It’s not just that. You want businesses to be able to fail if they are being run poorly. That’s something that’s a lot harder with government agencies, state owned enterprises, and large companies.

• government agencies: People rely on them by design. You can’t simply shut down the health care or welfare system because it’s being run poorly or corruptly.
• state owned enterprises: There is pressure from the ruling class to keep even inefficiently run or corrupt SOE going because they provide jobs and patronage.
• large companies: They become systemically important. The loss of a single large business can cascade through the economy. See: Lehman Brothers or the big auto companies during the 2008 crash.

That’s a survivorship bias. Running a small group is easier, of course, than a large organization (though I’m not sure how much this get offset by the large organization having more resources and the advantage of size), but I suspect there is something else going on there. When there are small groups, there can be many small groups, and the inefficient ones can die leaving only the successful efficient ones. Large organizations are too often “too big to fail”.

Our corporate structures and limited liability not only make these massive orgs possible, but incentivize some truly insane megacorps.