BHC Home       Publications Home

Business and Economic

Papers Presented at the BHC Annual Meeting

ISSN 0849-6825

William J. Hausman
College of William and Mary

Deborah Green
College of William and Mary
Editorial Assistant

Pat Denault
Harvard University
Web Editor

Current Issue
Back Issues

Style Guide
Printed BEH

2003 Annual Meeting Abstracts

Stephen B. Adams
Why Is There No Silicon Valley in New Jersey? A Tale of Two High-Tech Regions
In 1965, Frederick Terman accepted a consulting assignment from a consortium of New Jersey businessmen to provide a blueprint for a university to spur regional high-tech development. Given that Terman had helped make Stanford the educational anchor of a noted center of high-tech activity, it appears that his clients wanted to replicate in New Jersey the model he personified. That being the case, the logical question for the consultant to ask at the outset would be: "Why is there no Silicon Valley in New Jersey?" Terman never asked that question, but we can learn from exploring it. By comparing the experiences of the two regions, we learn, among other things, the significance of the evolutionary process of industrial clusters; that clusters may not fit neatly into descriptive categories; and that Terman's ends versus means were not what have been generally assumed: The "father of Silicon Valley" was less interested in using a university to promote regional economic growth than in using the promise of regional economic growth to build the university he wanted.
Franco Amatori
Big Business and European Unification: Is the Chandlerian Model Still Sustainable?
The expression "Chandlerian Model" in reality refers to two different intellectual buildings. The first derives from the research which led to the publication of Strategy and Structure. It was an enormous success among students of management and consultants, in whose hands it ended up in losing the complexity and the problematical approach that characterizes the work of a great historian. The other Chandler is the one we discover in the studies published in The Visible Hand and Scale and Scope, which emphasized the responses to the impulses of the Second Industrial Revolution in "regional" environments made by different markets, business and government relationships, and cultures. The first part of this short note intends to demonstrate that the ensemble of actions undertaken in the last few decades by the European Union does not appear adversarial to the Chandlerian model considered in this version (the one that stresses the necessity of the three-pronged investment and the development of organizational capabilities). The second part is a review of Whittington and Mayer's The European Corporation that shows, notwithstanding all the criticism that can be expressed, that even the Chandler prophet of the MForm is still alive. More controversial is the topic related to a new organizational configuration such as the "network form." Whittington and Mayer believe that it is located inside and not beyond the MForm. I suspect instead that we enter in a new territory for practitioners and scholars.
Rolv Petter Amdam and Marie-Laure Djelic
Processual Americanization: Postwar Changes in the French and Norwegian Business Systems
During the last century both the Norwegian and the French national business systems have changed significantly, particularly during the second half of the century. When we confront data on productive entities for France and Norway we find two tendencies, partly contradictory. There are common trends in the transformation - larger size of productive entities, rationalization of internal organization, evolution of ownership structures from personal forms toward a mixture of state ownership and public ownership (joint stock corporations), slow but progressive transformation of the competitive landscape toward oligopolistic competition and a disappearance of cartels. However, a number of differences also appear. This two-dimensional finding puts to the test both the pure modernization arguments and the traditional versions of national business systems or varieties of capitalism theories. Pointing to economic and technological drivers, modernization arguments and their more recent globalization variants have emphasized convergence. The logic of change, in those arguments, is neutral and universal. The defining claim of modernization or globalization arguments is that national systems of economic organization are bound to evolve quite significantly, moving toward a common—most efficient—set of institutional and organizational arrangements. In contrast, national business systems or varieties of capitalism theories highlight the systemic nature and tight coupling of national forms of capitalism and hence their stability and resilience over time. The consequence, from such a perspective, is a perpetuation of national differences and national models, if not further divergence, even under strong pressures for change. Our empirical results, on the other hand, point to both partial convergence of national business systems and resilient and embedded differences. Explaining such results calls for theoretical innovation. We propose the argument of "processual Americanization" to help account for these results.
Francesca Antolin
Global Strategies and National Performance: Explaining the Singularities of the Spanish Electricity Supply Industry

In this article I compare the contemporary trajectories of two managers who were pioneers and leaders of the electricity industry in their respective countries. One is Samuel Insull, who led the Chicago Edison Company in the United States, and the other is Juan Urrutia, creator of Hidroeléctrica Ibérica in Spain. The Chicago Edison Company was the world leader in many different fronts: managerial strategy, design and application of new technology, internal management, commercial policy, and establishment of a framework for the relationships between firms, financial systems and administration. Hidroeléctrica Ibérica was created in 1901, with the purpose of exploiting hydroelectricity resources, shortly after major advances in long-distance electricity transportation had been made. It immediately established itself as the leader of the electricity sector in Spain, a position it has maintained till the present due to the ambition of the initial project, the quality of the resources, and its strategy on various fronts. My generic purpose is to reflect on the complexities of the evolution of large technological systems, which are subject to a wide variety of conditioning elements, on both the demand and the supply sides. More specifically, I would like to understand what are the degrees of freedom which remain open to a follower, by how much he can adapt his strategies to special circumstances, once the world leader has shown a path. As part of that, I will look at the differences of context and its consequences on the economic logic applied by Juan Urrutia when making policy decisions that seem to differ from the best entrepreneurial practice of the period, as defined by Insull.
Anna M. Aubanell-Jubany
Cartel Stability in the Electricity Industry: The Case of Electricity Distribution in Madrid in the Inter-War Period

The objective of this paper is to analyze the factors that led to cartel stability in the electricity industry in Madrid from 1913 to the Civil War. This electricity distribution cartel is of interest because it lasted for more than two decades. Among the factors that accounted for internal cartel stability were: similar economic power of the firms (market share and financial backing), the large number of small customers, the fact that demand exceeded supply, the revenue sharing, and regulation. Internal instability came mainly from cost asymmetry. Regulation played an important role in the cartel's achieving external stability, as did the neutralization of the gas company by the cartel's members.
Insoo Baek
The Emergence of Mass Markets and the Dynamics of Retail Forms in Korea

In this paper, I examine the evolution of major retail forms—supermarkets, department stores, discount stores, and convenience stores—in Korea during three phases from the 1970s to the 1990s. Korea provides a useful comparison to Japan, showing how two nations subject to similar pressures from mass markets have experienced difficult structural and operational changes within retailing. Particular emphasis is given to changing markets and competition among retail forms and the relation of those factors to operating systems. I find that, although the dynamics of retail change in later developed countries create similar innovations in retail forms, plural paths of adaptation occur across national boundaries because of differences in markets, competition, and operating systems.
Gerben Bakker
Entertainment Industrialized: The Emergence of the International Film Industry, 1890-1940
Comparing developments in Britain, France, and the United States, the dissertation shows how, at the end of the nineteenth century, consumption of entertainment was rising rapidly. When further process innovations yielded decreasing returns, a few smart entrepreneurs adopted a product innovation, cinema, to automate and standardize live entertainment and make it tradable. Production costs rose gradually, until, in the mid-1910s, a few unique firms escalated their outlays on film production and moved into distribution and exhibition, leading to the emergence of the feature film and to the industrial and geographical concentration of the industry in Southern California. European film producers—which at times had supplied as much as two-thirds of the U.S. market—were marginalized. Only a fringe of small, flexibly specialized European companies remained. Interacting with consumer preferences, the emerging Hollywood studios increasingly used stars and stories as heavily promoted brands to overcome the short product life cycle of the films themselves. By the late 1930s, cinema had significantly changed the everyday lives of most consumers in the Western world and generated substantial social savings to society at large. Cinema, then, was not only first in a row of media industries that industrialized entertainment, but also the first in a series of international industries that industrialized services. The evolution of the early film industry thus may give insight into technological change in many service industries to come.
Gerben Bakker
Tradable Amusements: The Globalization of the Entertainment Industry and the Western World, 1776-1940
The process of globalization in the entertainment industry was pronounced and fast. It involved the market integration of what previously was a service, but became a tradable intermediate product (exposed celluloid film) delivering a service (cinema tickets). Although the media have been discussed extensively in the popular debate on the politics of globalization, the evolution of media industries has hardly been studied from the perspective of globalization. This paper studies how popular entertainment changed from mainly a local or regional activity into first a national and then an international business, using the perspective on globalization as outlined in O'Rourke and Williamson, Globalisation and History (1999). It examines why international market integration took place around 1900 and how entrepreneurs' adoption of film technology made it happen. It will also assess the effect on the production structure of the international entertainment industry, on organization structures, and, finally, on European and American government policies (which amounted to a "political backlash").
Jim Bamberg
The Fragility of Globalization: Global Firms, Nation States, and the Fragmentation of the International Oil Industry, 1950s-1970s
This paper examines the forces that resulted in the fragmentation of the international oil industry in the 1970s, when the international oil regime, which for decades had been dominated by a handful of major transnational Western oil corporations, was rudely shattered by the oil exporting states organized in OPEC. While business history has offered some empirical accounts of these events, the main theoretical insights have come from international relations, in particular from the proponents of hegemonic stability theory. Consistent with their "Realist" roots, hegemony theorists have focused primarily on relations between states and have paid little attention to the relations between the transnational oil majors and nation states. Focusing on the complex relations between the major transnational oil firms and nation states, the paper calls into question the validity of hegemonic stability theory in explaining the collapse of the globally organized, company-centered international oil regime and the resultant fragmentation of the industry as nation states took increased control.
Christopher Beauchamp
Government and the Telephone Patents in Britain and the United States, 1876-1897
The early telephone industry in the United States and Britain was one of the outstanding patent monopolies of the Second Industrial Revolution. Judges drew the patent rights of the dominant companies so broadly as to give them control over all transmission of speech by electricity. This paper studies one distinctive response to the telephone monopolies: namely, that the British and American governments became involved in attacks on the proprietary status of the technology. Governments in the late nineteenth century did not purport to regulate the extent of market control conferred by ownership of patent rights. Why and how then did they attack the telephone patents? Were their actions capricious and anomalous, or did they reflect an attempt to engage with the changing relationship between intellectual property and market power in the late nineteenth and early twentieth centuries? In addressing these questions the paper's comparative perspective illuminates differences between national regimes of property rights over technology.
Dag Magne Berge and Ove Bjarnar
Between "learning by learning" and "learned incapacity to learn": The Political Structure of Knowledge Flow in Norwegian and Scottish Fish-Farming
Targeted innovation policies have gradually since the 1980s been premised on allegedly new understandings of the process of knowledge flow and innovation. Interactive learning and the intersection of tacit and formal knowledge have become key words. In recent theories on regional innovation, interactive learning and knowledge flowing smoothly between regional actors constitutes a basic provision for processes of innovation. The idea is that regional innovation systems can develop the capacity to be reflexive and to apply institutional memory and intelligence, in other words learning by learning. These approaches, however, underestimate the role of interests, power, and politics in structuring knowledge flow between actors, institutions and systems. By comparing knowledge flow in Norwegian and Scottish fish-farming, the paper demonstrates empirically the relevance of incorporating socio-economic factors, conflict of interests, policy formation, and government regulations in analysis of innovation systems. The paper concludes that concepts like "learning by learning" do not capture essential selective mechanisms that influence the flow of knowledge in innovation systems, and poses the question to what extent such concepts may have normative implications or operational consequences for innovation policies.
Leslie Berlin
Entrepreneurship and the Rise of Silicon Valley: The Career of Robert Noyce, 1956-1990
The premise of this dissertation is that the career of Robert Noyce can illuminate the relationship between entrepreneurship and the rise of the semiconductor industry in Silicon Valley, California. Noyce co-invented the integrated circuit, the direct precursor to the microprocessors that lie at the heart of modern electronics. He co-founded Silicon Valley's first successful semiconductor company (Fairchild Semiconductor in 1957), as well as the industry's most powerful firm: Intel. Noyce both co-founded and served as a prominent spokesman for the industry's most effective lobbying organization, the Semiconductor Industry Association. His successful entrepreneurial career inspired hundreds of Silicon Valley residents to start their own high-tech companies. For the last two years of his life, Noyce served as the first CEO of SEMATECH, a billion-dollar manufacturing research consortium with membership that included fourteen semiconductor firms and the Department of Defense. The dissertation explores four major themes: the roles of apprenticeship and invention in high-tech entrepreneurship, the uneasy relationship between the U.S. government and American entrepreneurs, the gap between the myth and reality of entrepreneurial success, and the limits of entrepreneurship.
Michael H. Best
Lowell's Industrial Regeneration: Dynamic Technological Capabilities

