Category Archives: Capitalism

A Conceptual Framework for New Entrepreneurial History

Reinventing Entrepreneurial History

By R. Daniel Wadhwani (University of the Pacific, USA) and Christina Lubinski (Copenhagen Business School, Denmark)

Abstract: Research on entrepreneurship remains fragmented in business history. A lack of conceptual clarity inhibits comparisons between studies and dialogue among scholars. To address these issues, we propose to reinvent entrepreneurial history as a research field. We define “new entrepreneurial history” as the study of the creative processes that propel economic change. Rather than putting actors, hierarchies, or institutions at the center of the analysis, we focus explicitly on three distinct entrepreneurial processes as primary objects of study: envisioning and valuing opportunities, allocating and reconfiguring resources, and legitimizing novelty. The article elaborates on the historiography, premises, and potential contributions of new entrepreneurial history.

Keywords: entrepreneurship, entrepreneurial processes, history, theory, temporality, uncertainty, agency, opportunity, resources, legitimation


Business History Review, 2017, 91 (4): 767-799 – doi:10.1017/S0007680517001374

Review by Nicholas D Wong (Newcastle Business School, Northumbria University)

This article by Wadhwani and Lubinski proposes the reinvention of ‘entrepreneurial history as a research field’ with the aim of promoting greater ‘conceptual clarity’ between comparative studies and dialogue amongst scholars in the field. This engaging and well-written paper provides a new way of considering entrepreneurial activities over time with the emphasis placed on the processes that drive entrepreneurship rather than the individuals or institutions. Following a call to arms for history to join other social sciences (“management, economics, sociology, finance and anthropology”) in developing a distinct sub-field for the study of entrepreneurship the authors provide a neat structure to the paper which begins by providing an historiographical assessment of the strengths and weaknesses of what they term the “old entrepreneurial history”. This is followed by an insight into the parameters of the concept of “new entrepreneurial history”; one which considers the development temporally and defined succinctly as “the study of the creative processes that propel economic change”. This conceptualization foregrounds entrepreneurial processes rather than focusing on particular actors, institutions, or technologies.” The third section develops a set of core processes that frame the object of study in entrepreneurial history, “(i) envisioning and valuing opportunities, (ii) allocating and reconfiguring resources, and (iii) legitimizing novelty”. The paper concludes by highlighting the important contributions new entrepreneurial history can make to the field of business history.

‘So that’s my presentation. When do I get the half million dollars?’

In assessing the historical foundations of entrepreneurship, the authors follow the well-trawled path through the German Historical School of Schmoller and Weber and ultimately on to Schumpeter which, over time, helped promote the concept of “historical change focussed on entrepreneurial processes”. It was perhaps Schumpeter more than any other who ardently proclaimed the centrality of history in enabling the understanding the role of the entrepreneur as the driving force of capitalism and “central to the operation of markets and the dynamics of economies”. However, despite the strength of scholarship that developed during the immediate post-war period, the authors highlight how the field of entrepreneurial history dissipated in later decades being replaced by formulaic, normative and structured research that was “increasingly focussed on how norms, laws and other institutions shaped entrepreneurial roles and functions”. The authors highlight how this approach ultimately led to the demise of the field in the late 1960s as Chandlerian theory on organisational form and managerial hierarchies dominated business history. The 1970s and 80s saw entrepreneurship studies receive increasing attention from business-people and policy makers alike as a way of understanding how economies and markets operate (and what drives them). However, it was still largely ignored by business historians.

