Business Concentration around the World: 1900-2020

March 2026 marks the 250th anniversary of The Wealth of Nations. In that foundational text for modern economics, Adam Smith described a decentralized economy of small producers. Over the next two and a half centuries, however, the emergence of large firms began to shatter this blueprint of “atomistic” capitalism. Once upon a time, this shift motivated many observers to discuss and debate the span of control of the visible hand and the “centralization of capitals” (Marx, 1867; Marshall, 1890; Hayek, 1945; Galbraith, 1967; Chandler, 1977; Lucas, 1978). This evolution also inspired influential research on corporate governance (Berle and Means, 1932), which used high production concentration to emphasize that the separation of ownership and control in large corporations is consequential for society.

In the past few years, the rising dominance of large firms has returned to the forefront of economic and legal discourse. Recent discussions have had a particular focus on changes in the United States since around 1980, perhaps due to both greater data availability for this setting and our impression that this period has been rather eventful. An influential finding, based on the widely-used U.S. census dataset with comprehensive coverage over this period, shows that the largest firms account for an increasing share of output in many industries (Autor et al., 2020; Covarrubias, Gutiérrez, and Philippon, 2020). This rise of concentration is often viewed as an unusual development, and many studies have asked whether it results from shifts in technologies, trade, policies, or demographics.

In our new paper, “Business Concentration around the World: 1900–2020,” we assemble a new dataset to examine the rise of large firms through a wide lens, across both time and space. We uncover two sets of facts, which hold broadly over the past century among market-based advanced economies with available data. The foundation for these analyses is official statistics on the firm size distribution with long-run economy-wide coverage, which we have been able to find for ten countries across Asia, Europe, North America, and Oceania, in addition to the United States in our prior work (Kwon, Ma, and Zimmermann, 2024). We focus on market-based economies to study the “organic” evolution of the organization of production (in environments that approximate “Smithian” capitalism), which is not heavily influenced by government interventions. They are also the primary countries where we can find high quality long-run data.

Fact 1: A Century of Rising Concentration in Output and Capital

Around the world, we observe pervasive long-run increases in the concentration of sales, net income, and equity capital over the past century. For top shares by sales (covering Germany, Austria, France, Switzerland, Denmark, and the U.S.), the top 1% of firms typically accounted for around 50% of economy-wide sales in the 1950s; by the 2010s, this figure had risen to approximately 80%. The patterns are remarkably similar across the U.S. and other countries. For top shares by net income (covering Australia, Canada, Singapore, and the U.S.), the top 1% share started from around 50% in the 1940s, climbed to around 60% by the 1980s, and reached approximately 80% by 2000. For top shares by equity capital (covering Germany, Denmark, and Switzerland), the top 1% started at around 40% in the early 1900s and increased to over 70% in recent decades. These trends are similar for the economy-wide top 500 share, or the top N share where N in a given country and year is selected as 100 per one million population.

These trends hold not only in the aggregate but also at the industry level. In manufacturing, the rise of large firms was stronger in the early 20th century in countries that industrialized earlier, such as the U.S., the U.K., and Germany. In South Korea, where industrialization took place later, the rise of large manufacturers has been considerable in recent decades, as shown by data kindly shared by Choi et al. (2025). In services and retail/wholesale trade, the rise of large firms is notable later on, including in countries like the U.S., Germany, and Switzerland.

Fact 2: Stability of Employment Concentration

Interestingly, while sales, net income, and equity capital have become increasingly concentrated, employment concentration has remained relatively stable over the long run. For the economy as a whole, the largest 1% of firms by employees account for roughly 50% of total employment throughout the 20th century, and this stability holds across countries with available data. At the industry-level, we find similar patterns for manufacturing. However, retail/wholesale trade presents an exception, where employment concentration has risen almost as much as sales concentration.

Why does concentration of employment diverge from concentration of sales, net income, and capital? With standard production functions where capital and labor are complements, concentration of sales, capital, and employment should move in the same direction. When firms expand in output, they would increase the use of all inputs. One possibility for the divergence is that large firms expand using capital through automation, rather than using labor. For example, the decline in the relative price of capital over time (correspondingly rising capital productivity) can stimulate more automation, especially among large firms as they are more inclined to pay the automation cost (Hubmer and Restrepo, 2025).