In this paper, I tell a story of Lowell, Massachusetts not as a textile city, but as part of a multi-industry, high-tech region with a technology genealogy that goes back to the early days of the state as an instrument-making region. I attempt to define, make operational, and measure the concept of dynamic technological capabilities at both the enterprise and regional levels. Capabilities are what enable firms to create new products and processes in response to new market opportunities. By building a database of technology producers in the Lowell area we can infer the cumulative process by which technological capabilities are developed over time. The database of enterprises includes product portfolio and employment for the period from 1986 to the present and, most important, the date of enterprise founding. I also tell a post-textile story about the industrial dynamics of the Lowell region and focus attention on firms and technologies that are obscured by standard industrial classification codes.
Knut Boge
The Development of the Modern Norwegian Road System, Compared to the Development of the Swedish and Danish Road Systems: The "Different" Road System—A Result of Path Dependence, Rent Seeking, and Weak Central Institutions?
Long-term economic growth, as well as national innovation systems, are dependent on roads and other infrastructures. The trunk roads or arteries between the regions or provinces are the backbone of the transport infrastructures in most affluent Western industrialized countries. The Norwegian state has enjoyed significant budget surpluses during the last two decades as a result of its oil and gas exports. There are good reasons to believe that the Norwegian road system should be among the best in Europe. Despite the public wealth, however, Norway lacks a national trunk road system. The transportation costs are high. The number of casualties is also high, given Europe's lowest speed limits and a generally low traffic density. This contrasts with Sweden and Denmark, which faced serious economic problems from the mid-1970s, but prioritized the completion of trunk roads. This paper outlines a study of the development of the modern Norwegian road system, compared to the Swedish and Danish road systems. The emphasis is on the period after 1945—that is, from the emergence of mass motoring. Why have Norwegian politicians failed to prioritize the construction of trunk roads?
Bram Bouwens
Internationalization of the Dutch Paper and Board Industry, 1965-2000
The case of the Dutch paper and board industry illustrates the development of the globalization process of a branch of industry during the second half of the twentieth century. In 2000, foreign multinational corporations owned over 80 percent of the Dutch paper and board companies. The paper argues that the transformation of the industry was a product of strategic alterations of firms rather than of a reduction of transaction costs that were made possible by technological advance. The internationalization of the Dutch paper and board industry had a historical pattern that was related to the specific structure of the industry. The contemporary developments are seen as a result of path dependent strategies of firms. Economic, institutional, and also bandwagon elements determined this process.
Marcelo Bucheli
An American Multinational Enforcing Business Contracts in the Third World Countryside: The United Fruit Company and the Colombian Banana Planters, 1900-1970
In the first half of the twentieth century the United Fruit Company (now Chiquita) created an impressive network of production and distribution of bananas from the Magdalena region in Colombia to the American and European markets. Its banana exports came from its own plantations and local planters that signed purchase contracts with the company. The literature on the United Fruit operations in Colombia has been focused on the company's labor relations, neglecting the relationship between this multinational and the local planters, or minimizing the planters' importance to mere providers of the fruit. I show that there was a very dynamic and changing relationship between these Colombian providers and United Fruit. In the first half of the twentieth century United Fruit faced the constant threat of holdup by the local planters, so it used foreign courts, loans tied to purchase contracts, and a special timing in the contracts as mechanisms to enforce them. The locals made several attempts to be independent from United Fruit's contracts, all of them unsuccessful. In the 1960s due to labor problems the company decided to move from Magdalena to the region of Uraba. When doing this, they could not find a way to oblige the Magdalena planters that were not tied to any purchase contract to pay back their loans. In Uraba, United Fruit used only subcontractors to provide it with the fruit and avoided the post-contractual opportunism problem by using a Colombian financial institution as a third agent to enforce the loan contracts. This paper is based on the internal archives of United Fruit in Colombia and the Colombian planters. These archives have never been used by any other scholar.
Kwan Man Bun
Managing Market, Hierarchies, and Networks: The Jiuda-Yongli Chemical Group, 1917-1937
As China underwent rapid industrialization, how did companies deal with the problems of agency, competition, and rent-seeking regulatory authorities? Drawing upon recent theoretical debates on business history, network sociology, organizational theory, and the archives of the Jiuda-Yongli Chemical Industries, Ltd., this paper focuses on the creative use of network capitalism and meritocratic nepotism. Instead of conceptualizing market, hierarchy, and social networks as mutually exclusive categories, Fan Xudong, the company's founder, mobilized its shareholders, interlocking directorates, bankers, relatives, friends, and public opinion to facilitate the group's expansion, managed the market through cartels, utilized opportunities, information, and resources afforded by its hierarchical network, and lobbied various state regulatory authorities while reducing transactional costs and agency problems within.
Chiara Casalino
The Globalization before "The Globalization Era": The Internationalization of the Italian Automobile Industry, 1946-1966
This paper is intended for the Dissertations in Progress Sessions, and it presents the preliminary results of my dissertation project, focused on the internationalization of the Italian automobile industry—that is to say, because of the extremely concentrated structure of the Italian car industry, Fiat internationalization. Based on the documents now kept in the Fiat Historic Archives, the work starts with an introduction regarding the first decades of Fiat's history, and then it concentrates on Vittorio Valletta's era, the so-called Professor who was Fiat chairman for twenty years. The paper describes the sources I've exploited for my research and the topics that they are linked to, the steps that remain to be done, and the interpretation of the facts I propose. The presence of Fiat abroad will be studied not only in its quantitative dimension, but also from a qualitative point of view, with the aim of acknowledging that internationalization, seen as a strategy of growth, affects all the aspects of the producer's activity (the market, the production, the commercial organization, the corporate culture), and to test whether it can be seen as a case of globalization before "the globalization era."
Youssef Cassis and Camilla Brautaset
The Performance of European Business in the Twentieth Century: A Pilot Study

The purpose of this paper is to outline the conceptual framework of the project on "The Performance of European Business in the Twentieth Century," present some of the project's initial findings, and start a debate on the issue of performance among business historians. We launched the project to fill a major gap in the business history literature. It provides a comparative analysis of business performance in seven key European economies: Belgium, Britain, France, Germany, Italy, Spain, and Sweden. We preview the outcome of the project in this pilot study using the first and the last observation years: 1913 and 2000. We focus on two key measures of performance: return on equity and holding return, two complementary measures which can move in opposite directions (for example in 1913, an annus horribilis for investors despite high returns on equity). Our intent is to confront these results with qualitative data on a number of individual companies, making use of a prosopographical approach. Exploring the potential of integrating the history of the firm into a collective analysis of business performance should provide business history a contribution to the theme of performance, distinct from that of economics, accountancy, or business strategy.
Ning Jennifer Chang
Vertical Integration and Business Diversification: The Case of the China Egg Produce Company in Shanghai, 1923-1950
In the past it was thought that Chinese firms in the first half of the twentieth century, without the advantages of new technologies, ample capital, and special tax treatment enjoyed by foreign enterprises, could hardly compete with Western intruders. Recent studies, however, indicate that we underestimated the vitality of Chinese businesses. This paper is a case study of an industry whose products were sold exclusively to Europe and were controlled by a single Chinese business, the China Egg Produce Company (CEPC), along with six to eight British and American enterprises. Focusing on the CEPC and the refrigerated egg-packing industry during the interwar period, this paper argues that CEPC was quick to grasp Western management in terms of vertical integration and business diversification. Thanks to their ability to deal closely with the small egg collectors in the producing areas, CEPC managed to gain a footing in a business dominated by foreign enterprises. They then consolidated their position by seeking to control every link of their operation including egg purchasing, processing, transporting and, eventually, even selling. In addition to vertical integration, CEPC also diversified their business. Chinese enterprises during the interwar period shared many of the characteristics displayed by the early multinationals, including vertical integration and managerial hierarchies. When it was obviously profitable, Chinese firms were quick in transferring, absorbing, and adapting Western management and technology. This process was interrupted by the outbreak of World War II and later by the Communist Revolution. The example of the CEPC should lead historians to wonder whether the company would have developed into a Chinese multinational if there had been no political upheaval in the 1950s.
Andrea Colli
Convergence Lost: Finance, Governance, and Industry in Italy at the Beginning of the New Millennium
This paper will explore the evolution of the Italian financial market and its impact on the governance of Italian big business during the twentieth century. The main goals of this research are a) to understand if it is possible to talk of an "Italian model" of finance and corporate governance, as well as b) to identify which are the forces that contributed to shaping it during the last century, and c) to discuss the patterns of evolution of this model during the last two decades in the light of the globalization of the financial markets. After a general introduction on the main finance and governance models and on their convergence patterns in theory and history, I will examine the architecture of the Italian financial markets and its impact on the corporate governance of Italian corporations during the last century. In a third section I will identify the main forces driving toward a transformation of this system during the 1990s and analyze the outcome of this process. In the conclusions I will discuss the "convergence theory" in the light of the evidence from the Italian case.
Jonathan Coopersmith
When Worlds Collide: The Government and Electrification, 1892-1939

Electricity, as a technology with scientific dimensions and as a utility requiring major investments, rapidly became an international business venture. However, electricity also had public dimensions that attracted public authorities. The State became involved in the electrification process not only as a regulator and standard setter, but also as a client and eventually as an investor, either through collaboration with the private sector or as the sole actor through nationalization. Although the State confined itself within the boundaries of its territory, there is no doubt that its gradual intervention had a significant impact on global electrification and that the constant presence of the State gave electrification a strong ideological dimension easily perceptible in speeches and decision making.
Karel Davids
The Transformation of an Old Industrial District: Firms, Family, and Mutuality in the Zaanstreek between c.1840 and 1920
Between c.1840 and the First World War, the industrial district of the Zaanstreek, The Netherlands, underwent a radical change in energy base—from windpower to steam—and a fundamental shift in industrial structure. This paper focuses on the change in forms of inter-firm cooperation that accompanied this drastic transformation. The specific issue that the paper seeks to address is: How and to what extent did entrepreneurs in the Zaanstreek maintain or adapt the institutions in which inter-firm co-operation took shape? The case study shows why institutions of inter-firm cooperation based on the principle of mutuality, which had served as key elements of this industrial district for over 150 years, did not survive the transformation at the end of the nineteenth century, and why new formal institutions of inter-firm cooperation in the end failed to take their place. Ties between firms within the industrial district were in several respects replaced by, or subordinated to, ties between firms outside the industrial district. What kept inter-firm cooperation in the Zaanstreek nevertheless intact until the 1950s were the ties of regional family networks. But the paper shows that these networks did not remain immune to the effects of the industrial transformation between 1840 and 1920.
Mila Davids and Hans Schippers
Innovations in Dutch Shipbuilding: A Systems of Innovation Approach
Originating in a small country with a limited home market, Dutch firms have long been active on a global market. Before the twentieth century their dependence on foreign technical knowledge was striking. The adaptation and subsequent distribution of foreign innovations were common in most industrial sectors. During the nineteenth century, the Netherlands was a country that lacked a strong knowledge infrastructure. This situation changed during the twentieth century. Due to this developing knowledge infrastructure, also referred to as a national innovation system, the innovativeness of Dutch industrial enterprises gradually grew. In this paper, we focus on the shipbuilding sector, which operated in an international market, and address the question of how its innovative capacity evolved over time. Was the Dutch industry able to compete with foreign companies or did they remain "followers" with respect to innovation, and how important was the national innovation system in this respect? To answer these questions we examine the market situation and product as well as process innovations in the first half of the twentieth century. We focus on the whole constellation of actors in Dutch shipbuilding, their relations, interactions, and interdependence, as well as on the institutional setting, to gain a better understanding of the innovation processes in Dutch shipbuilding in the first half of the twentieth century.
Pascal DeSabres
The Parisian Subway, 1880-1900: A Local or a National Interest Line? On the Concept of Globalization

