Business  •  November 30, 2003

In Defense of Big Businesses

Living in the East Village, New York, I often come across people who have vendettas against big businesses, their most notable targets being Starbucks, K-Mart, and GAP. Many socialist types seem to be allergic to any businesses that are big. Big for them automatically means evil. They complain about big businesses wiping out small local businesses. They not only boycott big businesses, but also persuade others to do so by affixing stickers and flyers everywhere. In over 15 years of living here and listening to their arguments, none of them had any logic that convinced me the value of their arguments.

I am not saying that big businesses are good. Some big businesses are evil and some are good, just like many small businesses are. It is misguided and misleading to form an argument based on the size of business, just as it is so to form an argument of value based on race, age, or sex when these factors have no basis other than what their stereotypes allege. Even a good argument can be tainted if you frame it inappropriately.

I happen to hate many small businesses. I used to dread shopping for electronics in New York. Before Circuit City and Best Buy opened their stores in Manhattan, I often had to go to small electronics stores which were mainly set up to rip off tourists. During my first few years of living here, I have been a victim of their scams.

When I moved here from Japan in 1987, I spoke very little English and I had no idea what stores had what reputations. Before departure, my sister had given me a few hundred dollars of extra spending money. Since I had no friends or relatives here, I figured a Walkman could be my friend for a few months. I went to a small store where they had the model I wanted in the window. I told the store clerk which one I wanted. He picked up a phone and used it like an intercom, and said, “Hey, Joe, bring me a SONY WM-F100.” He told me that it is coming up, and asked me to settle the payment. I signed and gave him the traveler’s check my sister gave me. As another man nonchalantly walked behind him, he brought up a box of Walkman from under the counter, and said, “Thanks, Joe.” I could tell that “Joe” did not bring it up. The box had obviously been there the whole time. He showed me the box and I noticed that it was missing all the peripherals that it supposed to come with it, such as a rechargeable battery, a charger, a headset, and a carrying case. When I asked for them, he replied, “Oh, you mean you want the whole kit. That’s a hundred dollars more.” When I asked for my money back, he refused. With my broken English, it was impossible for me to argue. I ended up spending about 300 dollars in the end, roughly about double what it should have cost.

Back then, other than McDonalds, New York had very few big businesses, so I suffered many similar incidents with small businesses. If you live here long enough, you would be able to avoid rogue businesses, but for those who are new to the city, big businesses are safer in general. Even though I am no longer a newcomer, I am still very thankful that we now have Circuit City and Best Buy where I do not need to worry about getting ripped off blatantly.

In the 90s, Starbucks invited the greatest resentment from the residents. They grew rapidly by opening stores everywhere. It certainly had a sense of invasion. Any major change without consent is likely to cause some resistance whether it is positive or negative. That is, it is not the change per se as much as the lack of consent that offends people. The effort to fight the spread of Starbucks thus found a tinge of support in everyone, but this is where your emotion must be checked against your reason. Just because your immediate reaction is negative, you should not act on it without thinking about it carefully. A programmed response can be dangerous.

Again, I am not saying that Starbucks is free of evil. I am sure there are negative aspects to their rapid success, but we cannot dismiss the positive aspects either. First of all, the claim that Starbucks drove small coffee shops out of business is unfounded. It is in fact quite the opposite. At least in New York, Starbucks single-handedly started the gourmet coffee boom. If it were not for them, the small gourmet coffee shops that now exist everywhere would not have found enough customers. Before Starbucks, the average coffee in New York by today’s standard was nothing short of disgusting. Many airlines were forced to raise the quality of coffee served aboard because of Starbucks.

Many New Yorkers have now developed such a discriminating taste for coffee that they outgrew Starbucks, and are hunting for even better coffee, which created market demand for small gourmet coffee shops that serve higher quality coffee. This would not have happened without Starbucks. Many of these small businesses should be thanking Starbucks, not criticizing them.

In terms of serving local communities, Starbucks does well by offering benefit packages to their employees that are unheard of for a food franchise, or for any jobs with equivalent skill levels. Their coffee might be expensive, but not all the money goes to shareholders and executives.

After I pointed out these positive contributions of Starbucks, one of my friends remarked, “The point is that they could be doing more.” They certainly could be, but they are already doing better than many small businesses in terms of their share of contribution to our communities. Furthermore, the criticism is hypocritical coming from someone whose only contribution is negating negative things, and whose share of positive contribution is clearly less than that of Starbucks. If these critics want to see Starbucks do more, perhaps they should do more themselves by applying the same energy they use for criticizing Starbucks.

Once again, I need to remind the readers that I am not saying that Starbucks does nothing but good. Depending on the perspective, I am sure some of their business practices are evil, but to be fair, and to get back to my main point, one should apply the same criticism to small businesses as well. If one does, one realizes that size is quite irrelevant in this.

Size of business is not independent of nature of business. Certain types of business call for big operations, while other types call for small operations. You cannot take any business and make it big. Graphic design business, for instance, cannot be a publicly traded multi-national corporation. Even if you tried, because of the highly subjective nature of graphic design, it would not be effective. An auto manufacturing business cannot stay small unless it can find buyers who are willing to spend a fortune on each car. If all businesses stayed small, there would be so much inefficiency that our cost of living would skyrocket. Certain parity products such as underwear, paper towel, common vegetables, office supplies, and light bulbs, should be handled by big corporations in order to increase efficiencies and to lower the price. This does not mean that small businesses cannot manufacture underwear and light bulbs; it just means that they cannot manufacture generic ones and expect to compete with big corporations. If a small business goes out of business because it sells the same exact products that K-Mart sells, we should not blame K-Mart for it. That is what business is about; you offer something compelling, something with market demand, or you go out of business. Again, size is irrelevant in this.

Sometimes the opposite happens where small businesses drive the big businesses out of business. Film and video editing used to require relatively large operations. Your business had to be large enough to afford expensive equipment required to accomplish the task. Now, with the advent of computer-based non-linear editing system, many independent editors with their own computers are driving big editing facilities out of business. The same goes for music studios and printing facilities. To adjust to the times, many businesses change their strategies, products, services, and modes of operations. Ones that fail to adapt to change will die. No one is safe from this.

Small businesses have their own niches they fulfill. The big businesses have their own as well. The idea is to choose the appropriate size for what you are trying to accomplish. To criticize a business for being big is just as prejudiced as calling someone cheap just because he is Jewish. Size should not be a criterion for a business deemed evil. When a business is big whatever it does have a bigger impact. When it does something evil, it causes a big impact, but when it does something good, it causes a big impact as well. To be fair, their deeds should be viewed proportionately. If any company, big or small, does more good than evil, that is more than what most other businesses can say about themselves.

Also, good and evil are subjective. It is impossible to do something that absolutely everyone agrees to be good. Even Mother Teresa was deemed evil by many people. No matter how hard you try to do good, someone somewhere would criticize you for doing something evil. You can only do what you believe to be good. In this sense, your energy would be better spent by doing what you believe to be good than by criticizing deeds of others you believe to be evil. If everyone did nothing but to negate the negative deeds of others, we would be left with nothing to criticize, for no one would actually be doing anything. Even if it ends up being deemed evil, it is better to have tried than to have never tried at all. Don’t fool yourself: negating negative does not make you positive.

You might tell me that big businesses do not need me to defend them, but ultimately this is also to help legitimize the arguments of the critics. Even a legitimate argument can be harmful if it is framed inappropriately. In order for any criticism to be constructive, it must be fair. A criticism that lacks a sense of fairness is called a whine, and it is not particularly effective.