Everywhere one looks in the globalizing economy, companies seem to be rushing pell-mell to join forces with other companies: Exxon with Mobil...BP with Amoco and Atlantic Richfield . . . Chrysler with Daimler-Benz ...Ford with Volvo ...and on and on. Executives apparently believe that bigger is better, that industries inevitably will become more concentrated as the world’s markets become more integrated—and that only the few biggest firms in each industry will survive. "But there’s no evidence" to support that, contend management professors Ghemawat, of Harvard Business School, and Ghadar, of Pennsylvania State University. "It seems there is often a pathology involved."

Business executives have long tended to subscribe to benign versions of Karl Marx’s view that a continually dwindling number of capitalists would eventually monopolize everything, Ghemawat and Ghadar observe. The famous "rule of three," for instance, formulated by management consultant Bruce Henderson in the 1970s, was that a stable competitive market never has more than three significant competitors.

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