British business and the transition to a corporate economy: Entrepreneurship and management structures

Business History

Volumn 29, Issue 4, 1987, Pages 18-45

  Gourvish, T R ^a  

^a UNIVERSITY OF EAST ANGLIA   (United Kingdom)

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EID: 84928465691     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/00076798700000079     Document Type: Article

References (145)

1. Joseph A. Schumpeter, The Theory of Economic Development (Cambridge, MA, 1934), and Capitalism, Socialism and Democracy (London, 1943)
2. Edith T. Penrose, The Theory of The Growth of the Firm (Oxford, 1959, 2nd. edn., 1980)
3. Chester I. Barnard, The Functions of the Executive (Cambridge, MA, 1938)
4. Herbert A. Simon, Administrative Behavior: A Study of Decision-Making Processes in Administrative Organization (New York, 2nd edn., 1957)
5. Models of Man (New York, 1957)
6. Ronald H. Coase, ‘The Nature of the Firm’, Economica, new series IV (Nov. 1937), pp.386-405
7. Richard M. Cyert and Charles L. Hedrick, ‘Theory of the Firm: Past, Present, and Future: An Interpretation’, Journal of Economic Literature, Vol. X, No. 2 (June 1972), pp. 398-412.
8. It is a common pastime to raise such issues. Cf. Roy A. Church, Kenricks in Hardware. A Family Business: 1791-1966 (Newton Abbot, 1969), pp. 325-326
9. Ronald S. Edwards and Harry Townsend, Business Enterprise: Its Growth and Organisation (London, 1958)
10. Richard M. Cyert and James G. March, A Behavioral Theory of the Firm (Englewood Cliffs, NJ, 1963)
11. Leslie Hannah, The Rise of the Corporate Economy (London, 2nd edn., 1983), pp.4-5
12. ‘New Issues in British Business History’, Business History Review, Vol. LVII, No. 2 (Summer 1983), pp. 165-174
13. Donald C. Coleman, ‘The Uses and Abuses of Business History’, Business History, Vol. XXIX No. 2 (April 1987), pp. 111-156.
14. Simon, Administrative Behavior, pp.79-84
15. James G. March and Herbert A. Simon, Organizations (New York, 1958), pp. 136-42, 203-4
16. Oliver E. Williamson, ‘The Modern Corporation: Origins, Evolution, Attributes’, Journal of Economic Literature, XIX, No.4 (December 1981), pp. 1541-2, 1544-6
17. Cyert and Hedrick, loc. cit., pp. 399-400.
18. Penrose, op. cit. and see in particular the useful preface by Martin Slater, pp. vii-xxx
19. Robin L. Marris, The Economic Theory of ‘Managerial’ Capitalism (London, 1964)
20. Robin Marris and Adrian Wood (eds.), The Corporate Economy. Growth, Competition, and Innovative Power (London, 1971).
21. Philip W.S. Andrews, for example, Manufacturing Business (London, 1949)
22. On Competition in Economic Theory (London, 1964).
23. Alfred D. Chandler, Jr., Strategy and Structure: Chapters in the History of the Industrial Enterprise (Cambridge, MA, 1962)
24. The Visible Hand. The Managerial Revolution in American Business (Cambridge, MA, 1977).
25. Hannah, op. cit., and note the discussion in Scott Moss, An Economic Theory of Business Strategy. An Essay in Dynamics Without Equilibrium (Oxford, 1981), pp. 13, 19-28.
