Corporations are mostly just job programs. Most companies do not actually need anywhere near the number of people they have employed to function. The reasons why small teams work is because the number of communication channels go down, and you spend less time simply talking about the work and actually doing the work.
Or perhaps corporations grow large because they serve diverse needs. Much like users only need 10% of Microsoft Word, yet many cohorts often need a different 10% slice. Or we lack anti-trust controls, so rent seekers are soaking up markets. Maybe a combination of all three.
Likely. How big each "slice" is would be good to know. I wish someone would study it in depth, if it's even possible to fairly analyze.
I don't necessarily think your analogy with MS word is a fair or correct one, FWIW, only because once you build something the functionality is able to be distributed and replicated.
Employees require active up keep in a way that software really doesn't.