Edit: This question attracted way more interest than I hoped for! I will need some time to go through the comments in the next days, thanks for your efforts everyone. One thing I could grasp from the answers already - it seems to be complicated. There is no one fits all answer.
Under capitalism, it seems companies always need to grow bigger. Why can’t they just say, okay, we have 100 employees and produce a nice product for a specific market and that’s fine?
Or is this only a US megacorp thing where they need to grow to satisfy their shareholders?
Let’s ignore that most of the times the small companies get bought by the large ones.
Disclaimer that I’m not an economist
I believe I have heard a discussion about this before… that the “always grow bigger” model is not only not a necessity under capitalism, it wasn’t even the predominant economic model in the US for a while. Post war, FDR’s New Deal followed the Keynesian model, which from my understanding indirectly led to the type of regulated capitalism with a much heavier emphasis on shareholder/employee satisfaction… and also when the extremely high progressive income tax brackets happened. The always need to grow bigger idea may or may not have come from Milton Friedman of the UChicago school in the 1970s: one of the core assumptions of the Neoclassical model is that companies maximize profits.
Also this is definitely not just a US megacorp thing. Other countries have megacorps too. Case in point South Korea…