If this force of increasing automation is sufficiently strong—which could be the case in manufacturing—then large firms expand more with capital rather than labor. If the scope for additional automation is limited—which could be the case in retail/wholesale trade so far—then standard complementarity between capital and labor implies that sales and employment concentration both increase (e.g., top firms benefit more from the decline in capital price, and complementarity between capital and labor means that they become larger in sales, capital, and labor). We illustrate these forces in a simple model, and provide corroborating evidence (from U.S. Bureau of Economic Analysis data since the 1940s) that the capital to labor ratio has increased much more in manufacturing than in trade, which aligns with the predictions of the model mechanisms.

Implications for Economic and Legal Discussions

The data show that the rise of business concentration is a widespread trend, rather than a temporary occurrence due to shifts in regulation. The pervasive long-run facts suggest that broad-based economic forces are important to consider, in addition to policies and events that influence outcomes in specific settings.

Meanwhile, our results do not argue against the relevance of antitrust policies. The objective of antitrust is to tackle anti-competitive behavior, not to regulate firm size per se. Monopolies are not always large, and large firms are not always monopolies (e.g., a not so large rental company holds almost monopoly in the Hyde Park neighborhood near the University of Chicago, and probably holds more market power than most Starbucks or Walmart stores). A long line of research highlights that size and concentration are not necessarily reliable barometers of market power, and the economy-wide business concentration is perhaps not the most useful metric to assess the impact or usefulness of antitrust.

Yet economy-wide business concentration trends are important for many other issues. First, as discussed above, trends in top firms’ shares by sales, capital, and employment—simple statistics that can be estimated reliably over the long run—shed light on changes in the production function. Second, as the firm size distribution becomes more skewed, large firms play a greater role in shaping aggregate outcomes. Third, the governance of large companies is consequential when they account for a substantial share of production and output. It was for this reason that the famous work on corporate governance by Berle and Means (1932) conducted some of the earliest quantitative measurement of business concentration in the United States. Finally, the existence of large business organizations raises interesting questions about the power and limitations of centralization and planning, which may eventually help us understand mechanisms that shape the evolution of our economic and social structures.

Today, the largest 1,000 American companies by revenue account for roughly one half of total revenues of U.S. companies. This reality is very different from the world of small butchers, bakers, and brewers in The Wealth of Nations. Interestingly, Adam Smith dismissed the relevance of large companies because in his view they would be impossible to govern, as he famously remarked that “negligence and profusion therefore, must always prevail” given managerial agency problems. But these large companies have survived, and they have prevailed, perhaps partly with advancement in corporate governance and corporate law. Now their prominence raises additional questions about governance, perhaps at a larger societal scale, about whether such high levels of “centralization of capitals” present new challenges for maintaining balance and prosperity.

References

Autor, David H., David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen. 2020. “The Fall of the Labor Share and the Rise of Superstar Firms.” Quarterly Journal of Economics 135 (2): 645–709.

Berle, Adolf A., and Gardiner C. Means. 1932. The Modern Corporation and Private Property. New York: Macmillan.

Chandler, Alfred D., Jr. 1977. The Visible Hand: The Managerial Revolution in American Business. Cambridge, MA: Harvard University Press.

Choi, Jaedo, Andrei A. Levchenko, Dimitrije Ruzic, and Younghun Shim. 2025. “Superstars or Supervillains? Large Firms in the South Korean Growth Miracle.” Manuscript, February 2025.

Covarrubias, Matías, Germán Gutiérrez, and Thomas Philippon. 2020. “From Good to Bad Concentration? U.S. Industries over the Past 30 Years.” NBER Macroeconomics Annual 34 (1): 1–46.

Hayek, F. A. 1945. “The Use of Knowledge in Society.” American Economic Review 35, no. 4: 519–30.

Hubmer, Joachim, and Pascual Restrepo. 2025. “Not a Typical Firm: The Joint Dynamics of Firms, Labor Shares, and Capital-Labor Substitution.” American Economic Journal: Macroeconomics (Forthcoming).

Kwon, Spencer Y., Yueran Ma, and Kaspar Zimmermann. 2024. “100 Years of Rising Corporate Concentration.” American Economic Review 114 (7): 2111–2140.

Lucas, Robert E., Jr. 1978. “On the Size Distribution of Business Firms.” Bell Journal of Economics 9 (2): 508–523.

Ma, Yueran, Mengdi Zhang, and Kaspar Zimmermann. 2026. “Business Concentration around the World: 1900–2020.” NBER Working Paper No. 34711. National Bureau of Economic Research.

Marshall, Alfred. 1890. Principles of Economics. London: Macmillan.

Marx, Karl. 1867. Capital: A Critique of Political Economy, Vol. 1. Hamburg: Otto Meissner.

Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: W. Strahan and T. Cadell.