Software is a creative endeavor. As in most creative endeavors there are dis-economies of scale in the form of communications and management overhead, differences of opinion and perspective, etc. What group writes a better novel, a group of 5 or a committee of a 1,000? The same thing applies to software. Generally speaking the smallest group that can get the work done will do the better job. More so if the smaller group is on average more talented.

How do you ensure the average talent of a group of 1,000 people? It's a hard problem. How do you do so for a group of 5 people? That's an easy problem.