The aim of this paper is a new reading of the opposing arguments about the Métro project, using the concept of globalization (regarded as the integration of a network into a larger network, vital for the smaller system). This concept arose later than the two decades (1880-1890) we examine, but in the archives, we discover a desire to integrate the Métro network into a bigger network, owned by the great railway companies. The city refused this scheme, facing the national government in a political, not a technical, quarrel. A short analysis of some contradictory documents in this debate led us to change our views regarding the great railway companies: they are not the lobbying power described by their enemies, but, rather, in the 1880s, the only skilled actor able to build a Métropolitain railway in Paris. Finally, the Parisian "Métro" was built, ending a long quarrel opposing Paris and the state.
Ken Durr
The Developmental Dilemma: The International Basic Economy Corporation and the Limits of Corporate Social Responsibility, 1947-1980
The International Basic Economy Corporation (IBEC) was founded in the immediate postwar years in an attempt to apply U.S. capital and technical assistance to the problems of Latin America underdevelopment through the agency of a for-profit corporation. This paper examines the effect that this unusual founding mission, coupled with ongoing Rockefeller family control, had on the company from the years 1947 to 1980. Touching on the changing role of the multinational corporation in Latin America, the administrative challenges created by Nelson Rockefeller's personalistic managerial style, and Rodman Rockefeller's ultimately unsuccessful effort to more clearly define and extend IBEC's contribution to a movement toward corporate social responsibility that emerged in the 1960s, this paper concludes that ultimately, IBEC's longevity and its achievements and failings alike were possible only because the conflict between its conduct as a broadly-based "Rockefeller enterprise" and its establishment as a for-profit business never had been resolved.
Gunhild J. Ecklund
Conflicts and Cooperation: The IMF and Scandinavia, 1944-1960s

Since its conception in July 1944, the International Monetary Fund (IMF) has been an important promoter of globalization by facilitating the growth of world trade and international market integration. Today, the IMF sets strict conditions of economic transformation and liberalization in order to provide financial and technical assistance to member countries. Historically, however, the Fund has not always had the power and legitimacy to force its demands. Based on a comparative study of relations between the IMF and three Scandinavian countries from 1944 until the 1960s, in this paper I demonstrate that in its early history, the IMF faced fierce opposition from governments that questioned the organization's right to intervene in domestic matters. I examine how and why the Scandinavian countries built different relationships with the IMF, ranging from relatively relaxed cooperation in the Danish case to extremely tense relations in the case of Sweden. I also suggest that the IMF responded very cautiously to such opposition, and adapted its advice to what was politically acceptable in the various member countries.
Bernard Elbaum
A Long, Contingent Path to Comparative Advantage: Industrial Policy and the Japanese Iron and Steel Industry, 1900-1973
From 1900 to 1960, the Japanese iron and steel industry was nursed along by some varying combination of subsidies, trade protection, and military demand. Industrial policy made an important contribution to industry achievement even though it was prolonged, flawed, subject to political influence, and based on limited forecasting power ex ante, particularly with regard to the recurrent problem of raw materials. Despite many such problems, the record for steel—and other parallel cases—suggests that for a less developed nation as was Japan, market failures are sufficiently pervasive and large in scale that a diversified portfolio of interventions in basic industries can yield enough striking successes to repay the risk. Over the long term, however, implicit public commitment of aid to troubled industries may have created moral hazard problems that contributed to difficulties with excess capacity—difficulties that worsened with economic maturity and a less favorable market environment and that limit the attractions of the Japanese model.
Jeffrey A. Engel
Controlling Globalism's Reach: The Anglo-American Aviation Embargo of Communist China and the Downfall of British Aerospace
British aviation entered the 1960s in crisis. Their lead in jet aviation lost with the demise of the Comet airliner, with production costs up and revenues down, British policymakers and aircraft makers each sought new markets to sustain their industry until new, more competitive models could take flight. They focused on the People's Republic of China, a market wholly devoid of American competition. This paper uses the experience of British and American aerospace corporations, and British and American archival records, to reveal Britain's initially successful—though ultimately fruitless—efforts to sell advanced commercial aircraft to Beijing despite vigorous American opposition. To win this market, the British government authorized Vickers Aviation to sell American-licensed aerospace equipment to Beijing despite Washington's clear ban on the practice. To sell in China, in other words, and more broadly to aid Chinese industrialization, London purposefully violated American laws. This paper explores the Viscount sale, demonstrating how fear of American retribution ultimately destroyed Britain's chances for monopolizing this potentially vast market. It shows how economic warfare theories and multilateral and national restraints on Cold War business affected international corporations, limiting globalism's reach through the air.
Elysa Engelman
Dear Mrs. Pinkham: Expanding Intimate Advice Networks into a National Community of Consumers, 1890-1935
Despite its shady associations with bribery and deception, testimonial advertising remains one of the most successful techniques for promoting brand name consumer goods. Arguing that we need a better of understanding of how testimonials translate into sales, this paper examines the sophisticated and long-lived testimonial campaign of the Lydia E. Pinkham Medicine Company (1875-1968). Long after the end of the golden age of patent medicines, the Pinkham company sold millions of bottles of its Vegetable Compound to American women, using dramatic testimonials from loyal customers in conjunction with a reassuring trademark and personal correspondence between the company and potential users. A close look at Pinkham advertisements, letters, and company records reveals how the company knit together individual consumers into an imagined community, a national advice network that crossed boundaries of region, occupation, and class. Using testimonials to blur the line between commerce and friendship, the company convinced women to trust Mrs. Pinkham and her product. In the end, testimonial advertising was the most potent ingredient in the Pinkham formula: the combined voices of thousands of satisfied customers created a placebo effect that "cured" some women of their menstrual and menopausal complaints.
Valentina Fava
Bipolarism and Globalization: The Škoda Standpoint
The paper examines the "globalization issue" from the standpoint of Škoda Auto. After its success and growth in the interwar period, the company experienced difficulties that led to a slow decline. The issues addressed in this paper are the isolation forced upon Škoda during the Cold War and its implications for the further development of auto making in Czechoslovakia. It seemed relevant to view the Škoda experience in comparison to that of the European industry in general, underscoring the fact that the breaking off of relations with the West coincided with the period of greatest development in the automotive sector. In the 1950s, while the international automobile industry strove to expand, Škoda had to struggle for survival. The paper points out how a system based on reduced consumption and military priorities led to a marginalization of automobile production. In addition, the severing of commercial and technological relations with the West seemed not balanced by any kind of intrasystemic integration that could compete with what the West was going through during the same period. Finally, the paper shows how "sovietization" led to a worsening of the central problem facing Czechoslovak industry in the 1900s: the search for a national industrial model. The search for the "Czechoslovak way" would have diminished Soviet influence and loosened the hold of Socialist ideology on the country, becoming an important impetus toward fragmentation.
Lu Feng and Mu Ling
Indigenous Innovation, Capability Development, and Competitive Advantage: The Origins and Development of the Competitiveness of Chinese VCD/DVD Industry
Can firms in catching-up countries gain competitive advantage through innovation while they are still more or less dependent on foreign technology? If they can, is there a pattern? In a study of the history of the Chinese VCD/DVD industry, we found that, although Chinese firms have to rely on foreign basic and core component technologies, they have initiated VCD product innovation, and remained competitive by delivering superior products. The experience of this industry shows that it is still possible for firms in catching-up countries to innovate, to learn, and to gain competitive advantage over the more powerful, even though they have to start their technological learning based on technologies developed by advanced countries. A critical factor influencing such possibilities is the national value network in which firms have developed their perceptions of economic value in new technology. As new products or technologies developed in advanced countries spread across the national value network, local firms may generate novel ideas and different definitions about product performance, which mainly involve architectural knowledge, if they can participate in technological change early enough. And there is no insurmountable barrier for them to apply these ideas to the product through architectural technology. Therefore, there is a broad sequence in which firms in catching-up countries may achieve breakthroughs first in architectural innovation. What is critical is the effort in technological learning and capability development.
Paloma Fernández-Pérez
Family Firms in the Age of Globalization: Cooperation and Competition in Spanish Metal Manufacturing, 1870s-1970s

Inter-firm cooperation in Spain was an entrepreneurial growth strategy that was well suited during a century of metal transformation activities. Independent regional family firms dominated this economic sector in a national economy relatively isolated from international competition. Metal manufacturing firms in the wire/wire derivatives sector provide a good case study to show the dominance of family firms and regional ties in a sector that apparently required only integration to grow in the age of globalization. The loss of ownership of most old-century firms in the last three decades of the twentieth century proves that cooperation alone is not a guarantee of survival, particularly when the firms studied needed to conquer foreign markets in addition to maintaining their regional markets.
Mark Fruin and Kazuhiro Taniguchi
The Disjointed Hand: The Coordination Failure of Modern Firms in Japan
Using Chandler's (1977, 1990) definition of modern firms, we examine the nature of firms in Japan. We argue that national differences affected decisions about which twentieth-century firms were considered modern. In the twenty-first century, such differences should diminish. We examine contemporary Japanese firms in four areas: corporate governance; employment practices; supply chain management; and entrepreneurship, for supporting evidence, and find widespread coordination failure.
Dario Gaggio
Local Knowledge and Global Connection in Italy's Gold Jewelry Districts
A number of scholars have emphasized the importance of knowledge flows to the gaining of competitive advantages by clustered and flexibly specialized firms in industrial districts. Crucial to the success of these local systems is the construction and reproduction of unique collective skills rooted in heterogeneous networks that link local and extra-local actors. This paper addresses the question of what it means for local societies to become sites of unique skills by looking at the history of two Italian towns specializing in the production and trade of gold jewelry in the 1950s and 1960s. Issues of meaning and power have been neglected in the literature. By reconstructing the conflicts and negotiations in the two towns over skill formation, I place the politics of knowledge at the center of my narrative and examine the contrast between tacit knowledge, embedded in informal relations of apprenticeship, and explicit knowledge, rooted in formal technical education. The distinction between the two kinds of knowledge was itself politically constructed in the two towns, and such distinction was crucial to the preservation of—or challenge to—the prevailing structures of economic power.
Renato Giannetti
"Constructing" the Industrial District
The paper investigates the construction and the changing meaning of the "local system of production" since its "invention" in the early 1970s. We find the origins of the notion of a local system of production as a defensive device to adapt a peripheral area to a sudden break in economic conditions. Sociologists, for example, stated that cooperative ideologies (organized and promoted by Communist and Catholic parties) and a local organization of the labor market—strongly rooted in specific geographical area in Central and Northeastern Italy—helped those areas to cope with the crisis of mass production and big business. In the late 1970s and during the 1980s, the main meaning of the concept shifted to the "technological dynamism" of the local system of production. This was able not only to adapt itself to changing economic conditions, but also to compete successfully in the international market. This technological dynamism came essentially from the specialization of suppliers working in the same sector in a local area. The division of labor favored innovation, and moreover these innovations spilled easily over other firms thanks to their spatial contiguity. It was the time of "industrial districts" concept, which had strong roots in its own history. In the 1990s the meaning of "local system of firms" shifted again, from the capacity to innovate to the capacity to adapt defensively to a changing economic environment. The emphasis was again on the variety and ease of reorientation of productive capacity to market changes. New features were crucial, cooperation often became synonymous with market competition and lost a large part of its benevolent (and sometimes collusive) flavor. Industrial policy too came back into the center of attention, although in the form of local industrial policy.
Tiffany Gill
"This Industry is not Typical, but Exceptional:" African American Beauticians and Beauty Shop Culture in the Depression Era
"The largest and most profitable profession indulged in by Negro women in Harlem is the beauty shop," declared Works Progress Administration interviewer Vivian Morris in 1939. This Depression Era observation illuminates the sustained power of the black beauty culture industry even as the nation was in the midst of financial turmoil. This paper is a part of my forthcoming dissertation, "Civic Beauty: Beauty Culturists and Politics of African American Female Entrepreneurship, 1900-1965." My project's primary goal, beyond simply chronicling developments in the black beauty industry, is to illuminate the crucial role economics and entrepreneurship played in black women's political activism and community building. I posit that the black beauty industry—in particular, beauticians and the institutions they built—provide one of the most fruitful sites to explore the social, political, and economic challenges experienced by black women throughout the twentieth century. In this discussion, I will place black beauty culturists (hairdressers, salon owners, and product manufacturers) at the forefront of the social, political, and economic shifts that came about as a result of the Great Depression. The way that black beauty culturists responded to the changes in their industry at this pivotal moment laid the foundation for the formal political activism black women engaged in the modern civil rights movement. Greatly informed by recent historiography on the history of women and business in the twentieth century, as well as by the growing literature on African American entrepreneurship, I will seek to understand how black beauty culturists made claims to citizenship based on their understanding of the relationship between economics and political activism. My primary goal is to restore economics as an important variable in understanding black women's civic activism and community building. To that end, the black beauty industry, often vilified as subjugating women more than legal inequalities, and denounced for peddling products that denied an authentic "blackness," I suggest, must be understood as providing one of the most important opportunities for black women to agitate for social change both within their communities and in the larger political arena.
Margaret B. W. Graham
Less Transfer than Transformation: The Formation and Evolution of Corning's Avon Laboratory
This paper looks at the institutionalization of transnational technology transfer at Corning, Inc., one of the first U.S. companies to form an international R&D network. The formation of Corning's Avon Laboratory near Fontainebleau, France, was the first step in this process. In 1972, when Corning devised a strategy to "grow" an international laboratory, it envisioned a multi-lingual research staff at a greenfield site in an "international" location (Geneva or Brussels). Business realities forced the company instead to "make do" with the Avon Laboratory. The small parochial French laboratory was a poor vehicle for its original purpose—product adaptation for multiple European markets. But Avon more than justified its existence for Corning's evolving research network. The bridge it provided between Corning's French and U.S. operations enabled a two-way flow of knowledge, and the sharing of complementary experience helped to renew and transform Corning's central laboratory at a critical time.
Bishnupriya Gupta
Work and Efficiency in Cotton Mills: Did the Indian Entrepreneur Fail?
What explains the low productivity of Indian cotton textile workers, compared to workers in other countries such as the United Kingdom and Japan? Clark and Walcott argue that it is the low effort level of the Indian worker, reflecting workers' relative preferences for low work intensity rather than income and union resistance to increased work norms. This paper suggests that two alternative explanations are more compelling. First, nutrition levels and living conditions were such that Indian workers may have been physically incapable of higher work intensities, in line with nutritional efficiency wage arguments. Second, effort and wages may have been inefficiently low, but managers failed to recognize the possibility of a Pareto improving rise in both. This may have been due to the separation of the managerial functions in Indian industry, where responsibility for work discipline rested with the jobbers, while the technical staff was mainly European. We also show that labor use per machine was not higher in the unionized Bombay mills as compared to other regions, suggesting that worker resistance to increased effort cannot be an explanation for low productivity.
David C. Hammack
Explaining Cleveland as an Industrial Region: Innovation and Entrepreneurship in Firms and Industrial Clusters, 1840-1930
What made Northeastern Ohio an innovative, entrepreneurial place in the nineteenth century, and then allowed it to succeed for over one hundred years in nurturing new companies and industries? Why did the region then seem to lose its entrepreneurial capacity? To address these questions we developed data on patent activity across the United States and data on firms listed in the rating books published by Dun & Bradstreet and its predecessors in 1860, 1880, 1900, and 1925. Northeastern Ohio/Cleveland firms achieved increasing returns and a high rate of productivity growth after 1860 not only by passively taking advantage of their location at the cheapest place in North America to produce steel (for this period), but also by actively developing significant sources of invention and innovation, and by actively expanding national networks that linked inventors and entrepreneurs, especially in the northeastern United States, to investors and to local firms and specialists.
Susanne Hilger
"Pacemakers of Globalization in German Industry: Corporate Strategies at Siemens, Daimler-Benz, and Henkel, 1945-1975

