Another question raised by the frenetic activity is whether bigger is necessarily better. In Asia, some countries are moving in the opposite direction. South Korea, for one, is working hard to break up its chaebol, or otherwise contain their powers. Certainly, many of the recent mergers have a defensive quality to them. In the oil industry, companies eye one another nervously, fearing that if they do not find a partner, they might be left holding the bag in a game of musical chairs involving enormous stakes.
Size does confer some advantages, of course.
No doubt a prime motivation in the AOL-Netscape union was to gain the heft necessary to do battle with almighty Microsoft on more advantageous terms. Size cannot boost the price of petroleum, but it can help spread across a broader base the huge costs and risks involved in exploring for oil and natural gas farther and farther from shore, or in inhospitable places such as Central Asia. And cross-border mergers certainly allow some companies to compete better in international markets. But a reduction of costs, one of the most common rationales, may prove an illusion. Yet studies of mergers have shown that such projections often turn out to be mirages.