The view has prevailed for the better part of the twentieth century

Question

The view has prevailed for the better part of the twentieth century that small firms do not perform an important role in Western economies. Official policies in many countries have favored large units of production because there were strong reasons to believe that large firms were superior to small firms in virtually every aspect of economic performance—productivity, technological progress, and job security and compensation. However, in the 1970s, evidence began to suggest that small firms in some countries were outperforming their larger counterparts. Perhaps the best example of this trend was in the steel industry, where new firms entered the market in the form of "mini-mills," and small-firm employment expanded, while many large companies shut down plants and reduced employment. Although no systematic evidence exists to determine unequivocally whether smaller units of production are as efficient as large firms or are, in fact, more efficient, some researchers have concluded that the accumulated evidence to date indicates that small firms are at least not burdened with an inherent size disadvantage.

Thus, an alternative view has emerged in the economics literature, arguing that small firms make several important contributions to industrial markets. First, small firms are often the source of the kind of innovative activity that leads to technological change. Small firms generate market turbulence that creates additional dimensions of competition, and they also promote international competition through newly created niches. Finally, small firms in recent years have generated the preponderant share of new jobs.

However, empirical knowledge about the relative roles of large and small firms is generally based upon anecdotal evidence and case studies, and such evidence has proved inadequate to answer major questions concerning the role of small firms across various industries and nations. An additional difficulty is that it is not obvious what criteria one should use to distinguish small firms from large ones. While a "small firm" is often defined as an enterprise with fewer than 500 employees, research studies of small firms use a wide variety of definitions.    1  
 1. The passage is primarily concerned with

(A) dismissing a challenge to a traditional viewpoint
(B) suggesting a new solution to a long-standing problem
(C) resolving a conflict between two competing viewpoints
(D) discussing the emergence of an alternative viewpoint
(E) defending an alternative viewpoint against possible counter evidence

2  
 2. The passage suggests which of the following about the empirical study of small firms' role?

(A) Anecdotal evidence does not support the theory that small firms' role is significant.
(B) Degrees of market turbulence are the primary indicator of small firms' role.
(C) An examination of new niches created by small firms has provided important data for the analysis of such firms' role.
(D) Case studies have provided reliable evidence to answer major questions concerning small firms' role.
(E) A more precise definition of the term "small firm" is crucial to making a conclusive analysis about small firms' role.

3  
 3. Which of the following best describes the organization of the first paragraph of the passage?

(A) A viewpoint is introduced, counter evidence is presented, and a new perspective is suggested.
(B) Opposing viewpoints are discussed, and evidence is provided that refutes both of those viewpoints.
(C) A hypothesis is described, supported with specific evidence, and then reaffirmed.
(D) An alternative viewpoint is presented, criticized, and dismissed in light of new evidence.
(E) Opposing viewpoints are presented, discussed, and then found to be more similar than previously supposed.

4  
 4. According to the passage, an important contribution of small firms to industrial markets is that small firms

(A) operate more efficiently than large firms
(B) offer high job security and compensation
(C) cause international competition to decrease
(D) help prevent market turbulence from affecting competition
(E) frequently undertake activities that result in technological change

JOURNAL ARTICLE
Small Business Economics: A Global Perspective
ZOLTAN J. ACS
Challenge
Vol. 35, No. 6 (NOVEMBER/DECEMBER 1992), pp. 38-44

Published by: Taylor & Francis, Ltd.
Stable URL:  https://www.jstor.org/stable/40721390 
Page Count: 7

GMATNinja · Accepted Answer

It’s important to break down the structure of every RC passage and understand each paragraph within it. However, the primary purpose of the passage is  not  the sum of its paragraphs. There’s a difference between adding up the pieces and understanding how each piece fits into a greater story that the author has written. We want to do the latter. To see what I mean, let’s break down this passage in terms of what the author is doing:

In P1, The author describes the prevailing view of small firms in the 20th century, then explains when and how this view has been challenged. 
 In P2, The author describes an alternative view of small firms that has emerged in economics literature. 
 In P3, The author adds a caveat to accepting the alternative view, because of a lack of adequate empirical definitions and evidence about the relative roles of large and small firms.

The author wrote this passage in order to present and consider an emerging alternative to the prevailing wisdom about the importance of small firms in Western economies. The passage is structured to introduce the alternative view, explain how it’s challenged the prevailing view, describe what the alternative view argues, and remind us to be careful about rushing to embrace this argument. The structure of the passage isn’t strongly pushing us one direction or the other; rather, it is set up to examine all sides of the issue. We never see strong language endorsing the alternative view or rejecting it. Overall, the passage is a dispassionate description.

Now that we’ve got a clear-eyed view of the structure and purpose, let’s start eliminating choices:

The author is  not here to dismiss  the alternative view. The difficulties raised in P3 help us think critically about this view and the ongoing conversation about small vs. large firms. Thinking critically about a view is not the same as rejecting or dismissing it. If the author’s concern were dismissal, then P3 would use stronger, more explicit language to declare that the lack of empirical evidence makes the challenging view illegitimate. We’d also see different language in P1 and P2 to build up to this kind of conclusion. Because we don’t see the author using argumentative structure or language to construct the passage, we’ll eliminate (A) and move on.

This choice runs in the opposite direction of (A), and is wrong for the same reason: The author is not here to take sides. Because the author isn’t primarily concerned with suggesting the alternative view as a  solution , let’s eliminate (B).

This choice tries to hit the middle ground, but does the author ever  resolve  the conflict? No. The furthest that the author goes is to point out that both the prevailing view and the challenging view have flaws with regards to the evidence that they use. This is a great starting point for someone else to resolve the conflict, but because this never happens in the passage itself, let’s eliminate (C).

