Sunday, November 14, 2010

Thinking about the historical development of big companies

Chapter 4 of The Company: A Short History of a Revolutionary Idea by John Micklethwait and Adrian Wooldridge is titled "The Rise of Big Business in America, 1862-1913". Chapter 5 is titled "The Rise of Big Business in England, Germany and Japan, 1850-1950". The two chapters compare and contrast the development of large corporations in these four countries in a very concise way.

I would guess that the expansion of markets based on improved transportation and communications systems were common factors that allowed companies in the four countries to grow in order to secure economies of scale. There were several common factors, such as the need to develop enabling legislation for the large corporations to exist, the need to develop ways to finance the large corporations, and the need to develop ways to manage business enterprises that were more complicated than the earlier businesses.

The discussion indicates that while all four countries developed large corporations, the way that they did so and the kinds of corporations that resulted were contingent on the cultures of the countries, and thus contingent on the cultural histories of those countries. Germany and Japan developed corporations to achieve economic purposes enunciated by their national governments while the United States and Britain seem less to have recognized the military and diplomatic advantages of a big business sector. There were also differences in the attitudes toward monopolistic policies of corporations and differences in the way that class structure and educational systems affected business management.

It might be interesting to consider the differences between these countries that developed big businesses and the many that did not. Colonialism was of course a reason the peripheral regions of the empires failed to develop many of their own corporations, but that explanation does not explain the failure to do so adequately in Latin America.

No comments: