It's in the headlines nearly every morning: the urge to merge. Each day heralds a new marriage between colossal companies - creating a merger- and-acquisition frenzy unrivaled in history. This year we've seen a grand total of 10,401 worldwide deals, with a price tag of $1.3 trillion, which raises an interesting question: Is bigger really better?

Conventional wisdom explains these deals in terms of strategy, scale, and globalization - and stops there. We invited 12 influential thinkers and leaders to peel back the merger issue by answering three different questions: Will these megacorporations really work and succeed over time? Who will want to work with them? And will they work for us - what does this new cast of corporations mean for business and society? After you've considered these leaders' answers to the meaning of mergers, ask yourself, Is bigger really better?

Will They Work?

Ralph Nader

Consumer Advocate

Washington, DC

The central challenge for any company, regardless of its size, is to keep doing a better job for its customers. These megadeals have nothing to do with serving customers. So what's driving them? Greed, ego, and a dangerous can-you-top-this complex that I call "little boys looking for bigger toys."

One way to understand what's behind these mergers is to watch the press conferences in which they get announced. The two CEOs always make the case for greater efficiencies, more synergies, heightened productivity - in other words, what's in it for investors. How often do they describe what's in it for customers? When is the last time two giant banks merged and announced that they would reduce extravagant ATM fees? When is the last time two big companies from any industry merged in such a way that consumers said, "Hey, this deal is for me"?

And look at the compensation that CEOs receive as a result of megamergers - severance agreements or stock-option packages worth tens of millions of dollars. Don't tell me that payoffs this huge don't factor into the nonmeritorious calculations behind these deals. Now add the fact that more and more of these transactions are stock-for-stock deals - often with no cash changing hands - and the urge to merge becomes irresistible.

During the 1980s, at the height of the LBO frenzy, at least deal-makers had to turn to the financial markets to raise equity capital or issue debt. That reality imposed certain financial checks and balances. Today companies just issue more shares. CEOs can do megadeals with free money!

There is a soft underbelly to these megacorporations. It's called remoteness from empirical reality, overextension in every way: too much bureaucracy, too much hierarchy, rivalries between formerly independent operations. Just think: How much time will the leaders of these companies spend improving the quality of their products or devising new ways to serve customers? Very little. They'll be too busy wrestling with internal politics and figuring out whom to buy next, or whom to be bought by. And consumers will pay the price.

Ralph Nader has been an activist for grassroots democracy and consumer rights for more than 30 years. His first book, Unsafe at Any Speed inspired breakthrough auto-safety legislation. He has also promoted advances in clean water, occupational safety, antitrust enforcement, and campaign-finance reform.

Karen Stephenson

Professor

John E. Anderson Graduate School of Management, UCLA

Los Angeles, California

It is hard to deny that most big mergers are motivated by short-term financial gain for a small group of people. America is the short-term-thinking capital of the world. Our entire financial structure - with markets driven on a quarterly basis - is geared toward the short-term, and this fact heavily influences our thinking. Because we live in a big country, we tend to focus on an obvious characteristic: size. But smart businesses recognize a more important characteristic: structure. When the hierarchies of behemoths merge, they discover that they buy inefficiency through size - and then try to become more efficient. In contrast, the networks of effective organizations achieve scale through efficient structures.

The effectiveness of networks is apparent in another species of big mergers: companies that merge to create babies. These little offspring can tolerate big risk. They are agile and adaptive. Look at the merger between Shell and Mobil that spawned Aera Energy - an autonomous, creative, and highly profitable amalgamation of the two giants. A big part of Aera's success is a result of the careful extraction of the right DNA from both parents and the creation of a separate, effective network.

Networks succeed by being highly adaptive and agile. They learn to disperse innovation through autonomous subsidiaries. They're constantly stirring things up, moving people around, and cross-training their executives. Behemoths, on the other hand, tend to inbreed. They create separate silos that compete against and eventually cannibalize each other. But this giantism is a short-lived phenomenon. In another five years, we'll be riding the wave of their demergers.

Karen Stephenson (karen.stephenson@anderson.ucla.edu) is also president of NetForm, a company featuring Mercator, software that measures and maps knowledge networks in organizations. She is a contributing member to three international think tanks: Global Business Network, The Agora, and Cultural Survival.