In the age of globalization, from the late twentieth century onward, we have measured strategic management qualities by their ability to deal with structural changes in a flexible and innovative manner. Until the early 1970s, German companies got the necessary managerial tools to do this by facing up to their American competitors and learning from their management practices. With the help of expertise and innovations from the United States, German companies were able to meet the challenges posed by a global world economy. Using business records, I examine globalization at a microeconomic level by analyzing corporate strategies and techniques German companies such as Siemens, Daimler-Benz, and Henkel chose to cope with the internationalization of business until the 1970s. I address the motivations and results that accompanied this process of globalization.
Riitta Hjerppe
The Significance of Foreign Direct Investment in a Small Industrializing Economy: The Case of Finland in the Interwar Period

In this paper I use a new database to clarify the number of foreign-owned companies in interwar Finland, to show the ownership distribution by country and by industry and to give a preliminary estimate of the significance of foreign direct investment in the Finnish economy: the share of industrial production in foreign-owned firms as well as their proportion of all share capital in limited liability companies. The new database shows a small but unexpectedly high amount of foreign ownership in the Finnish economy in the interwar period. The majority of companies were there to take advantage of the ample timber resource, but as trade agents or sawmillers that is, in the simpler forms of timber use, not in the fast developing paper and pulp industry. Another major group of foreign companies were the Swedish, German, British, and American multinationals selling and servicing their products in the Finnish market, rather than setting up production or assembly plants.
Janet Hunter
Optimizing Effort: Institutions, Incentives, and Technology in Japan's Silk and Cotton Mills before the First World War
This paper analyzes the relative importance of labor management institutions in generating improvements in productivity and enhancing worker incentives in Japan's textile factories before the First World War. Scholarship has shown that much of the output growth around the turn of the century was extensive rather than intensive in nature. Productivity gains were significant, but advances in labor productivity were largely contingent on the increasing productivity of either capital or raw material. The paper suggests that the institutional set-up was not calculated to optimize worker effort, and may even have offered disincentives to increasing labor productivity. However, it also argues that the system was integral to technological and organizational innovation, and also permitted employers to reap the benefits of increases in output and productivity.
Bruno Jégou
Foreign Trade and Protectionism in a French Region at the End of the Nineteenth Century

I examine the effects of free trade and the return of protectionism at the end of the nineteenth century in Brie, a small French region close to Paris. The study is based on the Industrial Statistics, an administrative source comprising data on all of the companies in the region, particularly items pertaining to the firms' economic situation. Careful analysis demonstrates the pertinence of this source without overlooking its limitations. Using Industrial Statistics, I identified factors promoting and hindering the growth of companies in the region and assessed the relative importance of international trade in the regional economy. I consider the diverse situations in each branch to determine the importance of international trade in export markets and foreign competition in a mainly free-trade context. In general, the global effects of free trade established in 1860 do not seem to be as negative as the return to protectionism in 1892 (the end of the period examined) would suggest. In addition, it is interesting that the competitive strategies observed were often very modern, similar to those observed today.
Jan Jörnmark
The Asymmetrical Impact of the First Era of Globalization on Different Swedish Regions
The paper discusses the "first globalization" in a national as well as regional setting. Using Sweden as a rather typical example of this industrial revolution, the "revolution" is treated as an example of profound structural change, which affected different regions of the country in very different ways. Thus, Sweden saw the transformation of its former "base industry"—the iron industry—into a new industrial structure, based on the exploitation of the foremost raw material: wood. In turn, the wood industry gave birth to several industries: saw mills, pulp, and paper. It is argued that this change, which affected different regions very differently, led to deep tensions within Swedish society. The wood industry made its fastest and most thoroughgoing impact on the regions outside the old industrial heartland, Bergslagen. Despite this, the new industrial forces started to affect this area as well by the early 1880s. It is argued in the paper that this clash between "old" and "new" industrial interest groups was pivotal to Swedish developments during the next century. The clash of interest led to a political and economic struggle. The "old" interest groups were stronger in their political articulation, which led to a pattern of institutional change that partly arrested the process of structural change. As well, the state's actions became increasingly important to this increased rigidity. The paper thus aims to discuss the process of globalization in a national-regional setting. The effects of the process on a country's institutional choices are analyzed, in an effort to discuss why nationalistic forces came to dominate the political field after the turn of the nineteenth/twentieth century.
Matthias Kipping
The Evolution of Management Consulting in Japan: Towards an American Model?
This paper will trace the history of management consulting activities in Japan during the twentieth century, comparing it with developments in other industrialized countries. There is no doubt that the Japanese consultancy market today is underdeveloped. As the paper will show in some detail in its first part, this is not for want of trying. Already in the 1930s American scientific management consultancies such as Bedaux, tried to gain a foothold in Japan—albeit without much success. A more comprehensive effort to develop the Japanese consulting market was made in the immediate postwar period, in conjunction with the so-called productivity drive—but, once again, with little or no tangible results. The next efforts occurred during the early 1970s, when leading American organisation and strategy consultancies such as McKinsey & Company and the Boston Consulting Group (BCG) opened offices in Tokyo. But their activities in Japan remained limited. In a second part, the paper will offer some explanations for the apparent delay in the development of the Japanese consulting market. Its main argument there was little need for their different services or "products" in the specific Japanese business system. This only changed after the burst of the so-called bubble economy in the late 1980s, when Japanese companies started reducing their management layers, became subject to more scrutiny from international capital markets and competitive pressures, both abroad and at home. While the market for American-style consulting thus remained limited until recently, Japan developed other types of advisory activities, more akin to its own business system. These will be detailed in the third part of the paper. Following the development of American-style consulting since the last decade of the twentieth century, many of these more indigenous consulting activities have been in decline or are changing shape.
Prakash Kumar
Science for the Market: Research Strategies to Improve a Natural Dye, 1897-1914
British India's European planters put up a spirited fight to protect natural indigo's export market in the West after the German firm BASF introduced cheaper and purer synthetic indigo on the market in 1897. India had been a significant producer and supplier of natural indigo (extracted from the leaves of the indigofera tinctoria plant) to the West throughout the nineteenth century, and the introduction of synthetic indigo (derived from coal tar extracts) threatened to bring that dominance to an end. To face cheaper synthetic's competition, planters conducted laboratory experiments to maximize the yield of indigo, improve its quality, and minimize the costs of production. This paper analyzes scientific experiments conducted in India and Britain between 1897 and 1914 in order to understand the process of scientific innovation in the natural indigo industry. I will focus on two key chronological points: 1903, when planters in the majority turned away from direct funding of experiments, and 1908, when a significant scientific report failed to make an impact on the business community. The paper will reflect on the relations of scientists and their patrons—the planters and the government. What types of scientific experiments were favored? And, on the other hand, why were certain key research findings ignored?
Richard N. Langlois
Chandler in a Larger Frame: Markets, Transaction Costs, and Organizational Form in History

In 1977, when Alfred Chandler's path-breaking book The Visible Hand appeared, the large vertically integrated "Chandlerian" corporation dominated the organizational landscape. A quarter-century later, however, the Chandlerian firm is under siege from a panoply of decentralized and market-like forms that often resemble some of the "inferior" nineteenth-century structures the managerial enterprise replaced. Recently, authors of two long essays attempted to reinterpret Chandler in a way that preserves the essence of his contribution while placing that contribution in a frame ample enough to accommodate both the rise and the (relative) fall of the large managerial enterprise. One is the work of the formidable trio of Naomi R. Lamoreaux, Daniel M. G. Raff, and Peter Temin; the other is my own paper called "The Vanishing Hand." There is much common purpose and a good deal of overlapping explanation in the two papers; and I see the essential differences that remain as complementary rather than contradictory. In the end, the papers offer quite similar solutions to what is perhaps the fundamental post-Chandlerian puzzle: why has a monotonic decline in transportation and communication costs since antebellum times resulted in a "reswitching" of organizational form back to what appears to be an "earlier" structure of decentralization, market orientation, and relational contracts?
Mitch Larson
Practically Academic: Forming British Business Schools in the 1960s

In this paper I show that British management has undergone an incomplete process of professionalization since 1945, demon-strated by the establishment of university-based "business schools" modeled on American examples. Industrial advocates of management education not only hoped to solve economic problems but also strove to raise the status of business within British society. The process is incomplete because true professionalization has not occurred. Earlier pathways to management work were never fully replaced: accountancy and engineering training still supply a sizable number of today's business leaders. In addition, neither government nor business has erected legal barriers to entry or attempted to control access to business education as in other fully professional fields such as medical practice. Firms supported management training initi-atives within the universities because they sought to combine the universities' academic prestige with courses of practical relevance such as those at well-known American business schools such as Harvard or the Massachusetts Institute of Technology. The explosion of business schools and management training provision that has arisen since the mid-1960s demonstrates the success of the "trail-blazing" function of the London and Manchester Business Schools in elevating management's social status.
Fabio Lavista
Local Cultures and International Influences among an Italian Group of Management Practitioners after the Second World War

