The Anatomy of Big Business: Aspects of Corporate Development in the Twentieth Century

Business History

Volumn 33, Issue 2, 1991, Pages 268-296

  Wardley, Peter ^a  

^a UNIVERSITY OF THE WEST OF ENGLAND   (United Kingdom)

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EID: 84933484993     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/00076799100000056     Document Type: Article

References (80)

1. An excellent survey of the literature, empirical and theoretical, which considers the emergence of large scale enterprises appears in the ‘Select Bibliography’ presented in L. Hannah, The Rise of the Corporate Economy (2nd ed. 1983), pp. 193-8.
2. J. Robinson, The Economics of Imperfect Competition (1933);
3. E.H. Chamberlin, The Theory of Monopolistic Competition (Oxford, 1933).
4. R.M. Cyert and J.G. March, A Behavioral Theory of the Firm (Englewood Cliff, NJ, 1963);
5. O.E. Williamson, Corporate Control and Business Behaviour (Englewood Cliffs, NJ, 1970).
6. W.J. Baumol, Business Behaviour, Value and Growth (New York, 1959);
7. R.L. Marris, Economic Theory of Managerial Capitalism (1964).
8. For example, D. Morris and D. Hay, Industrial Economics: Theory and Evidence (Oxford, 1979).
9. See C.H. Lee, ‘Corporate Behaviour in Theory and History: II. The Historian’s Perspective', Business History, Vol.32 No.2 (1990) pp.163-79 for a brief overview of this genre.
10. T.R. Gourvish, ‘British Business and the Transition to a Corporate Economy: Entrepreneurship and Management Structure’, Business History Vol.29 No.4 (1987) pp.18-45.
11. L. Hannah, Rise of the Corporate Economy, Chs.7 and 8 and, in particular, pp.97-103.
12. C.H. Lee, The British Economy since 1700: A Macroeconomic Perspective (Cambridge, 1986).
13. W.D. Rubinstein, Men of Property: The Very Wealthy in Britain since the Industrial Revolution (1981);
14. G. Ingham, Capitalism Divided? The City and Industry in British Social Development (1982);
15. C.H. Lee, ‘Regional Structural Change in the Long Run: Great Britain, 1841-1971’, in S. Pollard (ed.), Region and Industrialisation (Gottingen, 1980).
16. P.J. Cain and A.G. Hopkins, ‘Gentlemanly Capitalism and British Expansion Overseas, I. The Old Colonial System, 1688-1850’, Economic History Review, 2nd series, Vol.39 (1986) pp.501-525;
17. ‘II. New Imperialism, 1850-1945’, Economic History Review, 2nd series, Vol.40 (1987) pp.1-26.
18. Proponents of the thesis that the British economy exhibited a major structural break in growth trends, such as W.W. Rostow, face severe criticism in the form of new estimates of post-1700 British national income estimated by Nick Crafts which reveal rates of growth that deflate any impressions of structural transformation and rapid expansion of per capita income before 1831: N.F.R. Crafts, British Economic Growth during the Industrial Revolution (Oxford, 1985), Ch.2, pp.9-47, and especially Table 2.11. In the face of slow growth the retention of the ‘Industrial Revolution’ as a description, let alone a model, which explains the British experience is problematic. The tenacity with which the label has stuck is nicely demonstrated by the title and subject of Jeffrey G. Williamson's article ‘Why was British Growth So Slow During the Industrial Revolution?’, Journal of Economic History, Vol.44 (1984) pp.687-712.
19. B. Supple, ‘A Framework for British Business History’, in B. Supple (ed.), Essays in British Business History (Oxford, 1977), p.9.
20. M. Falkus, ‘Modern British Economic Development: The Industrial Revolution in Perspective’, Australian Economic History Review, Vol.19 (1979), pp.42-62 highlights the problems associated with a periodisation which over-emphasises the era typically described as the Industrial Revolution.
21. S.B. Saul, The Myth of the Great Depression (1969).
22. For a useful summary of these debates see the final chapter of F. Crouzet, The Victorian Economy (1982), pp.371-422.
23. D. Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present (Cambridge, 1969), Ch.5.
24. A.D. Chandler, ‘The Development of Modern Management Structure in the US and UK’, in L. Hannah (ed.), Management Strategy and Business Development (1976), pp.23-51.
25. D.H. Aldcroft (ed.), The Development of British Industry and Foreign Competition (1968).
26. D.N. McCloskey (ed.), Essays on a Mature Economy: Britain after 1840 (1971).
27. W.P. Kennedy, ‘Notes on Economic Efficiency in Historical Perspective: The Case of Britain, 1870-1914’, Research in Economic History, Vol.9 (1984), p.134.
28. B. Elbaum and W. Lazonick, ‘An Institutional Perspective on British Decline’, in B. Elbaum and W. Lazonick (eds.), The Decline of the British Economy (1986), p.1-17.
29. D.F. Channon, The Service Industries: Strategy, Structure and Financial Performance (1978), p.1.
30. P.L. Payne, ‘The Emergence of the Large Scale Company in Great Britain, 1870-1914’, Economic History Review, 2nd series, Vol.20 (1967) pp.519-42.
31. S. Yonekawa, ‘The Strategy and Structure of Cotton and Steel Enterprises in Britain, 1900-1939’, in K. Nakagawa (ed.) Strategy and Structure of Big Business: Proceedings of the First Fuji Conference on Business History (Tokyo, c.1975), pp.242-3.
32. C. Shaw, ‘The Largest Manufacturing Employers of 1907’, Business History, Vol.25 No.1 (1983), pp.42-60.
33. L. Johnman, ‘The Largest Manufacturing Companies of 1935’, Business History, Vol.28 No.2 (1986), pp.226-45.
34. Crouzet, Victorian Economy, p.71.
35. P. Mathias, The First Industrial Nation (2nd ed. 1983), p.374.
36. R. Floud, ‘Britain, 1860-1914’: A Survey', in R. Floud and D. McCloskey, (eds.), The Economic History of Britain since 1700, Volume 2: 1860 to the 1970s (Cambridge, 1981) p.24.
37. N. Kaldor, Causes of the Slow Rate of Growth in the United Kingdom (Cambridge, 1966);
38. R.E. Rowthorn, ‘What remains of Kaldor’s Law?', Economic Journal, Vol.85 (1975) pp.10-19;
39. N. Kaldor, ‘Economic Growth and the Verdoom Law’, Economic Journal, Vol.85 (1975) pp.891-6;
40. P. Stoneman, ‘Kaldor’s Law and British Economic Growth, 1800-1970, Applied Economics, Vol.11 (1979) pp.309-19;
41. J.S.L. McCombie, ‘Economic Growth, Kaldor’s Laws and the Static-Dynamic Verdoorn Law Paradox', Applied Economics, Vol.14 (1982) pp.279-94;
42. A.P. Thirlwall, ‘A Plain Man’s Guide to Kaldor's Growth Laws', Journal of Post-Keynesian Economics, Vol.5 (1983) pp.345-58.
43. Cf. B.W.E. Alford, British Economic Performance, 1945-1975 (1988) p.58, where it is asserted that ‘productivity has almost certainly been lower in services than in manufacturing by a significant margin’.
44. N. Gemmell and P. Wardley, ‘The Contribution of Services to British Economic Growth, 1856-1913’, Explorations in Economic History, Vol.27 (1990), pp.299-321 demonstrate the positive productivity contribution of the services sectors relative to the manufacturing sector before the First World War.
45. The data sets for 1904/5 and 1934/35 were produced by the same methods while the source for the third data set was the Financial Times Top 500, 1985. Two major differences in the estimation procedures should be noted. The 1904/5 and 1934/35 estimates include all shares and debt and the prices used to calculated market capitalisation are annual averages; the market capitalisation estimates provided by the Financial Times Top 500 excluded preference shares and were based on stock market prices at the end of June 1985. Financial Times Top 500 (1985), p.6.
46. A simple counterfactual which re-absorbed Irish companies into the ranks of the Top 50 British companies for 1934/35 and 1985 would resubmit only the Bank of Ireland in 1934/35. Stock Exchange Official Year-Book (1935), pp.293, 347, 539; Financial Times Top 500 (1985), pp.7-13.
47. The estimated market capitalisation of F.W. Woolworth was 85.2 million and that of the Ford Motor Co., based on the ordinary stock price, was 16.2 million. Stock Exchange Official Year-Book (1935), pp.1155-6, 1827.
48. Boot's Pure Drug Co. had been purchased by Louis Kroh Liggett, an American, in 1920 but was sold off in 1933 when he went bankrupt. S. Chapman, Jesse Boot of Boots the Chemist (1974), pp.156-7.
49. Associated British Foods was a closed company and subsidiary of Wittington Investments Ltd., which was controlled by ‘the Weston family, their trusts and companies associated with them’. Stock Exchange Official Year-Book (1984-85), p.47.
50. Stock Exchange Official Intelligence (1905); B.W.E. Alford, W.D. & H.O. Wills and the Development of the UK Tobacco Industry, 1786-1965 (1973), p.69;
51. H. Cox, ‘Growth and Ownership in the International Tobacco Industry: BAT, 1902-27’, Business History, Vol.31 No.1 (1989), pp.44-67.
52. Payne, ‘Large Scale Companies’, Table 1, p.541.
53. R. Evely and I.M.D. Little, Concentration in British Industry: An Empirical Study of the Structure of Industrial Production, 1935-1951 (Cambridge, 1960);
54. S.J. Prais, The Evolution of Giant Firms in Britain: A Study of the Growth of Concentration in Manufacturing Industry in Britain, 1909-70 (Cambridge, 1970);
55. P.E. Hart, M.A. Utton and G. Walshe, Mergers and Concentration in British Industry (Cambridge, 1973);
56. P.E. Hart, Concentration in British Industry, 1935-75: A Study of the Growth, Causes and Effects of Concentration in British Manufacturing Industries (Cambridge, 1980). A number of characteristics are shared by these studies, including: their origin in the National Institute of Economic and Social Research; an investigative focus on concentration in the manufacturing sector; and an attempt to assess the ‘aggregate’, and ‘disaggregate’ patterns of concentration within, respectively, the economy as a whole and specific industries as discussed by Hart and Clark in Concentration, p.xi. The latter point is also discussed in Hannah and Kay, Concentration in Modern Industry, p.46.
57. An exceptional study which investigated concentration in a services sector is F. Capie and G. Rodrik-Bali, ‘Concentration in British Banking, 1870-1920’ Business History, Vol.24 No.2 (1982) pp.280-92; the authors demonstrate the importance of the amalgamation movement which produced large banks in England before the turn of the nineteenth century but suggest eagerness to demonstrate reliability and acquire prestige were more likely incentives to merger than the claims made by bankers that they were achieving economies of scale which mirrored assumed contemporary developments in industry.
