And a little take home message for start-ups (and companies in general):
The graph reflects the bleak reality of corporate growth, in which efficiencies
of scale are almost always outweighed by the burdens of bureaucracy. “When a
company starts out, it’s all about the new idea,” West says. “And then, if the
company gets lucky, the idea takes off. Everybody is happy and rich. But then
management starts worrying about the bottom line, and so all these people are
hired to keep track of the paper clips. This is the beginning of the end.”
This is not a revolutionary idea. Economists have studied the productivity curves of businesses for decades. "Diminishing marginal returns" is part of most basic microeconomics courses. Here's the page where Mankiw describes it using the enthralling example of "Caroline's Cookie Factory":
Apparently, though, this "discovery" made a real impression on this NY Times writer. I don't like it when people take well-established ideas from another field, dress it up in new lingo and statistics ("corporate productivity, unlike urban productivity, was entirely sublinear") and try to market it as new research.
That was the impression I got from a lot the results claimed by this guy; I think he's wrong to pass off gross oversimplifications as scientific progress. I can see why he gets cited, and it's part of the mistake with correlating citations with influence: they were probably mostly negative mentions. To be honest this behavior is a little trollish. As we can see here, he gets his publicity for it.
Somebody said below "Title should be 'A Physicist Plays Economist'"--yes, indeed.