This essay analyzes the creation and evolution of an informal network of managers, engineers, and technicians that influenced the modernization of management practice and culture in Italy between the late 1940s and the 1960s. One level of analysis deals directly with practices; the second describes the channels and the forms through which business knowledge spread during the postwar decades. On the first level, I analyze the re-engineering processes in two leading Italian light manufacturing industries, Olivetti and Necchi, explaining their characteristic techno-logical and institutional circumstances and the ways in which they attempted to adapt earlier versions of scientific management learned in the interwar period to new economic and technological conditions. On the second level, I trace the creation of a network for diffusing this information via published journals and public seminars and through foreign connections originating primarily in the institutions linked to the U.S. Technical Assistance and Productivity Program. My work allows us to identify the carriers of Americanization and, moreover, to understand how they acted and whether or not they succeeded.
William Lazonick
Indigenous Innovation and Economic Development: Lessons from "China's Leap into the Information Age"
On August 11, 1999, Qiwen Lu died during an operation for liver cancer at the age of 41. Less than two months earlier, he had submitted the final version of a book manuscript, China's Leap into the Information Age: Innovation and Organization in the Computer Industry, to Oxford University Press. The book contains detailed case histories, based on original field research, of four leading indigenous computer companies in China—Stone, Legend, Founder, and Great Wall—that emerged out of China's science and technology infrastructure inherited from the era of central planning. This paper distills the insights contained in Lu's four business histories to inform the theories of innovative enterprise, indigenous innovation, and economic development. Lu's studies emphasized the importance for the success of these enterprises of 1) knowledge and people drawn from the Chinese S&T infrastructure, 2) strategic control by autonomous enterprise managers with scientific backgrounds over the allocation of resources in the new technology enterprises, 3) financial commitment to the innovation process through managerial control over internal funds and, at critical junctures in the growth of the firms, stock market listings that raised cash without sacrificing managerial control, and 4) organizational integration of R&D, manufacturing, marketing, and services to generate higher quality, lower cost products. The concluding section of the paper considers the roles of indigenous innovation in China's economic transition, with an emphasis on the importance of understanding the role of innovative business enterprises in transforming a centrally planned economy into one that is more oriented toward market competition.
Tim Leunig
Can Profitable Arbitrage Opportunities in the Raw Cotton Market Explain Britain's Continued Preference for Mule Spinning?
In an influential article Saxonhouse and Wright argued that the quality of local cotton was the single most important factor in explaining national preferences for ring or mule spinning. For Britain, they argue that mills using more flexible mule spindles could exploit arbitrage opportunities between different types of cotton in the Liverpool market, reducing the incentives to adopt rings. We use newly assembled price data to show that such cost-reducing arbitrage opportunities were small. We argue instead that the primary determinants of Lancashire's technological choice were demand factors, but that the availability of good raw cotton did determine technological choice in emerging cotton industries.
Andrea Lluch
From Local to Global Markets: Notes on the Role and Function of Commercial Networks in the Export Boom of Argentina, 1890-1930

Without intermediation, it is difficult for trade to take place. In this paper, I explore the centrality of local agents in the export boom at the beginning of the twentieth-century in Argentina, a country that ranked among the top five exporters of wheat in the world. Agrarian expansion was the motor of the economic growth of Argentina and it was part of a wider economic process that included other Latin American rural areas that developed forms of commercial agriculture. Rural merchants have been a driving force behind rural-led economic development in the Argentinean pampas. I am interested in analyzing not only the role of local agents but also the configuration of informal regional networks among different types of firms such as retailers, banks, importers, and grain exporters. The way in which commercial networks are organized varies over time and across space, and I concentrate on one of the margins of the pampeana region (the National Territory of La Pampa). My focus is the history of a family firm, Casa Torroba Brothers, which was the most important commercial house in La Pampa Territory, and whose long-standing commercial activity has made it one of the few cases of continuity and sustained commercial growth.
Teresa da Silva Lopes
Diversification Strategies in the Global Drinks Industry
This paper examines the diversification strategies of the world's leading multinationals in alcoholic beverages between 1960 and 2002, a period when that industry underwent major changes and became global. The paper explains why, despite following quite different diversification strategies, these multinationals appeared quite similar by the beginning of the twenty-first century. It suggests that while these firms internationalized extensively within their core businesses, they restricted diversification to their domestic markets. This paper also looks at the cycles of diversification followed by these firms within the alcoholic beverages industry, explaining why the dominant patterns of diversification they followed were from beer into wines and spirits; from spirits into wines; and, more modestly, from wines into spirits. The overall argument of the paper is that these apparently distinct diversification strategies can be explained by a combination of physical linkages and knowledge linkages that existed between the businesses.
Teresa da Silva Lopes
The Growth and Survival of Multinationals in the Global Alcoholic Beverages Industry
This dissertation examines the rationale for multinational growth and survival in the global alcoholic beverages industry from 1960 to 2002. It takes a historical, international, and comparative approach, looking at the evolution of about seventy leading multinationals from different continents, based in one or several distinct alcoholic beverages businesses (beer, wines, and spirits). Certain firm-specific advantages are considered to be crucial in explaining growth and survival, the most important of which are brands and marketing knowledge. While marketing knowledge explains the intelligence and skills behind the management of these firms, brands explain, among other things, the alliances formed with direct competitors, the systems of corporate governance of firms, their diversification strategies, and ultimately the merger waves that occurred in the industry. The crucial contribution of brands also explains why they frequently outlive the firms that created them. With implications beyond the alcoholic beverages industry, the dissertation indicates that, in non-science-based industries, where levels of competition, concentration, and globalization are high, brands and marketing knowledge, rather than technological innovation, are central in explaining the growth, internationalization, and survival of firms.
Santiago López
The Role of Telefonica: The Internationalization of Telecommunications in Spain, 1970-2000

In this paper, I explore Telefonica's role in the technological and enterprise development of Spain. During the early formation of data transmission networks in the 1970s, Telefonica created an industrial group with its own companies and foreign technology partners (Fujitsu and American Telephone and Telegraph). Their significant technological achievement was the RETD (Special Data Transmission Network), conceived as a network of general-purpose universal access using packet switching. The recent privatization of Telefonica has influenced the evolution of telecommunications equipment suppliers. My primary objective is the study of the competitive advantages of Telefonica using data from OECD Communications Outlook. I also study the changes in the relationships between Telefonica and its old industrial companies and explain the internationalization of Telefonica as a process-based relationship of mutual trust between "technological groups" (similar to business groups.
Robert MacDougall
The People's Telephone: The Political Culture of Independent Telephony, 1894-1913

In this paper, I explore the political culture of the independent telephone movement in America from 1894 to 1913. Thousands of small telephone companies appeared in those years to challenge the monopoly of American Bell. They embraced the language, if not the substance, of American populism, speaking boldly of "liberating the people" from Bell's "tyranny" and declaring their fight "the War for American Industrial Independence." However, what was truly radical about the independent telephone companies was not their overblown rhetoric, but their approach to the task of building America's communications infrastructure. The independents offered a different style of telephone network, oriented to a different class of consumers. Theirs was a telephone system with less reach but more democratic access, with less efficiency but more local control. Their story demonstrates the conflicts and the inescapable connections among corporate structures, physical infrastructures, and political ideas.
Ioanna Minoglou and Stavros Ioannides
Nineteenth-Century Greek Diaspora Trading Houses of the Black Sea Region: From Individual Entrepreneur to Multi-Person Organization
The first aim of the paper is to propose a conceptual framework for the analysis of the process through which the implementation of an entrepreneurial idea may or may not lead to a hierarchical organization like the corporate firm. We argue that firm-like organization—defined as corporate ownership of non-human assets—is less likely a) the more specific and unchanging over time is the entrepreneurial project pursued, and b) when the human constituents of the entrepreneurial venture do not obtain new knowledge during the venture's operation. The second aim is to explore the historical relevance of this schema. To this end, we have chosen the example of nineteenth-century trading companies. These entities, some of which were enormous and highly diversified, never made the transition to the corporate formula. The literature tends to explain this puzzle on the basis of the transaction costs arising from the ubiquitous possibility of post-contractual opportunism. However, evidence from the Trading/Merchant Houses of the Greek Diaspora of the Russian Black Sea—­which were even less hierarchical—seems to suggest one further characteristic of closed networks: that they ensure that new entrepreneurial discoveries—that is, entrepreneurial learning—will stay within a peer group of agents.
José Antonio Miranda
The Expansion of Spanish Footwear Exports: The Role of the Industrial Districts
At the start of the 1970s Spain was the second-largest exporter of leather footwear in the world. This was the result of a remarkable renovation of the industry that created high growth, as only the previous decade the sector had been in an extremely backward state, and production levels had been extremely low. The aim of this paper is to show how the Spanish footwear industry managed to transform itself, in only a few short years, from an obsolete industry that was of little importance to the national economy into one of the most important global exporters in the sector and one of the country's most important industries in terms of currency contribution. The paper will focus on how several existing industrial districts that specialized in footwear production, located in Alicante province, in southeastern Spain, played a crucial role in that successful evolution.
Hideaki Miyajima, Yusuke Omi, and Nao Saito
Corporate Governance and Performance in Twentieth-Century Japan

To understand the corporate performance of Japanese firms in the twentieth century, we have constructed a comprehensive database that includes asset, capital composition, profitability, and other variables relating to corporate governance structure. In this paper, we briefly introduce our project and report preliminary results of research on corporate performance and its determinants. We surveyed the long-term transition of ROA (defined as the ratio of profit after tax reduction to total assets) and its standard deviation using micro data of Japanese firms through the twentieth century, and investigate the effect of corporate governance structure (large shareholder and main bank) and the role of corporate groups (zaibatsu and keiretsu) on ROA and its volatility. Preliminary results show that high ROA with high volatility characterized the performance of large firms in the prewar period, while relatively low profitability with less volatility characterized the post-war era. In the 1990s, however, Japanese corporations showed extraordinarily low levels of performance with high volatility. The large shareholder enhanced firm performance in the prewar period. In contrast, zaibatsu did not enhance their affiliates' performance, nor did keiretsu and the main bank in the postwar period. Keiretsu group affiliation increased growth at the expense of profitability in the postwar period. Finally, zaibatsu in the prewar, and the main bank and keiretsu system in the postwar period both reduced the volatility of performance. This stabilizing effect was partly brought about by risk or profit sharing, and partly by strict monitoring (zaibatsu) and rent extraction (main bank). The main bank system and keiretsu systems lost the ability to reduce the volatility of performance in the 1990s.
Marine Moguen-Toursel
Strategies of European Automobile Manufacturers Facing Community Environmental Standards

After 1973, when the issues of pollution and fuel consumption gained significance in the context of the petrol crisis, countries gave priority to reducing fuel consumption. This new context was particularly threatening for the automobile industry, which therefore welcomed initiatives coordinated by the European Community to improve the global competitiveness of the European industry by harmonizing national standards of vehicle safety and the reduction of fuel consumption and noise. If all the actors in the automobile sector agreed on the general principle of reducing consumption, they nevertheless showed interesting differences about ways of achieving that goal. The aim of this essay is to highlight the strategies of the various participants facing the complex issues involved in reducing pollution. Were interests different from one firm to another or was there a certain unity at the national level? Did European manufacturers propose a unified answer to environmental questions or, on the contrary, did they have so many different goals that each tried to impose its own views on European institutions? More generally, this essay raises the question of the respective weight of sectoral cultures, by definition transnational, national cultures, and institutional frameworks on the attitudes of economic actors.
Stephen L. Morgan
China's Encounter with Scientific Management in the 1920s-1930s

Chinese industrialists, industry government officials, and business academics embraced Fredrick W. Taylor's ideas of scientific management (kexue guanli fa) for the advancement of China during the 1920s and 1930s. In this paper, I explore the discourse surrounding the introduction of scientific management in China, which occurred on a wider scale than is commonly realized. It was influential in the redesign of personnel systems and work organization in the 1930s. As Taylor sought to break the power of the artisan over the industrial process, Chinese managers strove to break labor contractors. The interest in "new" management extended beyond personnel issues to embrace organizational design, industrial psychology, and the industrial rationalization movement (chanye helihua), and it was not the province of industrialist and industry officials alone. Discussion of managerial practices around the world had currency in journals read by educated workers, clerks, and petty intellectuals, as well as the business elite. My paper is an initial exploration of the transfer of management "know-how" or soft technologies to China, how they were received, and how managers adapted new practices given the constraints of the Chinese business environment.
H. V. Nelles
Financing the Development of Foreign-Owned Electrical Systems in the Americas, 1890-1929: First Steps in Comparing European and North American Techniques

