established from the start . Erich Gutenberg points out that an increase in capacity entails an increase in the size of the company, while a reduction in the size of the company means a permanent reduction in capacity. The company size is used in particular to find a basis for cross -company comparisons and observations, as is the case with statistics from authorities ( Federal Statistical Office ) or business associations . Laws also use company sizes for their purposes.
In order to quantify the size of a company / company, a key figure is required. However, the heterogeneity of the companies makes it impossible to use a uniform absolute key figure. Therefore one is forced to use several units of measurement. The units of measurement must meet criteria that enable a size comparison with other companies / companies. On the one hand, the unit of measurement must be easy to determine and available in all companies and in all industries; on the other hand, it must be representative and meaningful. Under these prerequisites, the potential quantities (number of employees , available working hours per period, agricultural area in agricultural operations, number of beds in hotels, fixed assets , total assets or business volume ) or the flow of goods and values (output quantity, sales , annual premium income or profit ) are available as units of measurement . In the case of listed corporations, the size of the company is often judged on the basis of the market capitalization or the market value and the annual net income.
Classification according to company size
Depending on the unit of measurement achieved, there is a division into small , medium-sized and large companies , with small and medium-sized companies in Germany often being abbreviated and summarized as SMEs (in Belgium and Austria: KMB). In the industry, sales or the number of employees , in banking total assets or business volume, and in insurance companies, the annual premium income have established themselves as units of measurement .
For all other legal forms , the obligation to disclose the annual financial statements is based on the Publicity Act . According to Section 1 (1) PublG, companies are obliged to disclose if at least two of the three criteria apply in three consecutive years:
- Balance sheet total of more than 65 million euros,
- Sales of more than 130 million euros,
- more than 5,000 employees
Eurostat and the European Observatory for SMEs divide companies into the following categories according to the number of employees:
- Small business : fewer than 10 employees,
- Small business : from 10 to 49 employees,
- medium-sized companies : from 50 to 249 employees and
- Large companies : 250 and more employees.
Other laws and regulations
The legislature was not only close to dividing companies into size classes, but also uses the defined size differences between companies to treat companies of different sizes differently in legal terms. As a result, not all company sizes should be “lumped together”, but should be given legally individual regulations.
Protection against dismissal
The Dismissal Protection Act (KSchG) only applies from a certain company size. So-called small businesses are excluded from the scope of the KSchG, with the result that dismissals can be issued there without special requirements. Depending on the employee's hiring date , the employer can hire up to 10 employees before the KSchG comes into effect. However, this threshold only applies to newly recruited workers who started working in January 2004. If the requirements of the small business regulation are not met and all other requirements for the applicability of the KSchG are met, the employer must ensure that the dismissal of an employee is socially justified. If there are no social justification reasons, the termination is ineffective. According to § 17 KSchG, an employer is obliged to report to the employment agency before he
- in companies with generally more than 20 and less than 60 employees more than 5 employees,
- in companies with generally at least 60 and less than 500 employees 10% of the employees regularly employed in the company or more than 25 employees,
- in companies with at least 500 employees, at least 30 employees
discharged within 30 calendar days.
Employment of the severely disabled
Every employer with at least 20 regular jobs is obliged to employ a certain number of severely disabled people , depending on the size of the company . For example, a company with at least 20 but fewer than 40 jobs must employ a severely disabled person. Companies with 40 to less than 60 jobs must employ two severely disabled people; According to Section 154, Paragraph 1 of Book IX of the Social Code, even larger companies must occupy at least 5% of the jobs with severely disabled people. The special protection against dismissal for severely disabled people according to Sections 168 ff. SGB IX is independent of the size of the employer's company, i.e. it also applies in cases in which the employer is not obliged to employ severely disabled people. It also applies in companies in which 10 or fewer employees are employed and in which the dismissal protection according to the Employment Protection Act does not apply.
Company size in the banking sector
With regard to the size of the business ( bank size ) , a distinction can be made between large , medium and small banks. When examining the question of the optimal operating size of credit institutions , the production factors (according to Gutenberg ) in banking theory are supplemented by a monetary factor, which includes liability (e.g. liability through equity ), refinancing ( savings ) and payment transactions (e.g. . stocks of cash , cashless payment includes), extended (liquidity,-financial area). The operating sphere of a bank is the technical-organizational area (TOB) and the sphere of values is the liquidity-financial area (LFB). The size measurement of banks is expediently carried out only for the sphere of values. Input-oriented measures of magnitude in the LFB are equity , the deposit business or the balance sheet total , better still the business volume . Input-oriented dimensions in the TOB are either the posting items or the number of employees .
