Size matters - smaller is better

For operational units at least.
In Robert Graves's book Count Belisarius, he wrote that when they told Belisarius that an army of 100,000 troops was mustering against him, he calmly said: "Very few generals can manage an army of a hundred thousand."
And when they said: "It's now 150,000", he'd say: "Even fewer generals can manage an army of 150,000."
Exactly.
But the army, bad though it may be at the provision of enough body armour or clean married quarters, does know how to divide itself into manageable bits. Even a battalion is usually only about 600. A major commands a company that isn't more than 200, and he is expected to know all their names; and a captain or a lieutenant deals with a platoon of just 40 to 50 people. It has learned that this is what works.

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In the early 1980s Albert Kushlik, a charismatic doctor in Southampton, realised that when badly disabled children were sent out to such vast asylums in the country, their families found it hard to visit, and dispirited mothers gave up bringing their children new clothes because the communal laundry reduced them all to grey rags. He figured that in a town the size of Southampton - about 200,000 people - there were only about 40 such children; so he started two houses, one in the north of the town, one in the south, for about 20 children each.

These were feasibly near their families, who could identify with the place, visit their kids often, give clothes to their own children that could be washed in a domestic washing machine and go on looking like real clothes. Parents could get to know the staff well and help out overnight if a professional went sick.

There's a number of things in the article I've seen first hand in some of the companies I have worked.  As a company grows in size it becomes much harder to manage, efficiency gets lost exponentially, not least because you have room for more people free-wheeling along instead of helping drive the company.  You become a number, a cog in the machine, rather than a person and it allows people to adopt an us and them mentality.

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