Networked electric systems spread across the globe early in the twentieth century. The process was led largely by groups of free-standing companies, or clusters of companies, based primarily in Europe (Germany, Belgium, Italy, Spain, Great Britain, France) and North America (Canada and the United States). In this paper I compare the several European patterns with those of North America in financing and organizing foreign utilities. The focus will be on the ways in which three forms of investment—the European industrial bank, the Canadian financial syndicate, and the US holding company—addressed different challenges in the process of foreign direct investment over time.
Heather E. Nelson
Insuring Canadians: The Wawanesa Mutual Insurance Company to 1976
This paper offers a brief explanation of my dissertation, which explores one of Canada's largest insurance companies, the Wawanesa Mutual Insurance Company. Wawanesa was created in 1896 by a small group of farmers intent on constructing a company to meet the needs of local farmers. Over the next thirty years, the company became a national company offering all lines of property and casualty insurance. One of the unique characteristics of this study is that it examines a national company that was headquartered outside of Canada's power and financial centers. What remains clear throughout the eighty years under investigation is that the company's expansion and its ability to adapt to both the social and economic difficulties make the company atypical in insurance, particularly in Canada. Many Canadian insurance companies started as responses to challenges posed by American and British competitors, but failed to adapt to changing circumstances, leaving the Wawanesa Mutual Insurance Company as one of the few remaining Canadian-owned and -operated property and casualty companies. This corporate success story affords an excellent opportunity to examine the company, its internal operations, and its interaction with society. In arguing that the company's strategies were responses to social pressures, resulting in successful adaptations in its structure, an understanding of issues like the role of regionalism in business, the development of appropriate distribution and marketing networks, and the development of regulatory practices as they pertain to insurance is developed.
Lucy Ann Newton
Global Exports and Local Finance: The Funding of Industry in Nineteenth-Century Sheffield
Britain's economy in the nineteenth century was based on a high level of international exports of goods and services. In terms of the traditional manufacturing industries, British iron and steel production dominated the world market before 1900. A major center of this production was Sheffield, a city made up of a network of interdependent, specialist firms. By the mid-nineteenth century works in Sheffield and its environs were responsible for 90 percent of all British steel production and 50 percent of all European production. It formed a prime example of the "industrial district" as defined by Marshall. This paper will analyze the means by which five companies in and around Sheffield raised finance. The issue of finance in industrial districts is a crucial one given the high trust and high-risk environment in which businesses operated. Sheffield's business people relied on very localized sources of finance: they called on familial contacts and local banks as sources for funding, in addition to regionally traded equities. The city and its environs thus formed an industrial district specializing in manufacturing iron, steel, and metal products that were exported to the world, yet it achieved this tremendous output through enterprises whose sources of funding were regionally generated.
Jari Ojala
Technology Management and Investment Decisions in a Mature Industry: The Leap of the Nordic Companies to Global Players from the 1960s to 2000
The technological leap made in the paper and pulp companies in the Nordic countries during the 1970s and 1980s by huge investments in modern production capacity and new products with a high degree of processing enabled the companies to grow during the 1990s into global, multinational players. This paper aims to analyze the unique institutional arrangements that profoundly affected the possibilities and outcomes of the Finnish wood processing industry from the late 1960s until the early 1990s. Under investigation are the investment restriction agreements made between the Finnish government (Bank of Finland) and the companies of the forest industry (through their interest group, Finnish Forest Industries Federation). The paper argues that these agreements, officially aimed at protecting Finnish raw wood supply, were among the main reasons for the rapid technological change within the Finnish paper and pulp industry. On the one hand, this technological change was one of the main reasons for the successful leap of the Finnish companies to becoming global players from the 1960s onward; on the other, the agreements constrained the possibilities for technology management and investment decisions within the individual companies.
Javier Vidal Olivares
Building and Managing a Global Network: Iberia, Spanish Airlines, 1940-2000
The airline Iberia was founded in 1927. From 1940 it was managed under the control of the State. It centered its strategy of commercial expansion in two main areas: Europe and Latin America. At the end of 1960 the company started to develop a first multinationalization process based on controlling flag carriers in Latin America. Given the existing restrictions in local markets by national regulations and by the IATA cartel, Iberia had to use different mechanisms to control those companies in order to avoid local and international barriers and also to develop a strategy of increasing traffic. The changing circumstances of the markets and the uncertainty of Latin American governments caused this strategy to fail. At the end of 1980 Iberia launched a program of mergers and acquisitions, pursuing a new multinationalization process also liquidated in a failure. This last failure reveals the differences in markets and local regulations compared with the past experience. The objective of this paper is to point out the differences of the two processes attempted by the company Iberia, stressing the different international contexts of the markets and of the institutions that regulate them. At the same time our aim is to explain how Iberia grew from a European state-owned flag carrier to a private global company.
Mary O'Sullivan
Historical Patterns of Enterprise Finance: The Case of General Electric
In this paper, I address the empirical challenge involved in understanding the historical evolution of the financial behavior of enterprises and leave the comparative challenge aside. Specifically, I focus on one of the most prominent U.S. companies over the last century, General Electric, to determine whether, or more precisely, how we can compile the data required to understand the historical evolution of the company's financing behavior. Relying primarily on the company's annual reports, as well as on data on the company's security issues from the Commercial and Financial Chronicle, I analyze the historical evolution of the company's investments, its capacity to fund them from internal sources, its reliance on external sources of finance, as well as the forms of external finance that it favored during the period from its incorporation in 1892 until 2000. I show that we can glean a detailed and comprehensive picture of that company's financial history from these sources for a period of more than a century.
Chad Pearson
"Unlike any city in the world": Employer Organizations, Welfare Capitalism, and the Open Shop Movement in Worcester, Massachusetts, 1885-1925
Throughout the first two decades of the twentieth century, major employers in Worcester, Massachusetts, succeeded in minimizing the power of labor unions. Worcester's industrialists adopted a variety of different strategies against organized labor, strikes, and workplace insubordination, including large-scale firings, blacklists, and welfare capitalism. They worked closely together in employer organizations, such as the National Metal Trades Association and the Employer Association of Worcester County, two organizations designed to achieve the "open shop." They were dynamic, keeping close tabs on troublesome workers and sharing information with one another about various managerial theories; they succeeded in keeping unions at a distance because they embraced both carrot and stick strategies. Worcester's employers were not satisfied with simply defeating the regional labor movement and maintaining relative industrial peace. They also advertised the distinctiveness of the city's industrial relations in trade magazines, books, and at national conventions. Members of the city's anti-labor union organizations shamelessly boasted about the superiority of Worcester, calling it "The City of Prosperity." This paper shows the ways that Worcester's powerful and immodest employers helped create an open shop city dissimilar to other industrial centers.
Robin Pearson and Mikael Lönnborg
Regulatory Regimes and the Globalization of Insurance
At the end of the twentieth century the global diffusion of one important financial service, insurance, was encouraged by deregulation, but it also encountered difficulties where deregulation remained incomplete and where there were many non-regulatory barriers to entry. International insurance was already well developed before 1914. The growth in the global insurance trade, however, occurred against a background of increasing national regulation and fiscal burdens in many countries, making international business affordable only for the largest companies with the deepest reserves. The object of this paper is to present some preliminary estimates of the extent of the international insurance trade during the half century before the First World War, and to assess the impact of national regulatory regimes and non-regulatory factors on the development of this business. The analysis is placed within the framework of modern theories of regulation, multinational enterprise, and internationalization.
Yovanna Pineda
Analysis of Manufacturing Strategies ad Profits: Industrial Development in Argentina, 1904-1930

In this paper, I examine three manufacturing strategies to procure large rents. The three most common strategies among fifty-nine manufacturing companies across ten sectors were short-term policies undertaken to best survive recessions or satisfy immediate needs. In the early twentieth century, merchant financiers invested in manufacturing because they expected generous returns. They invested widely across sectors to reduce their risk of failure. Manufacturers developed strategies to protect their investments, but ultimately they wanted to control their respective sectors to secure high income.
Caroline Piquet
The Suez Company's Concession, 1854-1956: Creating Modern Infrastructure, Destroying the Potential of the Local Economy

For more than a century, the Suez Canal Company's concession in Egypt was a French preserve, reflecting the role of the concession system there. Supported by favorable legislation, concession was the most widespread European business practice in Egypt. The system provided a way for Egypt to acquire modern infrastructures; the European contribution was a necessity, especially for digging the canal. The effect of the Suez Company is indisputable—the desert of the Suez isthmus was turned into a true economic area with ports, cities, and a labor force, and the region was progressively linked to the rest of the country via a road network. At the same time, however, the concession system denied the country any benefit from the infrastructure it created: the canal had to serve the financial and strategic interests of the company, not those of the local economy. The Suez Company thus embodies all the contradictions of the concession system, providing the country with a modern infrastructure while hindering the development of a national economy.
Ágnes Pogány
Cooperation and Competition: Interfirm Relations in Iron and Steel Cartels, 1886-1931: The Case of Austria, Czechoslovakia, and Hungary
In the Austro-Hungarian Monarchy there were two periods of cartelization before 1914. In the first period until 1900, low levels of interfirm cooperation hindered effective protection of the internal and export markets. In 1902 new iron and steel cartels were formed in the Monarchy. Institutions were established in order to inspire confidence and better cooperation. Both Austrian and Hungarian cartels were made on the same principles and had the same organizational structure, which made joint functioning possible. The newly formed common iron cartel reached significant results. Price decline was stopped and a compromise concerning the protection of the domestic markets could be signed with Germany and other major European producers. After World War I iron and steel producers of the successor states revived the former cooperation relatively early. Long personal contacts and common interests helped to alleviate serious problems caused by war and the peace treaties. Cartels aimed to stabilize steel production and prices by reconstructing market structures of the period before 1914. These efforts were not successful. A changed institutional and political environment, the resulting lack of confidence, and economic depression made well-functioning interfirm cooperation impossible.
Francesca Polese
Traveling for Industry: G. B. Pirelli and the Origins of the Pirelli Rubber Company, 1870-1872
Knowledge has been increasingly considered a crucial resource for economic and business development. However, recent literature has pointed out that "knowledge" per se is a rather generalized concept that calls for further specifications. Applying the framework suggested by Lundvall and Johnson, the paper is largely based on the first-hand evidence provided by the manuscript diary written by Giovanni Battista Pirelli (1848-1932)—Italian engineer and entrepreneur, founder (1872) of the first Italian rubber company, G. B. Pirelli & C.—during his educational journey through Europe (1870-1871), accomplished with the aim of acquiring the knowledge necessary to start the rubber industry in the country. The paper investigates the complexity of the learning mechanism, which in the second half of the nineteenth century allowed a relatively peripheral region like Northern Italy to reduce the gap separating it from the center of European industrialization. Special attention is devoted to the characteristics of the rubber manufacturing industry in the second half of the nineteenth century and to the specific difficulties encountered in the acquisition and transfer of knowledge (including technology) related to a relatively new and rapidly evolving industry. Finally, the paper attempts to explain how Pirelli was able to adapt the information attained during his journey to the Italian context.
Andrew Popp and John F. Wilson
Historical Perspectives on the Dynamics of Industrial Clustering in England
The paper integrates two important areas of literature, the Chandler model of corporate hierarchy and the discrete alternative models of small-firm flexible specialization, in order to explore long-run processes of structural and strategic change. To achieve synthesis, resource-based view (RBV) and resource dependency theories are combined to explain the evolution of different industry structures. A typology is developed delimited by the opposite cases of classic industrial districts and managerial hierarchies and hybrid alternatives to each. Empirical cases are offered, showing historical examples of conditions favoring each and also illustrating the forces shaping transition from one mode to another. The paper has implications for conventional interpretations and for the main areas of theory hitherto considered separately.
Daniele Pozzi
Techno-Managerial Competences in Enrico Mattei's AGIP: A Prolonged Accumulation Process in an International Relationship Network, 1935-1965