To demonstrate the difficulty for historically-orientated scholarship in defining and framing the concept of entrepreneurship, the authors provide some quantitative analysis of the number of articles published in Business History Review during the period 1954-2015 which mention entrepreneurship in the full text, including references. The figures are startling, with only 44 of 1044 featuring the term ‘entrepreneurship’ and when excluding the phrase appearing in citations this figure reduces to only twenty-six articles. This provides clear evidence of the lack of engagement with entrepreneurship by business history scholars. Moreover, of those articles that directly use the term, ‘entrepreneurship’, there is a general lack of clear definitions (most rely on Schumpterian definition, whilst more recently, Mark Casson’s definition has been widely-used). The authors use this evidence to demonstrate the lack of engagement in entrepreneurial studies (beyond the individual entrepreneur at least!) in business history. This is interesting research method although it could possibly have been improved by extending the analysis into other prominent business history journals such as Business History or Enterprise and Society – this would have strengthened the conclusions drawn from this section of the study. This section finishes by highlighting how historians have tackled entrepreneurship in recent years, with Popp, Raff, Amatori, Friedman, Jones and others using a variety of approaches including biography, microlevel process (such as agency over time) and macrolevel approaches which consider the consequences of entrepreneurship for structural change (such as the industrial revolution or globalisation).

“You told him he should start his own business.”

Following the illuminating section on the historiography of entrepreneurship, the next section tackles the concept of entrepreneurship as it relates to field of history. Here the authors provide a succinct and applicable definition of entrepreneurial history: “the study of the creative processes that propel economic change”. Here they are keen to point out that, “the definition focuses on the study of entrepreneurial processes and their relationship to change”. They provide three key premises that link entrepreneurial history to historical change over time: the temporal foundations of agency; multiplicity in the forms of value; and the collective and cumulative character of entrepreneurship. With reference to the first premise, the authors cite the work of Popp et al., and Beckert, by suggesting that understanding entrepreneurial agency “hinges on examining the processes by which they envision and pursue futures beyond the constraints of the present context”. Here they are making clear linkages to the concept of forward projection, that being the idea that the study of entrepreneurial history requires the researcher to understand the necessity of entrepreneurs to think-forward and plan for an “unpredictable future”. This is a novel approach, although it is reliant on a particular set of sources that work as evidence for qualitative research that can enable the historian to penetrate the mindset of the entrepreneur. The two papers cited by Popp and Holt both rely on extensive sets of letters between entrepreneurs and their familial, social and business networks which help construct a picture of the entrepreneur and the strategic forward planning for key developments such as succession, diversification, or international expansion. The second premise, multiplicity in the forms of value, suggests that entrepreneurs can find value beyond baseline profitability. Here the authors infer that entrepreneurs can seek future forms of (non-economic) value such as civic, environmental, academic, and industrial. This again is linked to the idea that the pursuit (or accumulation) of intangibles such as reputational and social capital can provide competitive advantage in the market place and, perhaps, can be considered as entrepreneurial as innovation, expansion and diversification. The final premise, the collective and cumulative character of entrepreneurship, refers to the domino effect of entrepreneurial opportunities that provide the foundation for, and provoke, further streams of entrepreneurship. This is linked to the notion that entrepreneurs have a sense of collective identity and the idea that “they belong to a generation, group or epoch”. The importance of this premise is that it moves away from what the authors refer to as the “heroic individual”. Here, new entrepreneurial history calls for further analysis of “cumulative entrepreneurial processes across multiple actors over time that propel historical change”.

The third section of the article points to processes that act as primary objects of study in entrepreneurial history. The first of these, envisioning and valuing opportunities, is linked to the classical characteristics of entrepreneurship such as forecasting market changes, seeking new opportunities, accessing and creating new technologies, exploiting new markets/territories and developing new practices. However, the authors highlight how new entrepreneurial history deviates from the old forms by explaining how the new opportunities are enacted rather than discovered. This is because actors define value and worth in different ways and this changes over time. The second process is allocating and reconfiguring resources; here they suggest that entrepreneurial history can “explore the processes and mechanisms by which actors allocated and reconfigured resources towards uncertain, future ends”. This section highlights the value of history in analysing the process and motivation for entrepreneurs to influence macro-level developments in terms of institutional or societal change and how this influences their allocation of resources. The final process identified by the authors, legitimizing novelty, builds on the previous processes as, in their view, legitimacy can pose ‘a problem in the entrepreneurial process because the new forms of value and new combinations of resources entrepreneurs introduce often fail to conform to widely shared expectations regarding rules, norms, beliefs, and definitions. Legitimation processes thus form another important focus of research in entrepreneurial history”. The key contribution of the historian in this area is understand the process of legitimation and to analyse how and why societal or institutional change occurs over time.

