As the size of the organization increases, there will be a
lesser inclination towards the risk-taking ability of the
organization in different dimensions of the business. The bigger
the company becomes, the more risk averse it gets. This is
irrespective of the fact that whether the company was innovative in
its initial phase or not. The main reasons are as below:-
- With the increase in the size, the ownership of the company
shifts from venture capitalist to the private equity firms and
these private equity firms are more conventional in their approach
and they focus more of EBITDA for long-term sales and market share
rather than the revenue. Thus they focus more on increasing market
share rather than risk taking innovations
- There will be a change in leadership when the size of the
organization increases, The CEO of the companies can keep on
changing with the size.
- Change in human resources is also one of the leading factors as
the founding employees can be seen as a type A personalities where
entrepreneurship and risk-taking are inherent but when the size of
the organization increase, more employees are induced and thus the
out of the box thinking and innovations are curved out slowly with
the increase in team size
- Most of the big organization operates with consensus and they
try to follow the middle path.