During Enrico Mattei's chairmanship, AGIP achieved important results in the natural gas business by completing a slow process of capabilities assimilation begun in the 1930s through the firm's activities abroad and its relationship with foreign technicians. During Mattei's years, through the ENI group, the company entered a new phase of development in Italy and especially abroad. Mattei paved the way for the evolution of the firm to a multinational dimension while keeping the characteristics (and the limits) that he had established just after the war. It took a younger generation of managers to bring the process to a successful conclusion. They abandoned certain "pioneering" policies and brought the company in line with international models in both technical and managerial skills.
Núria Puig and Adoración Álvaro
International Aid and National Entrepreneurship: A Comparative Analysis of Pro-American Business Networks in Southern Europe, 1950-1975
This paper deals with the relationship between international economic aid and national entrepreneurship. We examine the design of U.S. economic and technical assistance programs and their impact on the business communities of five Southern European countries (Portugal, Spain, Yugoslavia, Greece, and Turkey) during the Cold War in light of various economic and sociological theories. Using extensive archival research and an in-depth national case study, we argue that U.S. aid, provided by official agencies and private institutions through grants, loans, direct investment, and transfer of technical and managerial knowledge, acted in most cases as a catalyst for technologically advanced entrepreneurs in the Southern European periphery, where influential pro-American business networks emerged or were reinforced. We identify national economic groups, the state, U.S. multinational firms, and a limited number of key individuals from business and government circles, as the principal players of this mesoeconomic entity. We argue that pre- and post-war links to direct U.S. investments were more relevant and had more enduring effects on such networks and the resulting modernization than the assistance programs themselves. A conceptual framework is developed to explain how U.S. economic diplomacy and U.S. multinational firms interacted with national business circles and their environments, and how geopolitics and relative backwardness shaped the expectations and benefits of the groups and individuals involved in each country.
Laure Quennouëlle-Corre
State and Banking for Firms' Financing in France, 1945-1970
It is known that after the Second World War French growth was largely fueled by significant state intervention in the economy and by public financing for business investments. The system created by the Treasury in the 1950s and continued in the 1960s was based on a strong union among public, semi-public, and private financial institutions under the Treasury's direction and the Ministry of Finance's powerful administration. The Ministry of Finance, one of the most important economic actors in France during this period, had been trying on the one hand to liberalize the system since the 1950s, but on the other hand, it did not want to harm the "circuit du Trésor" that allowed its administration to control the economic situation. This paradox can explain the stop-and-go policy between liberalization and regulation followed in this period. At the same time, the relationships between the State and the banks became so tight that they strengthened the banking cartel and increased banking's contribution in the financial system. During the 1950s and 1960s, banks began a revival that increased after the 1970s recession, when the French economy returned to the market economy it had had before the Great Depression of the 1930s. The French financial choice for economic development was not in favor of markets, but clearly for the largest deposit banks, which concentrated financial intermediation. The question is important primarily because of its consequences for French firms' financial dependence.
Neil Rollings and Matthias Kipping
Networks of Peak Industrial Federations: The Council of European Industrial Federations (CEIF) and the Council Directors of European Industrial Federations (CDEIF)
There is currently an active debate in political science on the role of business in European integration. This paper will try to provide a historical dimension to this debate. It will show that UNICE, which was formally established in 1958, originated from earlier, more informal networks of European industrial leaders, some of them going back to the interwar period. The paper examines two institutions: the Council of European Industrial Federations (CEIF) and the Council of the Directors of European Industrial Federations (CDEIF). Together, these bodies played a central role in the development of a common business position in Europe and in putting that view across to governments and, to a lesser extent, public opinion, in the formative stages of European integration. This arena proved extremely helpful to industrial leaders given the uncertainties of the postwar world and continued to operate after other forums had come into existence.
Patrizia Sabbatucci Severini
Regions, Nations, Globalization: A Case Study of the Marches Region
After the Second World War, the economic development of the Marches, in central Italy, was due above all to strong growth in small and medium-sized businesses involved in the export of "made in Italy" light goods such as shoes and leather. Until 1950, some 60 percent of the population of working age was involved in farming, and over 70 percent of agricultural land was worked on a sharecropping mezzadria basis—a type of contract widely held to have been an obstacle to capitalist development. The present work will examine, first, economic development between the mid-eighteen hundreds and 1950, when gradual changes, brought about partly by the integration of the local into the national economy and partly by emigration abroad, transformed both primary and secondary economic sectors: the factories opened by capitalists from northern Italy, workshops producing goods for the local market, and a few specialized producers of hand-made products for the wider Italian (and more rarely foreign) market. The character of postwar development will be analyzed, with special attention being paid to the role played by agriculture, to the growth and organisation of certain "driving" industries (such as furniture-making, shoe-making, and the production of agricultural and other machinery), to the decline of others (such as hat-making, and the manufacture of musical instruments), and finally, through an examination of particular cases, to the process of internationalization of certain businesses.
Mohamed Sassi
The Emergence of the French Oil Industry between the Two Wars

The late emergence of a French oil industry, precisely between the two wars, at first appears to be an economic miracle. It was born from a determination to set up an independent energy policy. France is a country deprived of natural resources and, on the eve of the First World War, its vital need for energy pushed it to give more importance to oil, which explains private initiatives such as the case of Desmarais Frères. In 1914, the French supply of oil was totally dependant on the Majors, particularly on the American company Standard Oil. Although from 1917 Shell was privileged, the problem of the oil industry was not yet resolved. In 1919, the French objective was to recover a part of the interests of the Turkish Petroleum Company (T.P.C.) in the Near East. France recovered the share of the Deutsche Bank and thus created the Compagnie Française des Pétroles (C.F.P.). Born in 1924, the company was to be associated with any preexisting French oil company in order to assure an indisputable majority of national capital. The second important step was the setting-up of the law of 1928 that took care of special export authorizations of the crude and refined oils. The final step was the creation of the refining company (C.F.R.). The state supported the development of the C.F.P. by some institutional arrangements and succeeded in integrating it upstream, by adding the capital of the largest distribution companies and by encouraging the development of their distribution activity. The objective of this study is to try to identify the mechanisms of this successful integration with the international oil markets.
Emanuela Scarpellini
American-Style Supermarkets Abroad: Imitation or Adaptation? The Case of Italy
This paper presents a case study of the establishment of the first Italian supermarket in 1957, carried out by an American industrial group (Ibec). It raises the question of the export of a model born in the United States in an economic and political context far different from the original one and it points out the adaptations that took place with respect to that initial model. First, it demonstrates how it was necessary to transform the technical and structural aspects of the supermarket as an institution to adapt to Italian society. Second, it analyzes how other serious problems deriving from the particular political and juridical situation in Italy were confronted. Finally, it suggests that fundamental changes were necessary in order to adapt the experiment successfully to a new reality and that the final result proved to be substantially different from the original model.
Harm Schröter and Luciano Segreto
Global Electrification in Depression and War, 1930-1945
The paper provides an overview of electrical foreign direct investment (FDI) during the period 1930-45. It especially pays attention to investment by US, Canadian, Belgian, and Swiss electric and holding companies. The same type of FDI by other states such as the UK, France, and Germany is examined. We argue that the impression that this type of FDI declined during the 1930s because of foreign exchange transfer problems and because of direct state intervention into prices and distribution of power is not correct. In spite of these difficulties, investors sold out only to a small extent and thus stayed with their respective investment. The paper also lists the most important investors according to their size of investment and their relation to each other.
Marlis Schweitzer
Uplifting Makeup: Actresses' Testimonials and the Cosmetics Industry

Throughout the late nineteenth century, manufacturers actively solicited testimonials from popular actresses for products ranging from cosmetics and corsets to pianos and patent medicine. By the turn of the century, however, the use of testimonials as a general advertising practice had fallen into disfavor, and while they never completely disappeared, celebrity testimonials were noticeably absent from the pages of most women's magazines for almost a decade. For this reason, the subsequent resurgence of actresses' testimonials in cosmetics advertising of the 1910s raises important questions about the use and desirability of actresses as endorsers, and offers new insight into the cosmetics industry's efforts to alter preconceptions about the use of cosmetics as a social practice. By 1910, actresses had gained a more respectable position within society and were widely recognized as fashion leaders, often appearing in the pages of Vogue and Harper's Bazar dressed in their latest stage clothes. For emerging cosmetics specialists such as Forrest D. Pullen and Helena Rubenstein, as well as for established beauty product manufacturers like the Pond's Extract Company, an association with fashionable actresses was an effective way to promote their product line and, more important, the cosmetics industry as a whole..
Peter Scott and Peter Walsh
New Manufacturing Plant Formation, Clustering, and Locational Externalities in 1930s Britain
This paper examines the geography of new manufacturing plant formation in Britain during the 1930s, using a dataset of new plants (with 25 or more employees) established during 1932-1938. For sectors not strongly influenced by the need for proximity to primary sector inputs, plants are shown to be clustered in industrial districts located within a coffin-shaped "axial belt," running northwest from London to Merseyside and the West Riding of Yorkshire. Most provincial regions within this belt had factories clustered in long-established, sectorally specialized industrial districts based around mature industries and benefiting from Marshallian externalities. Greater London and the West Midlands had clusters of this type. Yet they also contained "new industrial districts," based around a diverse range of complementary industries and deriving locational externalities primarily through functional, rather than sectoral, commonalities. The emergence of these districts marked the start of a long-term trend from local and regional industrial specialization by sector, to specialization by function.
Anna Spadavecchia
Financing Industrial Districts in Italy, 1971-1991. A Private Venture?
The dominant view about Italian Industrial Districts (IDs) suggests that firms within IDs finance themselves through internal sources alone. This view, based on Northeastern Ids—on which the mainstream literature concentrates—implicitly denies any potential role played by state subsidies available to SMEs through national and regional industrial policies from the 1950s onward. This paper, focusing on a Southern ID, tests whether IDs can also emerge within the context of state intervention, and whether Southern IDs, in contrast to Northeastern IDs, relied more heavily on state funding. The paper uses company reports and balance sheets of two samples of SMEs: 32 in the Southern ID of Barletta and 22 in San Mauro Pascoli, a ‘classic' ID in the Northeast. The analysis of the capital structure of these companies confirms a greater reliance of Southern companies on subsidies. However, another interesting point emerges; contrary to the dominant view, companies in the Northeastern sample did not rely on internal finance alone, as they made significant use of market capital.
Eva-Maria Stolberg
Emergence and Re-Emergence of Siberia as a Transregional Economy, 1890-1914, 1990-2000
My paper examines the similarities of Siberia's economic insertion into the East Asian-Pacific Rim, thereby comparing the crucial decades of the late Tsarist empire (1890-1914) with that of post-Soviet Russia (1990-2000). In contrast to other regions of the world, Siberia has been marginalized as a trade emporium in present historiography, political science and world economy. Since the 1890s' gradual industrialization and the increasing expansion of the world economy, Siberia, wedged between Mongolia, China, Japan, and North America, became a multifarious meeting ground for European/American and Asian peoples and cultures. Entrepreneurs from all over the world, including Chinese, Japanese, and Korean merchants contributed to the cosmopolitan flair of this frontier land. It was a development that had been interrupted by seventy years of Soviet Communismus and that had isolated Siberia from the East Asian-Pacific Rim, and nowadays the region experiences a gradual re-emergence.
Xavier Tafunell and Albert Carreras
The Profitability of Spanish Firms in a European Perspective
The profits and profitability of companies have been relatively neglected and remain among the few important aspects of business and economic history about which hardly anything is known. Although there have been some studies on the topic, these relatively few works do not combine to form a critical mass of knowledge on the historical evolution of business profits for many countries in the period before the second half of the twentieth century. We present an estimate of the century-long profitability of Spanish firms from 1880 to 1981 based on massive use of published reports. We assess its robustness and weakness as well as its main features. We compare it with comparable data on business performance for Britain, France, and Germany based on previous work by Cassis, Arnold, Spoerer, and Marseille. The various estimates tend to confirm each other. A number of common features appear that could led to new research challenges. We conclude that it is possible to assess business profitability quantitatively with some confidence.
Kazuhiro Taniguchi
The Diversity and Dynamics of Clusters in China: Intercluster Learning and Bridge Organizations in a Global Economy
The diversity and dynamics of regional clusters of entrepreneurship and innovation in China are impressive. Particularly in the Beijing, Shanghai, and Tianjin regions, clusters, co-located firms within related industries and lines of business, enhance knowledge creation by promoting frequent interactions and deepened divisions of labor between firms. Managerial and entrepreneurial skills, a supply of capable workers, and connections to markets are crucial for starting clusters. But China faced a brain drain in the 1980s. In order to bring students home after their overseas educations and to encourage entrepreneurs to return either temporarily or permanently, the Chinese government sponsored frequent technical conferences and facilitated the extension of Silicon Valley's Overseas Chinese networks. What resulted may be called a "bridge organization" in the sense that it literally serves as a bridge between Silicon Valley and China, and thus facilitates "intercluster learning" in a global economy.
Gregory L. Thompson
Defining an Alternative Future: Globalization and the Birth of the Light Rail Movement in North America
The purpose of this paper is to: 1) trace how European experience with light rail captured the imagination of transit reformers in the United States; 2) look at how the idea actually took root in the first application of light rail in Canada (Edmonton, 1978) and in the United States (San Diego, 1981); and 3) examine briefly the traffic behavior consequences in San Diego and Edmonton. The light rail movement arose in North America during the 1960s and 1970s amid growing disillusionment with technological progress. The paper argues that the coming of light rail to North America was an expression of a new North American spirit of political activism. The light rail movement attempted to steer technological progress away from what the established transit institutions in North America promised. In that respect it had a revolutionary aspect to it, earning the appellation of "movement." I also argue, however, that the early light rail movement had a strong pragmatic streak, resulting in a complex and not obvious relationship between the light rail movement and both the established transit industry and the anti-highway movement of the same period. Many people were involved in the decisions in Edmonton and San Diego. None were in it for financial gain. Vendors had little part in launching this revolution. Though they did not achieve the goals that they hoped for-perhaps 15 to 20 percent of regional travel using transit, less automobile use, less pollution, less sprawl—on balance these people did more good than harm.
Janice Traflet
"Own Your Share of American Business": Public Relations at the NYSE during the Cold War