Congratulations on starting your own firm.

In terms of the potential contributions that new entrepreneurial history can make the authors have compiled a helpful table that compares it to Chandlerian business history, new institutional business history, and new economic histories of business. This table, in part, helps reinforces the central tenets of new entrepreneurial history (such as the emphasis on the process of entrepreneurship, the cumulative and collective approaches, the impact on development of society and institutions, the methods of assigning value over and above profit etc.) and how it diverges or challenges traditional schools of business history. The eclectic approach to entrepreneurship as designed by the authors provides a framework for future research to follow in order to consider the development of entrepreneurship over time but also in understanding how entrepreneurship influences, and is influenced, by, individual, institutional and societal micro and macro-level factors. Perhaps the greatest contribution, as highlighted in the conclusion, is the implications or influence that new entrepreneurial history can have on entrepreneurs today. Here the authors demonstrate the strength of the historian in enabling entrepreneurs to understand the world and “acting in it”. By following the framework developed in this paper, business historians have opportunity to develop a richer and deeper insight into the core factors that influence and drive the process of entrepreneurship.

A couple of minor observations: the definition provided by the authors, in my opinion, could be broadened out slightly. In the case the authors raise the point that new entrepreneurial history focuses on the study of the creative processes that propel economic change, [my emphasis], however, this framework could be used to study processes far beyond the purely economic (including, for example, environmental, technological, cultural, management, social, political). Indeed, the section on ‘multiplicity in the forms of value’ highlights how value can be assigned to non-economic factors, such as the accumulation of social and cultural capital, environmental, civic, academic, esthetic, industrial etc. The definition in this instance seems too narrow in enabling the researcher to understand change and the authors themselves provide insight into factors beyond market forces. In terms of broadening out the concept, I feel this particular theme has potential to inform research beyond business history and could have relevance to research in other branches of management and organisational studies, and perhaps even other disciplines in social sciences. My second observation concerns the blurring or overlap between premises two and three concerning the recruiting and allocation of resources on one hand and gaining of legitimacy on the other hand. Both sections cover similar areas with regards to the winning institutional support or driving institutional change in order to gain support or enhance legitimacy. I feel there is scope to draw greater distinctions between these two processes.

To conclude, this article presents a well-considered and well-structured contribution to the field of entrepreneurial history. The authors establish a real need for their approach and then provide a strong, clear and adaptable framework that can open the field to future researchers. As a business historian myself, I am always sympathetic to papers championing a historical or temporal approach and found this paper extremely useful to my ongoing research projects. I am sure it will make a strong contribution to the field and provoke much discussion and research in the years to come!


I am extremely grateful to Andrew Popp and Niall Mackenzie for their feedback on an earlier draft of this review.


The Middle Income Trap

Development State Evolving: Japan’s Graduation from a Middle Income Country

By Tetsuji Okazaki (University of Tokyo)

Abstract: This paper reexamines the industrial policy in postwar Japan from perspectives of the literature on a “development state” and a “middle income trap”. Japan transited from a middle income country to a high income country in the period from the 1950s to the 1970s. This process was characterized by a large structural change, such as resource reallocation from the primary industry to the secondary and the tertiary industries as well as resource reallocation within the secondary industry. Transition to a high income country is a challenging task for a middle income country. With respect to Japan, the industrial policy played a positive role in the transition. This was achieved by interactions between MITI and other related actors, who constrained and corrected MITI’s attempts of excess intervention.


Distributed by NEP-HIS on 2017‒09‒03

Review by: Joyman Lee (University College London)


Students of modern Japanese economic history are familiar with the work of Chalmers Johnson (1982) on the Ministry of International Trade and Industry (MITI). In that work Johnson argued that MITI was the leading state actor in Japan’s economic miracle, playing a vital coordinating role between policymakers and the private sector. Johnson’s emphasis on the role of the state in the East Asian experience has triggered similar studies on the development state in Korea (Alice Amsden) and Taiwan (Robert Wade).