26. Cf. Armen A. Alchian and Harold Demsetz, ‘Production, Information Costs and Economic Organization’, American Economic Review, LXII, No.4 (Dec. 1972),pp. 777-95
27. Oliver Williamson, loc. cit. and see also his ‘What is Transaction Cost Economics?’, in Economic Organization. Firms, Markets and Policy Control (Brighton, 1986)
28. Corporate Control and Business Behavior. An Enquiry into the Effects of Organisation Form on Business Behavior (Englewood Cliffs, NJ, 1970)
29. Markets and Hierarchies: Analysis and Antitrust Implications (New York, 1975).
30. For some applications see Stephen Nicholas, ‘Agency Contracts, Institutional Modes, and the Transition to Foreign Direct Investment by British Manufacturing Multinationals Before 1939’, Journal of Economic History, XLIII, No.3 (September 1983), pp. 675-86
31. Peter Hertner and Geoffrey Jones (eds.), Multinationals: Theory and History (Aldershot, 1986).
32. Moss, op. cit., pp.98-103
33. Mark Casson, ‘General Theories of the Multinational Enterprise: Their Relevance to Business History’, in Hertner and Jones, op. cit., pp.49, 59
34. Peter J. Buckley and Mark Casson, The Economic Theory of the Multinational Enterprise (London, 1985).
35. On the need to match the theory employed to the task to be tackled see the seminal article by Fritz Machlup, ‘Theories of the Firm: Marginalist, Behavioral, Managerial’, American Economic Review, Vol. LVII, No.1 (March 1967), pp. 1-33.
36. Note, in particular, Chandler's contributions in: Herman Daems and Herman Van Der Wee (eds.), The Rise of Managerial Capitalism (Louvain and the Hague, 1974)
37. Harold F. Williamson (ed.), Evolution of International Management Structures (Newark, NJ, 1975)
38. Leslie Hannah (ed.), Management Strategy and Business Development. An Historical and Comparative Study (London, 1976)
39. Alfred D. Chandler, Jr. and Herman Daems (eds.), Managerial Hierarchies: Comparative Perspectives on the Rise of the Modern Industrial Enterprise (Cambridge, MA, 1980)
40. Alfred D. Chandler, Jr. and Richard Tedlow, The Coming of Managerial Capitalism. A Casebook on the History of American Economic Institutions (Homewood, IL, 1985)
41. Kesaji Kobayashi and Hidemasa Morikawa (eds.), Development of Managerial Enterprise (Tokyo, 1986).
42. ‘The Growth of the Transnational Industrial Firm in the United States and the United Kingdom: A Comparative Analysis’, Economic History Review, 2nd series, Vol. XXXIII, No.3 (Aug. 1980), pp. 396-410
43. ‘The Emergence of Managerial Capitalism’, Business History Review, LVIII, No.4 (Winter 1984), pp. 473-503.
44. All this should not be taken to preclude criticism of the strategy-structure argument. Cf. for example Bernard W.E. Alford, ‘The Chandler Thesis - Some General Observations’, in Hannah, Management Strategy, pp. 52-70.
45. ICI has also been the subject of a non-commissioned history - Andrew M. Pettigrew, The Awakening Giant. Continuity and Change in Imperial Chemical Industries (Oxford, 1985) - but its author was very much an insider. Many commissioned works have failed to see the light of day following the withdrawal of company support.
46. Turnover date for 1985-86 reveals that of the 12 companies considered (that is, excluding Midland Bank), seven were in the UK's top 50, each with sales exceeding £1,900 million, and ten were in the top 107 companies. The Times 1000 1986-1987: The World's Top Companies (London, 1986). The companies are: ICI, Electricity Council, Imperial Group, British Steel Corporation, British Railways Board, Courtaulds, British Coal (top 50); Bowater, Pilkington, W.H. Smith (top 107).
47. Some writers do refer, however, to ‘management structure’, ‘direction and management’, etc., but the lack of prominence of such entries is still revealing. An obvious exception to the rule is William J. Reader, Imperial Chemical Industries: A History, Vol. II. The First Quarter-Century 1926-1952 (London, 1975), Figures 3, 5, 6.
