small firms do not perform an important role

[abcgmat]

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.

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 counterevidence

The passage first says
commonly held view point:small firms don't play a significal role
But we now have evidence that they outperform, atleasat are not burdened by small size

2nd para: This new view emerged and important contribution made by Small firms are described
Auhtors Opinion: Because the relative role of Small firms is from case studies, it inadequate
and we donot have obious criteria to define Small firms


(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 counterevidence

[spoiler]OA:D[/spoiler]
A - we are not dismissing the challenge but we are supporting the challenge to traditional view
B - No solution is suggestion
C - Two viewpoints are not resolved
D, E is confusing
E- very confusing to make out what it means in first read
The passage seems to be defending small firms against the traditional viewpoint though it is not authors presonal view.

Also Authors opinion is about only about two things
1. since the evidence is from case studies , it not adequate to tell the role of small firms
2. We dont have a obvious criteria to defined a small firms.

The view about the importance of small firms is from researchers and not authors

D- the passage is not so much about how it emerged or when it emerged or why it emerged.


Can you help me understand why E is wrong and how D is correct

[Birottam Dutta]

Please try and understand that it may be an alternate view point but there is no counter evidence whatsoever against this view point. The only thing suggested is that whatever is being said in favor of this alternate view point is only through case studies and observation and may not be concrete enough to make solid conclusions. But no counter evidence is provided to show that small firms are worse off than large firms.

D on the other hand says that the passage is discussing the emergence of an alternate view point. This is correct because from the tone of the author "However, in the 1970s, evidence began to suggest that small firms in some countries were outperforming their larger counterparts", it is clear that author is considering the time frame in a way which makes 1970 the near part and not the distant past. So, discussing the emergence of an alternative viewpoint is correct.

Hope this is good explanation for you.

[abcgmat]

Though I agree with you that 1970 is mentioned as the time when the alternate view point emerged. I am not very convinced if that alone defines the main point of the passage.

1. Also the alternative view point is mentioned at the end of first paragraph and at the beginning of second paragraph.
2. We also have author's opinion about the case studies at the end of passage
(i think if author has a opinion, then it must be covered in main purpose of the passage)
Can someone explain how D covers all these points

I am convinced with your explanation that author is not
defending the alternate view so 'defending alternative view' cannot be the main point.
Therefore E cannot be the answer