The greater a company’s revenue, the less it spends on legal expenses in proportion to that revenue. Despite having amassed 15 possible explanations for that pattern, another one came recently to my attention (See my post of Aug. 21, 2008: client satisfaction or what leads to it, invention activity within the company, pay of in-house counsel, and the ethical stance of companies; and Dec. 3, 2007: 11 more reasons for economies of scale.). The source was Amar Bhidé, The Venturesome Economy: how innovation sustains prosperity in a more connected world (Princeton Univ. 2008) at 16.

The larger the department, the more its managers are likely to learn about an innovative management method; more importantly, the more they will have opportunities to match that new idea to some need. They have more needs, in the first place, than a smaller and simpler department. They can also stick with the innovation longer to rub off the rough edges. The larger department can absorb more trial and error and it has more talents and skills that can extract value from the new idea. In other words, more opportunities and more resources are at hand so the department is more likely than smaller departments – at smaller companies – to take advantage of the novelty and improve the benchmark metric.

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