48. James B. Jefferys, ‘Trends in Business Organisation in Great Britain 1856-1914’, London Ph.D. thesis, 1938 (reprinted, New York, 1977), p. 130
49. Cf. Philip L. Cottrell, Industrial Finance 1830-1914. The finance and organization of English manufacturing industry (London, 1980), p. 163 (gives figures for 1915:73 per cent of cos = private)
50. Peter L. Payne, ‘The Emergence of the Large-scale Company in Great Britain, 1870-1914’, Economic History Review, 2nd series, Vol. XX, No.3 (Nov. 1967), p.520.
51. Anthony R. Holmes and Edwin Green, Midland: 150 Years of Banking Business (London, 1986), pp. 60-63
52. Church, op. cit. p. 71
53. Donald C. Coleman, Courtaulds. An Economic and Social History, I (Oxford, 1969), pp. 150, 274
54. Michael Moss and John R. Hume, Shipbuilders to the World. 125 Years of Harland and Wolff Belfast 1861-1986 (Belfast and Wolfeboro, NH, 1986), pp. 52-53.
55. Bernard W.E. Alford, W.D. & H.O. Wills and the Development of the U.K. Tobacco Industry 1786-1965 (London, 1973), pp. 183, 466-8
56. Theodore C. Barker, The Glassmakers. Pilkington: The Rise of an International Company 1826-1976 (London, 1977), pp. 169, 171
57. Peter L. Payne, Colvilles and the Scottish Steel Industry (Oxford, 1979), pp. 77, 85-6.
58. Cottrell, op. cit. p. 162, suggests that fears of company law reform stimulated company registrations in the 1890s, but this is not mentioned in the case studies.
59. T.R. Gourvish and R.G. Wilson, ‘Profitability in the Brewing Industry, 1885-1914’, Business History, Vol. XXVII, No.2 (July 1985), pp. 146, 152.
60. Coleman, op. cit. I, pp. 152-3, 175-83
61. Payne, op. cit., pp. 85-86.
62. In Bristol, too, limited liability status for Wills was seen as a way of strengthening family responsibility in the business: Alford, op. cit., pp. 119, 181-6, 280-82.
63. Payne, loc. cit., pp. 520-524
64. Chandler, ‘Emergence of Managerial Capitalism’, loc. cit., pp.496-497.
65. The four included Ogden's of Liverpool, which had been bought by American Tobacco in September 1901. Its sale to Imperial was part of a deal which involved the transfer of Wills' export business to a new company, British-American Tobacco, dominated initially by the Americans (stakes: ⅔ American Tobacco, ⅓ Imperial). Wills also set up a separate manufacturing enterprise in Australia in 1901, a move consistent with the ‘uncertainty avoidance’ exhibited by emerging multinationals. Alford, op. cit., pp. 219-20, 250-69, 272.
66. Ibid., pp.263-4, 272-6, 309-11
67. Alford, ‘Strategy and Structure in the UK Tobacco Industry’, in Hannah, Management Strategy, pp.38, 73-4
68. Payne, loc. cit., pp. 535, 539.
69. Coleman, op. cit., I, pp. 191-3, 220-22; II, pp. 24-32, 37-9, 104-23. In the process the shareholding of the founding families fell to 58 per cent (Courtauld family 32.5 per cent), with 18.5 per cent in the hands of Henry Tetley and Thomas Latham, salaried managing directors who had been brought into the business in 1893.
70. Ibid., II, p. 122
71. Coleman's entries on ‘Sir Thomas Paul Latham’ and ‘Henry Greenwood Tetley’ in David J. Jeremy and C. Shaw (eds.), Dictionary of Business Biography, III (London, 1985), pp. 662-664; V (London, 1986), pp. 470-72.
72. Chandler, Visible Hand, pp. 391-402, 433-41.
73. Payne, op. cit., pp.87-8, 132-3.
74. Kenricks did much the same thing when Frederick Ryland was given one share in 1883: Church, op. cit., pp.78-9. However, the firm's capital structure is presented in a very confusing manner, and the precise details of ownership are not clear.
