Big Corporations Influence on the Development of Local Businesses in Small Towns

Establishment of large corporations in small towns impacts the local industries and companies significantly, either negatively or positively. Large corporations’ influence on the local economy depends on the cost-benefit analysis for the small-town economy (Vachon, 2016). The impacts range from effects on the communities, local businesses, municipal rules, regulations, and laws, and local resources.

Big enterprises create job opportunities for local communities, but they also adversely impact local businesses’ human capital. Experienced employees chose to join these institutions due to higher rewards and benefits compared with small businesses. This paradigm shift slows the growth and causes operational strains for local firms (Vachon, 2016). Hence, large corporations diminish human capital, which is fundamental to local companies’ growth and sustainability.

Big corporations are also associated with changes in municipality regulations, laws, and rules. Notably, local authorities impose regulatory restrictions on local and foreign institutions to ensure that residents benefit from business activities (Vachon, 2016). Enforcement of the corresponding laws and regulations, such as tax laws, may negatively impact the local businesses.

Multi-national or large enterprises have the capacity for high production, distribution, or retail. As a result, their need for a high volume of materials can subject the local resources to pressure. Similarly, their ability to cover the local market in a short period increases competition (Vachon, 2016). The high capacity of production implies a significantly increased volume of waste. Poor management or disposal of the waste may necessitate the enactment of environmental regulations, which, in some circumstances, affects the productivity of the local entities.

In conclusion, big corporations, in most cases, impact the local businesses negatively. Big corporations in small-town affect crucial elements for running businesses, such as human capital, resources, and business laws and regulations. While large entities may positively influence job creation, they create pressure on the fundamental elements required for running local enterprises.

References

Vachon, C. (2016). Big fish, small sea: Big companies in small towns. SSRN Electronic Journal. doi: 10.2139/ssrn.2824436.