The Great Crash of 1929 and accompanying Wall Street scandals shook many Americans' tenuous faith in stocks as a route to wealth and in the New York Stock Exchange (NYSE) as a just and orderly marketplace. While severe and prolonged, this loss of popular confidence, however, proved temporary. Among the many factors stimulating the market's image recovery was an ambitious NYSE public relations campaign called "Own Your Share of American Business." Operating from 1954 to 1968, the program was designed to disassociate equity investing from its negative gambling connotation and instead, inflate it into a patriotic act that blended citizens' self-interest with the national interest. During the Cold War, "Own Your Share" promoted the idea that stock-buyers (and stock-sellers) not only enriched themselves, but also helped protect the American way of life from the perceived communist menace..
Michelangelo Vasta
The National System of Innnovation in Historical Perspective: Italy from the Unification to the Present, 1861-2000
The aim of the paper is to reconstruct the main characteristics of the Italian "System of Innovation" by using a long-run perspective. In so doing we will adopt a well-established theoretical framework, which stresses that technological performances of national economies cannot be explained only by looking at the strategies and performances of firms; it is necessary to extend the analysis to several institutional factors—education, finance, relationship between public and private R&D systems, industrial policy, patent legislation, etc.—which play a fundamental role in favoring the diffusion and economic exploitation of scientific knowledge. The analysis is focused particularly on the organization of scientific and technological research activity and innovation policies. At the same time we will provide some typical indicators of technological capacity—data on patents and on R&D, but also some "new" proxies such as the Technology Achievement Index (TAI) and the Historical Innovation Index—in order to evaluate, also adopting a comparative perspective, the Italian technological performance in the long run.
Cyrus Veeser
Market Bound: Concessions as a Development Strategy in Latin America
In the late nineteenth century, modernizing regimes across Latin America granted concessions to attract foreign capital. Concessions gave private investors monopolies, subsidies, guaranteed rates of profit, and other exclusive privileges. In the Dominican Republic, legislators acknowledged that "privileges create monopolies, which are always hateful," yet continued to grant monopolistic contracts because "to condemn concessions is to condemn the republic to stagnation, since no capitalist, given our current conditions, would expose his capital here [otherwise]." This paper explores the granting of concessions as a modernizing strategy. I argue that for weak and capital-starved Latin American states, concessions were a double-edged sword. They allowed modernizing regimes to shape the economy by privileging certain industries, infrastructure projects, regions, and foreign investors. Although the policy had serious drawbacks, as shown by protests about the high prices of goods and services provided by concessionaires, Latin American governments saw few alternatives to promoting national development by fettering economic freedom.
Grietjie Verhoef
Economic Empowerment and Performance: Strategies toward Indigenisation/Black Economic Empowerment and the Performance of Such Enterprises in Nigeria and South Africa, from the Early 1970s to 2002
The post-colonial African states embarked on programs to transfer ownership of assets in their economies to the indigenous population. Such a strategy was implemented in Nigeria, which was a British colony, as well as in South Africa. The paper traces the strategy toward such transfer of ownership in Nigeria and South Africa. It is argued that the state-driven strategy of Nigeria defeated the object of economic growth and ran into serious problems with the financing of the process. In South Africa a different strategy of Black Economic Empowerment was adopted. The paper tracks the progress of the program and assesses the sustainability thereof. Reference is also made to the current policy development in South Africa and the link between NEPAD foreign investment and the South African strategy.
Kazuo Wada
Kiichiro Toyoda and the Birth of the Japanese Automobile Industry: Reconsideration of the Toyoda-Platt Agreement
Toyota Motor Corporation is now undoubtedly one of the most famous and mighty car assemblers in Japan. It has been widely asserted that the one million yen that was received as a result of the Toyoda-Platt Agreement provided Kiichiro with the means to begin doing research on the automobile. Such a legendary story is unreliable. The nucleus of this legendary story about Toyota is the Toyoda-Platt Agreement, so it would be worthwhile to reconsider that agreement. I would also like to draw attention to information that has been neglected until recently: Kiichiro's work experience at the factory of Platt Brother & Co. in 1922, based on his own recently discovered diary.
Margaret Walsh
Trans-Atlantic Public Policies: The Role of the State in the Development of Long-Distance Bus Transport
This paper raises contested issues of government policy in shaping the growth of transport in the twentieth century by using the lens of the long-distance bus industry. These issues include free competition, the relationship between public and private transport, the desirability of a national transport policy, the maintenance of services that are not purely economic, but which provide a public service, and the role of subsidy. Policies in the United States and the United Kingdom suggest that the weakening position of intercity public transport stems from both the popularity of the individualistic motorcar and the difficulties facing governments in managing policies to coordinate different modes of transport. Despite a greater capacity to plan public transport in the United Kingdom and despite a greater awareness of environmental issues in all advanced industrial economies, the long-distance bus has not flourished. Notions of public service and communal well being faded before the popular demand for individual mobility. Both the US and the UK moved toward regulation of the bus industry in the 1930s and abandoned that process in the 1980s. Concerns about monopoly and about the threat to established rail networks brought some recognition of the need for public intervention. Yet in the United States authorities could not reconcile the fear of monopoly within one transport mode with the economic possibilities of intermodal cooperation. More important, they failed to acknowledge the impact of automobility on public transport. In the UK there was more interest in government ownership of transport, and eventually part of the bus service was nationalized. But even here the global move toward laissez faire in the 1980s brought back privatization and the promotion of more competition. In neither country did this competition restore prosperity to long-distance bus transport. Travelers frequently preferred to drive themselves for distances up to 400 miles, while cost-cutting airlines increasingly offered more attractive services. Any possibility of fully integrating bus transport into national and international networks never got off the ground.
Tony Webster
An Early Global Business in a Colonial Context: The Strategies, Management, and Failure of John Palmer and Co. of Calcutta, c.1800 to 1830
From the 1780s until 1834, British commercial activity in India and the East was dominated by the agency houses, mercantile organizations that combined banking, shipping, trade, and speculative investment in commodity production. Mostly based in Calcutta, they conducted business on a global scale, with Britain, the Dutch East Indies, China and the United States. Wars in Europe and India and trade liberalization in the East created a difficult business environment that contributed to the demise of the houses by 1834. Dominating the scene was Palmer and Co., led by John Palmer, whose wealth and reputation for liberality and generosity earned him the informal title "prince of merchants." This paper examines the management, business strategies, and weaknesses of the firm, as it strove to adapt to the difficult circumstances of the period. The reasons for the firm's failure are analyzed, focusing particularly on shortcomings and erroneous practices that contributed to the extinction of Palmer and Co. and the other houses.
David F. Weiman and John James
The Role of the Fed in the Payments System: Historical and Comparative Perspectives
Paralleling debates in other network industries, economists and policy makers have questioned the extent of Federal Reserve intervention in the payments system, notably the Fed's operation of clearinghouses for check and electronic transactions. Those advocating deregulation or privatization point to comparative and historical evidence to demonstrate the viability of a more private system. Moreover, they argue that recent economic, political, and technological changes—namely, globalization, the information and communications technology revolution, and the deregulation of banking—have opened up potential markets for the private provision of payments services and so diminished the Fed's share. Through a historical and comparative analysis of payments systems in the United States and other G-10 countries, we identify those market segments where central bank intervention is nearly universal (for example, the settlement of large-value interbank transfers) and those where the Fed's role is distinctive (for example, the operation of check and automated clearinghouses). We then draw on the insights of network economics to explain the role of the Fed in the payments system, both the common and unique elements. Because of demand and liquidity externalities and the resulting potential market failures, some form of collective control and coordination is required to maintain an efficient, stable payments system; we show why these problems led to Fed intervention in the U.S. case as opposed to private solutions such as bank joint ventures. A critical factor driving state intervention in the U.S. payments system then and now is its more decentralized, fragmented banking system, a point clearly illustrated through a comparison with the Canadian case.
Carl Weinberg
Big Dixie Chicken Goes Global: Exports and the North Georgia Poultry Industry

Over the past one hundred years, chicken raising in the American South has evolved from a small-scale local barnyard business to a highly capitalized and mechanized industry. Over the past few decades, exports—mainly to Russia and China—have become an increasingly important part of the operations of the large vertically integrated operations that dominate chicken raising and processing throughout the United States. This fact was brought home to many Americans for the first time when in March 2002 the Russian government cut off all U.S. poultry imports and caused a storm of protest. The global marketing of poultry products has certainly been in evidence in North Georgia, home to the city of Gainesville, which boasted for many years of being the chicken capital of the world. Gainesville has several regionally based companies for which exports are a key part of the business. In this paper, I examine the process by which the industry evolved in this region and eventually turned to foreign markets as one way of dealing with the intense competition among the big processors. I look not only at the causes of this shift, but also at the consequences for business owners, workers, and chicken growers.
Drew Whitelegg
Sowing the Seeds of Globalization: Delta Air Lines, 1970-1995
This paper analyzes the development of Delta Air Lines, 1970 to 1995, from a regional to a global carrier. It argues that many of the features associated with modern-day globalization were present at Delta from the 1970s and, more specifically, the 1980s. The airline expanded simultaneously at the global and local levels, largely through franchise and code-share agreements. At the same time, the airline became driven by the need to compete through lower cost structures. Delta's global status should be viewed as an evolutionary development over a thirty-year period, not as a product of changes in the 1990s.
Mark Wilson
The Business of Civil War: Military Enterprise, the State, and Political Economy in the United States, 1850-1880
My dissertation, which concentrates on the history of military industry and army procurement in the Civil War North, points to the need for new interpretations of American and political and economic development. In the North, the leading managers of the business of war were rough-and-tumble army bureaucrats, who oversaw a vast mixed military economy in which they deliberately used a combination of public and private sources of supply. On the private side of the military economy, the business of prime contracting was dominated by well-established wholesalers and wholesaling manufacturers. After the first few months of the war, Republican party officials and local elites, along with small businessmen, had surprisingly little influence over the shape of the war economy. Public criticism of the business of war tended to focus not so much on patronage practices or corruption, but instead attacked the figure of the middleman, an abstract type who represented profit-taking mercantile intermediaries who came between legitimate producers and the wartime consumer state. All in all, the history of the North's war economy suggests that business and political histories must do more to account for the development and influence of producerist ideologies, distribution and marketing businesses, military institutions, and the consumer state in American history.
Ben Wubs
International Business and National War Interests: Lever Brothers and Unilever during World War II
This paper discusses the role of multinational firms during wartime. It explores the tensions between the interests of international business and national states. It draws on the case study of Unilever, the Anglo-Dutch multinational formed in 1929, which provides an unusually interesting example of corporate governance issues in this period. The paper focuses on the fate of Unilever's business in its three main European markets—Britain, the Netherlands, and Germany—during the war. The main questions at stake are: how did Unilever manage to survive World War II, even though its raw materials were in short supply, the Nazis tried to get hold of the Unilever shares on the Continent, and the British Trading with the Enemy Act complicated international business?
Shakila Yacob
Beyond Borders: Ford in Malaya, 1926-1957

In this paper, I examine the strategies of Ford in relation to the market of British Malaya. Ford started exporting to Malaya in 1909 and built an assembly plant in 1926, becoming the only automotive assembly plant in Malaya and the region. Initially, Ford used the distribution facilities of British merchant firms, but after 1926 established its own distribution company. I explore the reasons behind these shifts in Ford's modes of operation in this market and show how Ford transferred knowledge and personnel from its affiliates elsewhere to gain market share in the interwar years before a period of stagnation.

             © 2006 Business History Conference