As Okazaki notes, the emergence of newly industrialising economies facing the challenges of globalisation and democratisation has led to a renewed interest in the development state. Okazaki argues that rather than constituting a static set of policies, Japan’s developmental state was highly dynamic and adaptive, echoing Douglass North’s idea of “adaptive efficiency” (North 2005). Significantly, this ceased to be the case in Japan after the 1990s. A second strand of literature that informs the paper is the idea of the “middle income trap” (Gill and Kharas 2007), which highlights a particularly challenging transition which middle-income economies face, as the policies that have fueled the initial stages of growth are no longer appropriate for continued growth. The idea has gained considerable traction among commentators in China.

china middle income

The fear of the “middle income trap” has been particularly acute in China.

Okazaki’s paper shows that Japan’s successful voyage through the “trap” was partly facilitated by its success in resource allocation across industries, in addition to well-known increases in the intra-sector productivity. Between 1955 and 1975, Okazaki attributes 29% of the increases in labour productivity to resource allocation, which he stresses was “substantial” (p. 4).

Okazaki traces the evolution of policies from the American occupation period, when U.S. advisor Joseph Dodge initiated the abolition of strict wartime controls. A 1953 government report was followed by the Five Year Plan of 1955, which highlighted the need to transition from light to heavy industries. MITI was formed in 1949 to pursue the policy of “industrial rationalization”. Formal economic controls were replaced by a portfolio of public financial institutions, including the Japan Development Bank (1951), tax relief, and foreign exchange allocation, and a central coordinating Council for Industrial Reorganisationolic . The government promoted new sectors, particularly the machinery and the automobile industries within it, which included the use of cultural strategies such as a campaign to promote the purchase of domestic cars at the same time as regulating foreign direct investment (1952) and curtailing the foreign exchange available for car imports (1954). The government also actively implemented policies concerning the automobile parts industry, which was quite atypical given the miscellaneous and low tech nature of that sector.

japan car industry

A Toyota factory in 1948. MITI’s policy in supporting the automobile parts industry which supplied major manufacturers such as Toyota was particularly distinctive.

At the same time as developing the domestic economy, MITI also foresaw foreign pressure on trade liberalisation, and formed a committee to formulate its strategy in 1959. While the ministry remained ambivalent with respect to its effects, it nonetheless adopted a sequential programme of liberalisation that was intertwined with plans to upgrade the industrial infrastructure. The high level of alert to likely external treasures had a direct effect on the government’s sector-specific strategies, e.g. to focus on passenger cars in the automobile sector. However, MITI’s more radical plans to consolidate the industry by policy intervention were not adopted, and instead the government aided the industry through JDB loans and low interest loans to small and medium-sized suppliers. MITI also successfully resisted IMF pressures to remove the industry from the foreign exchange system until Japan was well established in the world market (1963). Meanwhile, the government conceded that the coal industry would be uncompetitive and adopted a programme of gradual phasing out.


Okazaki’s study provides a timely, quantitative and authoritative review on an important and relatively understudied topic (given the acceptance of Johnson’s view as orthodoxy among historians) by one of Japan’s leading economic historians, whose trans-war perspective is particularly useful in teasing out more subtle changes amidst MITI’s strong posture towards industrial policy. As Okazaki observes,  the difficulties that middle-income economies face are acute, as “one of the difficulties that middle income countries face is that they should compete with low income countries in the markets of labor-intensive industries as well as with high income countries in the markets of capital and technology intensive industries” (Bulman 2017). In this context, Japan’s success appears remarkable, perhaps no less than the historiographically well-recognised significance of Japan’s Meiji-period Westernisation.

However, the complexity of policies required for breaking the “middle-income trap” in Japan’s case may not provide much comfort for middle-income economies currently facing the challenge. Although Japan rejected centralised state controls, the Japanese example appears to require a complex set of policies that presupposes a high degree of political cohesion and long-range economic planning, which is often difficult in many middle income economies given various political and social challenges. It also requires a state that is highly persuasive to the populace with respect to its vision for economic development. These factors appear to mark Japan out as an exception rather than an example that can be easily perceived as immediately relevant by many developing countries.

