"Problems of Scale": The Case for IIASA Research

Cantley, M.F. & Glagolev, V.N. (1978). "Problems of Scale": The Case for IIASA Research. IIASA Research Memorandum. IIASA, Laxenburg, Austria: RM-78-047

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Abstract

This paper considers the general problem of how the "scale" or "size" of an entity is or should be determined, for entities ranging from individual units of plant to large organizations and industrial complexes. Several "levels" of scale are defined. The factors bearing on scale decisions are identified.

A number of techniques are reviewed, along with their relationship to socio-economic environment. In the socialist economies, the national and sectoral plans provide the framework for an analytical solution by mathematical programming, including non-linear production cost functions to represent economies of scale. In the market economies, the uncertainties of competition create a less stable environment; in which the scale decision has competitive significance. The relationship of large-scale projects of overall strategic planning is emphasized.

Following the review of techniques and methodology, the contribution of eight distinct disciplines to the subject is described. Section 5 considers research issues, discussing the problem of generalizing the measurement of scale, and emphasizing the changing nature of environments. Reference is made to the expanding East-West trade, and the growth of large-scale, long-term agreements. Within the Western economies, the pursuit of scale economies and of dominant market share may be leading to changes in the causal texture of operating environments.

In the final section, possible case material for future research is considered. The case of coal-fired electricity generating stations is reviewed. A description of the interaction between the growth of scale and of "relevant contexts", through diffusion and the reduction of barriers, leads towards consideration of possible implications in the field of trade planning and industrial development models. Other research problems in the field of industrial rationalization and restructuring are suggested.

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