As a system or an organization performs more and more of the same type of work, it will tend to acquire efficiencies over time, but it might also acquire inefficiencies – like bureaucracy. When scale turns into an advantage, it’s due to positive feedback loops.

It’s safe to conclude that scale advantages can create extremely durable economic moats, but it’s also important to recognize that economies of scale don’t necessarily create moats. As other car producers closed the gap with Ford’s level of productivity, Ford’s scale advantage disappeared.

Sources/Further Reading