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The dominance of the Big Firm

The shift to remote work presents an unprecedented opportunity to harness global talent and productivity. But despite societal and technological advances that have made forming distributed teams simpler than ever, companies struggle to do so effectively. Why?The answer lies in a fundamental mismatch between the old economy and the rapidly changing model we see before us. It rests in the fading of the traditional firm and in the rise of the “firms-of- one” that will increasingly define the future of work.Nobel Prize-winning economist Ronald Coase laid out the roadmap for this transition in his acclaimed 1937 essay, “The Nature of the Firm.” Coase determined that firms arise when they can arrange to produce what they need internally to avoid the marketplace costs of offering goods or services.That novel concept defied the traditional theory that the efficiency of the market would always make it cheaper to contract out work than to hire for it. And for much of the 20th century, his hypothesis proved correct: the “firm,” primarily in the form of large for-profit companies, became the building block of the old economy.Their existence was necessary because, historically, it has been prohibitively expensive for smaller businesses and individuals in most industries to engage in the global market.