ABSTRACT
This paper 1 is concerned with the interrelationship between two of the most significant developments in European industrial organization in the 1980s. The first of these was the emergence on a large scale of cross-border merger activity. The second was the apparent resurgence in the numbers of small- and medium-sized enterprises in the European Community. Both of these developments have been the subject of detailed study, especially in the context of completion of the internal market. The implications of the former for the latter have, however, not been the subject of systematic analysis. It is true that students of merger activity have been concerned with its impact upon industrial concentration and economies of scale. This has implications for the changing role of small business, but only as a by-product of the analysis of mergers between the giants. Discussion of merger policy has also focused on its role in regulating the strategic behaviour of giant firms and multinational corporations (Neven et al. 1993). Discussion has become focused on the merits and demerits of large firms as such, rather than upon the optimal structure of industry as a whole, and upon the patterns of interrelationships between large and small firms as customers and suppliers as much as competitors.