Perhaps the most avid student of Japan’s experiences will be China, which possesses a similar state capacity for a coordinated industrial policy and a qualified commitment to the market, even if it may not enjoy the same degree of social cohesion. This likely Chinese interest may explain the timing of Okazaki’s paper. However, the requirement of a strong state may produce perverse incentives for middle-income countries to maintain authoritarian systems of government (even though Japan was not classically authoritarian in that period in its history), and reminds us of unresolved tensions between economic development and democratisation.

Additional References

Alice, A, 1992. Asia’s Next Giant: South Korea and Late Industrialization. New York, NY: Oxford University Press.

Bulman, D, Eden, M, Nguyen, H, 2017. “Transition from Low-Income Growth to High-Income Growth: Is there a Middle-Income Trap ?” Journal of the Asian Pacific Economy, 22(1): 5-28.

Gill, I, Kharas, H, 2007. An East Asian Renaissance: Idea for Economic Growth. Washington DC: The World Bank.

Johnson, C, 1982. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975. Stanford, CA: Stanford University Press.

North, D, 2005. Understanding the Process of Economic Change. Princeton, NJ: Princeton University Press.

Wade, R, 2003. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton, NJ: Princeton University Press.

Computers and Business History: Mira Wilkins Prize Winner

IBM Rebuilds Europe: The Curious Case of the Transnational Typewriter
By Petri Paju (Turku) and Thomas Haigh (Wisconsin, Milwaukee).

Abstract: In the decade after the Second World War IBM rebuilt its European operations as integrated, wholly owned subsidiaries of its World Trade Corporation, chartered in 1949. Long before the European common market eliminated trade barriers, IBM created its own internal networks of trade, allocating the production of different components and products between its new subsidiaries. Their exchange relationships were managed centrally to ensure that no European subsidiary was a consistent net importer. At the heart of this system were eight national electric typewriter plants, each assembling parts produced by other European countries. IBM promoted these transnational typewriters as symbols of a new and peaceful Europe and its leader, Thomas J. Watson, Sr., was an enthusiastic supporter of early European moves toward economic integration. We argue that IBM’s humble typewriter and its innovative system of distributed manufacturing laid the groundwork for its later domination of the European computer business and provided a model for the development of transnational European institutions.

Enterprise & Society 17(2, June 2016): 265-300



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Review by James W. Cortada (Charles Babbage Institute, Minnesota)

Prizes are awarded all the time for “best article” in a particular field, calling our attention to a well-executed, thoughtful one. But, occasionally, a prize winning article signals bigger shifts in a discipline than might otherwise be noticed. With this year’s award of the Business History Conference’s “Mira Wilkins Prize,” for the best article published in Enterprise & Society, we have such a signal.

Petri Paju and Thomas Haigh wrote “IBM Rebuilds Europe: The Curious Case of the Transnational Typewriter,” published in June 2016. They were recognized for “the best article on international business history,” the objective of this prize, but it is far more than good international business history.

The article chronicles how IBM created an internal network across eight national electric typewriter plants in post-World War II Europe to manufacture parts and to assembly these products. While electric typewriters were in great demand and IBM made what many considered to be the best one, the company created an internal network for their manufacture and distribution that transcended international borders in the decade after the war, presaging what would happen for some European products after the establishment of the European Union. But that was never solely the point—to create a European-wide market by governments—rather, it was to drive down production costs, increase demand for and the ability to deliver enough machines, while promoting IBM management’s belief that “World Peace through World Trade” could be a global objective for nations and companies. The authors trace how parts were made in one country, shipped to another, put together then sold, called the “Interchange Plan.” This experience taught IBM management how to create a more formal pan-European wide, later worldwide organization in 1949 that could manufacture, sell, and support its products called IBM World Trade. Within a half generation, World Trade did as much business as the American side of IBM.

Lessons learned in forming a pan-European typewriter business made it possible for IBM to develop a pan-European computer business that quickly dominated the mainframe business in Western Europe and in other parts of the world. Just as important, when IBM moved into the computer business, it already had factories, sales offices, and experienced employees in those countries that would become its best customers. These include Great Britain, France, West Germany, the Nordics, Italy, Spain, and a sprinkling presence in every country that eventually became part of the EU. The authors explain how the company created and learned from its “Interchange Plan,” operationally and strategically. They explored the accounting level to explain how money and budgets were exchanged across borders when governments had yet to sort out those issues, let alone even allow such exchanges.