75. Moss and Hume, op. cit., pp. 92, 96-7, 132-3, 135, 173-4.
76. This phrase was used to describe recruitment to the Pilkington board before 1914: Barker, op. cit., p.241.
77. Terence R. Gourvish, ‘The Railways and the Development of Managerial Enterprise in Britain, 1850-1939’, in Kobayashi and Morikawa, op. cit., pp. 187-90.
78. See Hannah, Corporate Economy, pp.29-50
79. John Turner (ed.), Businessmen and Politics: Studies of Business Activity in British Politics 1900-1945 (London, 1984).
80. Hannah, Corporate Economy, p. 178.
81. Ibid. p.62.
82. Reader, op. cit., I, pp.451-66, 476-7; II, pp.3-21.
83. Hannah, Corporate Economy, pp.37-38.
84. William J. Reader, ‘Personality, Strategy and Structure: some Consequences of Strong Minds’, in Hannah, Management Strategy, p. 122.
85. Reader, op. cit., II, pp. 21-30, 133-44
86. Hannah, Corporate Economy, pp. 81-85
87. R.P.T. Davenport-Hines, ‘Harry Duncan McGowan’, Dictionary of Business Biography, IV (1985), pp. 21-26.
88. Derek F. Channon, The Strategy and Structure of British Enterprise (Boston, MA, 1973), pp.67-9
89. Hannah, Corporate Economy, p.85
90. ‘Strategy and Structure in the Manufacturing Sector’, in Management Strategy, pp. 185-6. The 12 companies were: Vauxhall, Ford, Esso, Mars (US subsidiaries), Massey-Ferguson (Canadian); Nestle, Philips (European subsidiaries), Unilever (European connections); and Smith's Instruments, Spillers, British-American Tobacco, and ICI.
91. Economist, 27 Dec. 1930, cited in William J. Reader, Fifty Years of Unilever 1930-1980 (London, 1980), p. 17.
92. Charles Wilson, The History of Unilever. A Study in Economic Growth and Social Change (London, 1954), I, pp. 207-10, 243-312, II, pp. 301-8
93. ‘Management and Policy in Large Scale Enterprise: Lever Brothers and Unilever, 1918-1938’, in Barry Supple (ed.), Essays in British Business History (Oxford, 1977), pp. 124-140
94. David K. Fieldhouse, Unilever Overseas. The Anatomy of a Multinational 1895-1965 (London, 1978), pp. 24-63
95. entries by Reader on ‘William Hesketh Lever’ and John R. Edwards on ‘Sir Francis D’Arcy Cooper' in Dictionary of Business Biography, III (1985), pp. 745-52; I, pp.781-5.
96. This is Wilson'S emphasis rather than Fieldhouse'S. Cf. Wilson, in Supple, op. cit., p. 124, and Fieldhouse, p.36.
97. Wilson, in Supple, op. cit., p. 135.
98. Wilson, op. cit., II, pp.312-315.
99. Edwin Green and Michael Moss, A Business of National Importance. The Royal Mail Shipping Group 1902-1937 (London, 1982).
100. Charles Wilson, First With The News. The History of W.H. Smith 1792-1972 (London, 1985), p. 346
101. Barker, op. cit. pp. 320-345.
102. Coleman, op. cit., II, pp. 222-43. The quotation is from p.237.
103. Rio Tinto also identified and acted to improve its organisational structure: Charles E. Harvey, The Rio Tinto Company: An Economic History of a Leading International Mining Concern 1873-1954 (Penzance, 1981), pp. 207-223.
104. Alford, op. cit., pp.330-334
105. Alford, ‘Strategy and Structure’, loc. cit., pp. 75-77.
106. Moss and Hume, op. cit., pp. 244-50, 270, 278, 282-3, 285-321
107. Peter N. Davies on ‘Owen Cosby Phillips’
108. Michael Moss on ‘Sir Frederick Ernest Rebbeck’ in Dictionary of Business Biography, IV (1985), pp. 672-4, 853-5.
109. Holmes and Green, op. cit., pp. 122-4, 153-7, 173-4, 190-91, 194-6.
110. Church, op. cit., pp. 144-6, 200-30
111. ‘Family and Failure: Archibald Kendrick and Sons Ltd., 1900-1950’, in Supple, op. cit., pp. 103-123.
