Diseconomies of scale

According to the traditional theory,due to the dis economies of scale after some level output,the LAC curve slopes upwards.The dis economies of scale occurs due to the human and behavioral problems in managing big business.The causes of dis economies of scale are as follows:

1. Managerial inefficiency :The manager cannot manage and coordinate efficiently if the production is made on a very large scale.The management becomes complimented,the managers become too busy and become less efficient in decision making.Due to this when the size of the firm or output increase,the staffs increase more than proportionately and the management becomes less efficient.This increase cost of production.The inability to collect monitor information in large scale production by top administrator has been called 'control loss' by Oliver Williamson.The existence of dis economies of scale has been denied by some economies.But such dis economies can be clearly seen in some industries.
2. Problems of moral and motivation:There is the problem of moral and motivation among both management and labour force in large scale production.The collective feeling is less in firms than in small firms.The moral towards the organization is less is large firms.There is no incentive to increase production.The managers of large firms fell more secure and fell no fear of getting sacked.This makers them lethargic and devoid of entrepreneurship.Consequently,the cost of production increase.