The benefits to IBM were both obvious and extraordinary. Obvious ones included reduced operating costs for the manufacture and increased sale of typewriters. Less obvious, but ultimately more important, “this system would also foster interdependence among the various national [IBM] firms,” while spreading capabilities across multiple countries so that if one nation were to nationalize or block local IBM production, as occurred during World War II, another plant could pick up the slack. The company used its system in its public relations campaign to promote international trade through American managerial leadership and “to meet the challenges of communism” in the Cold War. Other American corporations—all of them with close ties to IBM’s management—took note of what IBM was learning and applied those lessons as well. IBM’s country organizations could also claim to be local, since each employed nationals, Fins in Finland, French in France, and so forth.

The lesson urged by these two young historians is an appropriate one at the moment: “think more carefully about the assumption that postwar globalization of European trade can be reduced to ‘Americanization’,” because IBM’s experience reflected a “hybridization of U.S. technology and management in postwar Europe.” Apply their suggestion worldwide. IBM was also prepared to experiment and operate in ways that valued expansion into new markets even at the costs of profits. That is one reason why it came to dominate the mainframe market so fast and for so many decades. The wisdom of today’s corporate fixation on shareholder value is challenged by this study of how IBM ran its typewriter business.

Perhaps the greater lesson, the more significant observation for why this prize this year is so important, lies elsewhere. For the past two decades, a month has barely gone by without an historian or economist publishing on the interactions of computing technology and business management. E&S is not alone in doing so; Technology & Culture has published some two-dozen similar articles in the new century, and Information & Culture is rapidly becoming another journal with a mix of business/information technology conversations. Petri Paju and Thomas Haigh are more than two gifted prolific article writers, they are teaching a new generation of scholars how to understand the role of information technologies and of management, business operations, and corporate strategy in a world filled with computers. Simply put, this article is seminal, worthy of being studied across multiple disciplines. The Mira Wilkes Prize Committee is to be congratulated for not letting this paper slip through the cracks.

Governance structures and market performance

Contractual Freedom and Corporate Governance in Britain in the Late Nineteenth and Early Twentieth Centuries

by Timothy W. Guinnane (Yale University), Ron Harris (Tel-Aviv University), and Naomi R. Lamoreaux (Yale University)

Abstract: British general incorporation law granted companies an extraordinary degree of contractual freedom. It provided companies with a default set of articles of association, but incorporators were free to reject any or all of the provisions and write their own rules instead. We study the uses to which incorporators put this flexibility by examining the articles of association filed by three random samples of companies from the late nineteenth and early twentieth centuries, as well as by a sample of companies whose securities traded publicly. Contrary to the literature, we find that most companies, regardless of size or whether their securities traded on the market, wrote articles that shifted power from shareholders to directors. We find, moreover, that there was little pressure from the government, shareholders, or the market to adopt more shareholder-friendly governance rules.

Business History Review, Volume 91 (2 – Summer 2017): 227-277.


Review by John Turner (Centre for Economic History, Queen’s University Belfast)

Tim Guinnane, Ron Harris and Naomi Lamoreaux are three scholars that every young (and old) economic historian should seek to emulate. This paper showcases once again their prodigious talent – there is careful analysis of the institutional and legal setting, a lot of archival evidence, rigorous economic analysis, and an attempt to understand how contemporaries viewed the issue at hand.

In this paper, Guinnane, Harris and Lamoreaux (GHL) examine the corporate governance of UK companies in the late nineteenth and early twentieth centuries. The UK liberalised its incorporation laws in the 1850s and introduced its first Companies Act in 1862. From a modern-day perspective, this Act enshrined very little in the way of protection for shareholders. However, the Appendix to the 1862 Companies Act contained a default set of articles of association, which was the company’s constitution. This Appendix, known as Table A, provided a high level of protection for shareholders by modern-day standards (Acheson et al., 2016). However, the majority of companies did not adopt Table A; instead they devised their own articles of association.

