FRtR > Outlines > American Economy (1991) > From Small Business to the Corporation: The American Free Enterprise System > Large corporations

An Outline of the American Economy (1991)


4/12 From Small Business to the Corporation: The American Free Enterprise System


6/12 Large corporations

*** Index * < Previous * Next > ***

Although there are many small- and medium-size corporations, bigger business units are needed to perform certain services in the vast American economy. Large corporations can supply goods and services to a greater number of people across a wider geographic area than small businesses. They serve consumers across the nation and across the world. Corporate products tend to cost less because of the large volume and small overhead costs per unit sold. Moreover, consumers benefit from the availability of corporate "brand names," which they recognize as guaranteeing a certain level of quality wherever purchased.

Large corporations also have the financial strength to research, develop and produce new goods. Their scientific know-how, innovation and technical capability are critical to maintaining the nation's competitiveness and productivity.

In the United States, a corporation is a specific legal form of organization of persons and resources chartered by one of the 50 states for the purpose of conducting business. When people and resources are brought together to form a corporation, the result -- in the eyes of the law -- is a person. (indeed, the Latin word corpus means "body" or "person.") A U.S. corporation, distinct from any individual human being, may own property, sue or be sued in court and make contracts. For this reason, a corporation is an ideal vehicle for the conduct of business by many smaller enterprises as well as larger ones.

Some 500 major corporations occupy an important role in American business, although in some respects it has been a declining one. From 1978 to 1990, the profits of these 500 firms taken together have risen from $61.5 thousand-million to $93.3 thousand-million and assets have risen from $898.5 thousand-million to $2,298.6 thousand-million. In 1990 some 12.4 million people were employed by these firms, 1 million fewer than in 1986.

*** Index * < Previous * Next > ***