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.
While this is mostly true it’s certainly the case that publicly traded companies have strong incentives to grow.
Private companies mostly have the ownership, and/or the desire to go public to blame.
And publicly traded companies are the also the minority of the total number of companies in the US. So this is a niche issue with outsized effects, meaning a policy solution is out there that