This choice is precisely tailored to the passage’s structure and purpose. At the end of the day, this passage takes the form of a discussion, presentation, or consideration — not an endorsement, defense, rejection, or attack. Let’s keep (D) and finish our process of elimination.

Just as we eliminated (A) and (B), we’ll eliminate (E) because the author is not here to  defend  anything.

(D) is the best answer choice.

I hope this helps!

JarvisR · Answer

Time taken 8 mins
1. The passage is primarily concerned with
D discussing the emergence of an alternative viewpoint
"Author is neutral in the argument.First a traditional view point is presented and then and then counterview evidences are presented.The discussion is continued in the second para by mentioning the pros of small firms.In last para, the author mentions why the the new evidences are inadequate to answer major questions concerning the role of small firms."
So overal Para is discussing the counter evidences.

2. The passage suggests which of the following about the empirical study of small firms' role?
E. A more precise definition of the term "small firm" is crucial to making a conclusive analysis about small firms' role.
"An additional difficulty is that it is not obvious what criteria one should use to distinguish small firms from large ones. While a "small firm" is often defined as an enterprise with fewer than 500 employees, research studies of small firms use a wide variety of definitions."

3. Which of the following best describes the organization of the first paragraph of the passage?
A. A viewpoint is introduced, counter evidence is presented, and a new perspective is suggested.
"The view has prevailed for the better.... 
blah blah
However, in the 1970s, evidence began to suggest that small firms in some countries were outperforming their larger counterparts.
blah blah
Although no systematic evidence exists to determine unequivocally whether smaller units of production are as efficient as large firms or are, in fact, more efficient, some researchers have concluded that the accumulated evidence to date indicates that small firms are at least not burdened with an inherent size disadvantage.
"

4. According to the passage, an important contribution of small firms to industrial markets is that small firms
E. frequently undertake activities that result in technological change
"small firms are often the source of the kind of innovative activity that leads to technological change"

AdityaHongunti · Answer

GMATNinja   chetan2u   TommyWallach   egmat   DmitryFarber   mikemcgarry 
please explain q1. The primary purpose has to be the summary of summaries of the paras, ie. we have to consider all the viewpoints (+-) and then summarise it in 1 line. I was stuck between options A and D. Though I answered D out of guess between the two I want to know where my though process lacks. Option A is more well defined and takes all the viewpoints into account and then summarises it and option D is more like a title of the passage. Para structure is - 1. belief...counter evidence.. 2. support to counter evidence. 3.refute to the study suggesting study is not relevant. Then how is it not A?

Anyone with an explanation is welcome.

rocky620 · Answer

Dear Experts,
Kindly help with Q-2.
There is a confusion between Option A & E, as Both are mentioned in the passage.

Supporting Option A:   However, empirical knowledge about the relative roles of large and small firms is generally based upon  anecdotal evidence  and case studies, and such evidence  has proved inadequate to answer major questions concerning the role of small firms across various industries and nations.

Supporting Option E:   An additional difficulty is that it is not obvious what criteria one should use to distinguish small firms from large ones.

GMATNinja · Answer

While the portion of the passage that you quoted as it relates to (A) does suggest anecdotal evidence has been  inadequate  to answer major questions about the  role of small firms , the passage does NOT suggest that anecdotal evidence supports the idea that small firms are  insignificant .

In other words, the passage tells us that anecdotal evidence doesn’t answer some major questions, but it doesn’t tell us what questions those are. And it certainly doesn’t tell us that anecdotal evidence suggests small firms are not significant. For that reason, (A) is not supported by the passage, and we can eliminate it.

I hope that helps!

vic231 · Answer

GMATNinja  Why is C not the answer for Question 2?

GMATNinja · Answer

The passage does tell us that small firms "promote international competition through newly created niches". But it does NOT tell us that an  examination  of those niches has  provided important data  for the analysis of small firms' role.

In other words, all we know about the niches is that they exist and that they promote international competition, but there's no  data  related to those statements. And there's certainly no mention of data that came from an  examination  of those niches, so (C) can be eliminated.

Choice (E), on the other hand, is directly supported by the last paragraph, so it's a much better answer.

I hope that helps!

agrasan · Answer

Hi  GMATNinja

I read your explanation for question-1 but I still don't get comfortable with option-D. I agree that other four options don't seem right but the passage doesn't just talk about the alternative viewpoint  (small firms have an important role) , it seems like the passage does more than that like traditional viewpoint and limitations of both. How can we just say that primary purpose is  just to discuss the emergence of alternative viewpoint ?

Is it the case that option D is not a perfect choice but best amongst the all?

Please help me with this.

GMATNinja · Answer

Question 1 
 
All of that other stuff can be considered the context of the new, alternative viewpoint. Yes, the traditional view is discussed, but only to compare and contrast it with the alternative viewpoint. And discussing the pros and cons of the new viewpoint would, of course, fall under the umbrella of a "discussion" of the new viewpoint.

In other words, the goal isn't just to tell us that the new viewpoint EXISTS. Instead, it's to discuss the new viewpoint. That includes a comparing it to the traditional viewpoint, examining its strengths and weaknesses, and so on.

For example, even though the traditional view is explained in the first paragraph, the author's goal isn't simply to teach about the traditional view in a bubble. The author only brings up the traditional view to help explain the new view. It's not just a question of WHAT is discussed in the passage. Instead, this question is about WHY everything is there.

The view has prevailed for the better part of the twentieth century

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The view has prevailed for the better part of the twentieth century

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