The bank is seen as a producer who creates various types of monetary problem solutions (e.g. maturity transformation ) (output) through the use of production factors (human labor , operating resources , materials , liability benefits, information, payment services) (input) .
The output is measured in the TOB via the number of bank accounts or the number of transactions per account. In the LFB, it is based on the volume of monetary products (e.g. loans, liability commitments).
The bank's production as a transformation - and intermediations performance construed. The output is the credit volume or the securities portfolio, the input is the volume of deposits. This approach is usually used for empirical research.
Business aspects relating to company size
Classifications into company sizes also make economic sense, although a single unit of measurement, such as the number of employees, is hardly meaningful. Even companies belonging to the same branch show some clear differences. Equity ratio , gearing , profitability or productivity are some of the key figures that differ more or less significantly from one another even in companies in the same industry.
A farm size in which the production-related cost savings are depleted and the economy of scale has reached its lower limit is, as minimum optimum size ( english "minimum optimal scale" referred to). If this company size is not reached, the company produces too expensive in relation to its competitors to be able to survive in the market over the long term . A company size is cost-optimal if it can achieve the maximum profit. The optimal company size is the capacity at which, under the given technical and organizational conditions, output takes place at the lowest unit costs. Graphically, the unit cost curve must pass through its lowest point at the intersection of the marginal cost curve (the operating optimum ).
According to the law of mass production , the proportion of fixed costs decreases with increasing capacity utilization per unit, resulting in economies of scale . If the increase in capacity leads to a reduction in costs, one speaks of economies of scale (static economies of scale). Size degression occurs when the unit costs decrease with growing company sizes until the optimum company size is reached. After that, the costs increase progressively.
Internal company size growth can be achieved through capacity-increasing investments , external through company acquisitions and mergers . The vertical range of manufacture is discussed in concepts such as lean production , lean supply or outsourcing and has an impact on the size of the company.
Effects of company size
The company size allows comparisons with other companies in the same industry and also enables assessments of market shares and market power : if, for example, an industry has a total turnover of 100 million euros and the company size of a market participant is 40 million euros, its market share is 40%. If small companies just keep their company size constant while the competition grows, they become relatively insignificant and potential takeover candidates . In economic theory, some studies go back to a scientific paper by Ronald Coase . This raises the question of which services a company should create itself and which ones it should ask for on the market (vertical integration). This question is referred to in the specialist literature as the “make-or-buy” decision. Outsourcing concepts can also reduce the importance and size of the company and increase the risk of being taken over. Multinational corporations have now reached a size that can result in monopoly-like dimensions with corresponding market power. Due to their financial power, they are able to buy up small businesses and thereby further increase their market share. Their status of size reaches dimensions that, in the event of a corporate crisis, can even bring them close to being a too big to fail candidate for a state rescue.
- ↑ Werner Sombart, Modern Capitalism , Volume III, 1955, p. 539 f.
- ↑ Erich Gutenberg, company size , in: Handwortbuch der Betriebswirtschaft, 1956, Sp. 801
- ^ Walther Busse von Colbe, company size and company size , in: Handbuch der Betriebswirtschaft, 1974, Sp. 567
- ↑ Erich Gutenberg: Fundamentals of Business Administration, Volume 3: The Finances , 1969, p. 15
- ↑ Erich Gutenberg: Fundamentals of Business Administration, Volume 3: The Finances , 1969, p. 98
- ↑ Willi Albers (Ed.): Handwortbuch der Wirtschaftswwissenschaft , Volume 1, 1977, p. 559
- ^ Willi Albers (Ed.): Handwortbuch der Wirtschaftswwissenschaft , Volume 1, 1977, p. 558
- ↑ Jan Schäfer-Kunz / Dietmar Vahs: Introduction to Business Administration , 2007, p. 9
- ↑ European Commission , SMEs and Employment , in: Panorama der EU-Industrie 95-96, Luxemburg 1995, p. 187
- ^ Joe S. Bain, Barriers to new Competition , 1956, p. 53
- ↑ Andreas Hahn, Oligopolistic Market Dominance in European Merger Control , 2003, p. 290
- ^ Ernst Eisendrath, Fixed Assets and Decapitalization of German Industry , 1950, p. 31
- ^ Ernst Eisendrath, Fixed Assets and Decapitalization of German Industry , 1950, p. 32
- ↑ Michael Kutschker / Stefan Schmid, Internationales Management , 2010, p. 435