112. Payne, op. cit., pp. 188-9, 238-49.
113. John Scott and Michael Hughes, The Anatomy of Scottish Capital: Scottish Companies and Scottish Capital, 1900-1979 (London, 1980), p.85.
114. Wilson, op. cit., pp.223-6, 280-81, 347-8
115. Reader, Bowater, pp. 90-92, 148-50
116. Payne, op. cit., pp.243-249.
117. For the observation that not all firms with managerial hierarchies were manager-dominated, and not all manager-dominated firms possessed hierarchies, see Gourvish, in Kobayashi and Morikawa, op. cit., pp.282-5.
118. The US lead in diversified firms, M-form companies, and the dominance of managers over owners should not be overplayed. Cf. John Scott, Corporations, Classes and Capitalism (London, 1979), pp. 60-65.
119. Lance Davis, ‘The Capital Markets and Industrial Concentration: The U.S. and U.K., a Comparative Study’, Economic History Review, 2nd series, XIX, No.2 (Aug. 1966), pp. 255-272.
120. Williamson, Corporate Control.
121. Reader, op. cit., II, pp. 74-81, 311
122. Holmes and Green, op. cit., pp. 133, 193
123. Barker, op. cit., pp.323, 330-33.
124. Cf. William Lazonick, ‘Strategy, Structure and Management in the United States and Britain’, in Kobayashi and Morikawa, op. cit., pp. 101-146.
125. Donald C. Coleman, Courtaulds. An Economic and Social History. Vol.III. Crisis and Change 1940-1965 (Oxford, 1980), pp. 164, 173, 241-54, 271, 310-11, 321.
126. Reader, Bowater, pp.331-335
127. Holmes and Green, op. cit., pp.281-288
128. Terence R. Gourvish, British Railways 1948-73. A Business History (Cambridge, 1986), pp. 368-388.
129. Wilson, op. cit., pp. 391-392.
130. Gourvish, op. cit., pp.567
131. Leslie Hannah, Engineers, Managers and Politicians. The First Fifteen Years of Nationalised Electricity Supply in Britain (London, 1982), p.294
132. Ministry of Fuel and Power Statistical Digest 1952 (London, 1953), p.39.
133. William Ashworth, The History of the British Coal Industry, Volume 5, 1946-82: The Nationalized Industry (Oxford, 1986), pp. 5-8, 31-3, 138-42, 191-7, 612-29.
134. Hannah, Engineers, Managers, pp.2-4, 7-22, 60-63, 162-3, 183-4.
135. Gourvish, op. cit., pp.31-60.
136. Ashworth, op. cit., pp.628-9, 637ff.
137. Gourvish, op. cit., pp. 144-70, 308-25, 330-43
138. Hannah, Engineers, Managers, pp. 10-11, 42-3, 139-48, 186-90, 264-5.
139. Hannah, Corporate Economy, p. 152.
140. Roy Church, ‘Family Firms and Managerial Capitalism: The Case of the International Motor Industry’, Business History, Vol. XXVIII, No.2 (April 1986), pp. 165-80
141. Gourvish, op. cit., pp.31-3, 171-2.
142. Cf. Peter Steer and John Lake, ‘Internal Organization and Profit: An Empirical Analysis of Large U.K. Companies’, Journal of Industrial Economics, XXVII, No.1 (Sept. 1978), pp. 13-30.
143. Cf. Hertner and Jones, op. cit., pp. 5-6, 12-13, 60.
144. Penrose, op. cit., p.3
145. Cf. Hannah, Corporate Economy, pp.4-5, where the warning is put more strongly.