58. In 1934/35 Imperial Chemical Industries Ltd. owned a direct controlling interest in at least 43 companies and a preponderant interest in at least six other companies. Stock Exchange Official Year-Book (1935), pp.1284-5.
59. Stock Exchange Official Year-Book (1935), p.2612.
60. The probable understatement of the diversity of production within companies in 1985 can be illustrated by one example. Bass is categorised as M.1.2, a drinks producer in the Food, Drink and Tobacco section, although it operated restaurants, hotels, squash clubs, bingo and social clubs, betting shops, greyhound stadia, holiday facilities and insurance companies. Stock Exchange Official Year-Book (1984-85), pp.83-4.
61. It has been the customary practice that ‘oil companies like Shell and British Petroleum are excluded from [the] lists [of Britain’s largest companies] since, although they were large, they did not have substantial manufacturing interests in the UK (in 1919 and 1930), but were involved mainly in overseas operations and in UK marketing'. Hannah, Corporate Economy, p.117.
62. A similar justification, with amplification, is also offered by Chandler, ‘Modern Management Structure’, in Hannah (ed.), Management Strategy, p.35.
63. The commencement of oil extraction from the North Sea, which occurred simultaneously with the publication of these texts, transformed the nationality of producers as circumscribed by this definition of ‘Britishness’ predicated as it was on domestic industrial production.
64. Coats Patons, as J. & P. Coats had become, was ranked as the 92nd largest British company by the Financial Times Top 500 (1985), p.29.
65. However, within a year, merger with Vantona Viyella had restored Coats Viyella to its traditional status within the ranks of Britain's largest 50 companies; the company was ranked as Britain's 40th largest company in the Financial Times Top 500 (1986), pp.30, 38.
66. C. Trebitcock, ‘Spin-off’ in British Economic History: Armaments and Industry, 1760-1914', Economic History Review, 2nd series, Vol.22 (1969) pp.474-90;
67. idem, The Vickers Brothers: Armaments and Enterprise, 1854-1914 (1977);
68. N. McCord, North East England: The Region's Development, 1760-1960 (Bristol, 1979) pp.134-8.
69. The importance of this aspect of the development of British industrial companies, with reference to research, development and maintained profitability, is developed by M. Kaldor, ‘Technical Change in the Defence Industry’, in K. Pavitt (ed.), Technical Innovation and British Economic Performance (1980) pp.100-21.
70. J. Cain, ‘Railway Combination and the Government, 1900-1914’, Economic History Review, 2nd series, Vol.25 (1972) pp.623-41;
71. G. Channon, ‘Railway Pooling in Britain before 1900: The Anglo-Scottish Traffic’, Business History Review, Vol.62 (1988) pp.74-92.
72. S. Pollard, The Development of the British Economy, 1914-1980 (3rd ed. 1983), pp.88-91, 94.
73. Prais, Evolution of Giant Firms, pp.156-62; though it should be noted that employment was the index of company size used in this study which has implications for relative labour productivity. Use of an alternative indicator of company size might produce different conclusions.
74. Western Europe is defined here as the European Community, Switzerland and the three Nordic countries. Financial Times Top 500 (1985), pp.5-13.
75. To cite a specific case, the nationalised French banks do not appear, whereas the ‘Big Four’ British banks are listed among the largest 100 European companies. Financial Times Top 500 (1985), pp.7-8.
76. H. Yamazaki, ‘The Development of Large Enterprises in Japan: An Analysis of the Top 50 Enterprises in the Profit Ranking Table (1929-1984)’, Japanese Business Year Book, No.5 (1988), pp.12-55 offers an interesting comparison which suggests similarities between the anatomy of Japanese large companies and those identified here for Great Britain. In particular, financial institutions appear relatively important. However, although Yamazaki's tables highlight the relative importance of firms engaged in the production of service, direct comparisons of the composition of the largest 50 companies cannot be made because profits rather than the market value of firms are the preferred index of size and the zaibatsu do not appear as corporations.
77. The source for prices and capital structures of American companies is the Manual of Statistics (New York, 1905).
78. Compare Payne, ‘Emergence of British Large Scale Companies’, Tables 1 and 2, pp.541-2.
79. A.D. Chandler dates the creation of modern organisational structures from the creation the multi-divisional structure by Du Pont and General Motors in response to the inventory crisis of 1920-21. Visible Hand, p.457.
80. D.F. Channon, The Strategy and Structure of British Enterprises (1973), Ch.3.