{"id":13200,"date":"2018-08-10T04:36:15","date_gmt":"2018-08-10T04:36:15","guid":{"rendered":"http:\/\/www.lifeandnews.com\/articles\/?p=13200"},"modified":"2018-08-11T04:40:01","modified_gmt":"2018-08-11T04:40:01","slug":"apples-1-trillion-value-doesnt-mean-its-the-biggest-company","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/apples-1-trillion-value-doesnt-mean-its-the-biggest-company\/","title":{"rendered":"Apple’s $1 trillion value doesn’t mean it’s the ‘biggest’ company"},"content":{"rendered":"

Jerry Davis<\/a>, University of Michigan<\/a><\/em><\/span><\/p>\n

On Aug. 2, Apple became the first U.S. public corporation<\/a> to achieve a US$1 trillion valuation, making it the largest company in the world \u2013 by one measure at least. <\/p>\n

A New York Times article<\/a> proclaimed that this milestone \u201creflects the rise of powerful megacompanies\u201d that control a large and growing share of all corporate profits. It also warned that this phenomenon might be contributing to stagnant wages, a shrinking middle class and rising income inequality, suggesting regulators may need to rein them in or break them up.<\/p>\n

But what exactly defines a \u201cmegacompany\u201d? And what would make it so powerful that it needs dismantling, like \u201cMa Bell<\/a>\u201d back in the 1980s? <\/p>\n

As a scholar of corporations<\/a>, I believe that if we want to understand \u2013 and regulate \u2013 big companies, it\u2019s important to be clear on the very different meanings of \u201cbig.\u201d <\/p>\n

\n \"\"
\n When General Motors was the most valuable U.S. company, it was big in many ways, including having the second-most employees.<\/span>
\n AP Photo<\/span><\/span>
\n <\/figcaption><\/figure>\n

Yesterday\u2019s \u2018big\u2019<\/h2>\n

When Fortune magazine first wanted to create a roster of America\u2019s 500 biggest corporations<\/a> in 1955, revenue was the obvious way to think about size. <\/p>\n

A \u201cmajor corporation\u201d was one that sold a lot of products. With almost $10 billion in annual sales, thanks to its 54 percent share of the U.S. auto market<\/a>, General Motors topped Fortune\u2019s list that year.<\/p>\n

But GM<\/a> was also big in most every other way, including its stock market valuation or \u201cmarket cap\u201d (where it was No. 1), assets (No. 2, after AT&T) and employment (also just behind AT&T at 624,000). Indeed, for much of the post-war era the biggest corporations were big in every way, and market cap was very highly correlated<\/a> with revenues, employment and assets. <\/p>\n

Not anymore. The post-industrial corporation of today is often heavy on market cap but, like Apple, light on employment and hard assets. <\/p>\n