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.
I didn’t see a single top level comment be the devil’s advocate so I will give it a try.
Humanity moves forward. Standards are always shifting. New technologies and needs are created everyday and people want to raise their standard of living to accommodate for new things. Also, global population has been growing since we stabilized food production in the 1800’s.
If companies don’t grow at least with population, that means tomorrow we will have less than today. If companies don’t also grow with raising standards of living, that means someone stays poor. If companies don’t also grow to match the complexities of producing new technology, that means we stopped in time technologically.
In a competitive system such as capitalism, you don’t wait for more competitors to show up and fill this new ever-growing demand; you take that demand for yourself. So everyone seeks growth.
When a society does not grow (i.e. japan) for too long, capitalism doesn’t break down immediately, but you clearly see it stagnates. Japan’s population is not stable and their economy is facing major problems.
Whether growth is organic or fabricated is a related, but different, topic
I work in a mid size company that is a leader in the niche market that we do. However we need to innovate and acquire other small companies and expand because we do have competitors. So the world around us is telling us to innovate or lose the market.