Abstract

Is it better to be big or small? Are large organizations inherently superior because they possess greater resources to protect the interests of their constituencies against the vagaries of powerful external forces, or are small-scale organizations superior because they are more sensitive to their constituents' needs and more adaptable to changing conditions? That unresolved issue is at the core of a roiling controversy in both the geopolitical and corporate worlds. Efforts to resolve it in government and business present a rare opportunity for mutual learning from experiences in those two quite distinct domains. In the late 18th century, the American Founders advanced a compromise in government that has proved eminently functional and durable: federalism. Now, variations of American federalism are being tested in new confederations of domestic and international businesses, both large and small. Today's federalism seems to work better than previous forms because of the advent of a new style of leadership, which the authors characterize as that of "leaders of leaders."