How does a business's size impact its stakeholders?

A business's size can significantly impact its stakeholders in terms of influence, risk, returns, and communication.

The size of a business can have a profound effect on its stakeholders, which include employees, customers, suppliers, investors, and the local community. One of the most apparent impacts is the level of influence stakeholders can exert. In smaller businesses, stakeholders often have a more direct and significant influence on business decisions. For example, a key supplier might have a substantial say in a small business's operations, while in a larger corporation, the influence of individual suppliers is typically diluted.

Risk and returns are other areas where business size matters. Larger businesses often present lower risk to stakeholders due to their established market presence and diversified operations. However, the potential returns, especially for investors and employees, might be higher in smaller businesses. This is because smaller firms often have more growth potential, which could lead to higher stock returns for investors and career advancement opportunities for employees.

Communication is another aspect that is impacted by the size of the business. In smaller businesses, communication between the business and its stakeholders is often more direct and personal. This can lead to stronger relationships and higher stakeholder satisfaction. On the other hand, in larger businesses, communication can be more formal and structured, which might be less personal but more consistent.

Lastly, the impact on the local community can also vary with business size. Larger businesses can contribute more to the local economy in terms of employment and tax revenues. However, they might also have a more significant environmental footprint and can lead to issues such as traffic congestion and noise pollution. Smaller businesses, on the other hand, might have a lesser economic impact but can contribute to the community in other ways, such as by preserving local culture and providing personalised services.