The aim of GHL’s paper is to analyse articles of associations in 1892, 1912 and 1927 to see the extent to which they shifted power from shareholders to directors. To do this, GHL collected three random samples of circa 50 articles of association for 1892, 1912 and 1927. Because most (if not all) of these companies did not have their securities traded on stock markets, they also collected sample of 49 commercial and industrial companies from Burdett’s Official Intelligence for 1892 that had been formed after 1888. However, only 23 of these companies had their shares listed on one of the UK’s stock exchanges.

GHL then take their samples of articles to see the extent to which they deviated from the clauses in Table A. Their main finding is that companies tended to adopt governance structures in their articles which empowered directors and practically disenfranchised shareholders. This was the case no matter if the company was small or large or public or private. They also find that this entrenchment and disenfranchisement becomes more prominent over time. However, GHL unearth a puzzle – they find shareholders and the market appeared to have been perfectly okay with poor corporate governance practices.

How do we resolve this puzzle? One possibility is that shareholders (and the market) at this time only really cared about dividends. High dividend pay-out ratios in this era kept managers on a short leash and reduced the agency costs associated with free cash flow (Campbell and Turner, 2011). Interestingly, GHL suggest that this may have made it more difficult for firms to finance productivity-enhancing investments. In addition, they suggest that the high-dividend-entrenchment trade-off may have locked in managerial practices which inhibited the ability of British firms to respond to future competitive pressures and may ultimately have ushered in Britain’s industrial decline.

Another solution to the puzzle, and one that GHL do not fully explore, is that the ownership structure of the company shaped its articles of association. The presence of a dominant owner or founding family ownership would potentially lessen the agency problem faced by small shareholders. In addition, founders may not wish to give too much power away to shareholders in return for their capital. On the other hand, firms which need to raise capital from lots of small investors on public markets may adopt more shareholder-friendly articles. The vast majority of companies in GHL’s sample do not fall into this category, which might go some way to explaining their findings.

A final potential solution is that the vast majority of firms which GHL examine may have raised capital in a totally different way than public companies, and this shaped their articles of association. These firms probably relied on family, religious and social networks for capital, and the shareholders trusted the directors because they personally knew them or were connected to them through a network. Indeed, we know precious little about how and where the multitude of private companies in the UK obtained their capital. Like all great papers, GHL have opened up a new avenue for future scholars. The interesting thing for me is what happens when private firms went public and raised capital. Did they keep their articles which entrenched directors and disenfranchised shareholders?

Unlike the focus of GHL on mainly private companies, a current Queen’s University Centre for Economic History working paper examines the protection offered to shareholders by circa 500 public companies in the four decades after the 1862 Companies Act (Acheson et al., 2016). Unlike GHL, it takes a leximetric approach to analysing articles of association. Acheson et al. (2016) have two main findings. First, the shareholder protection offered by firms in the nineteenth century was high compared to modern-day standards. Second, firms which had more diffuse ownership offered shareholders higher protection.

How do we reconcile GHL and Acheson et al. (2016)? The first thing to note is that most of Acheson et al’s sample is before 1892. The second thing to note is that in a companion paper, Acheson et al. (2015) identify a major shift in corporate governance and ownership which started in the 1890s – companies formed in that decade had greater capital and voting concentration than those formed in earlier decades. In addition, unlike companies formed prior to the 1890s, the insiders in these companies were able to maintain their voting rights and entrench themselves. This corporate governance turn in the 1890s is where future scholars should focus their attention.


Acheson, Graeme G., Gareth Campbell, John D. Turner and Nadia Vanteeva. 2015. “Corporate Ownership and Control in Victorian Britain.” Economic History Review 68: 911-36.

Acheson, Graeme G., Gareth Campbell, John D. Turner. 2016. “Common Law and the Origin of Shareholder Protection.” QUCEH Working Paper no. 2016-04.

Campbell, Gareth and John D. Turner. 2011. “Substitutes for Legal Protection: Corporate Governance and Dividends in Victorian Britain.” Economic History Review 64: 571-97.

Contingencies of Company Law: On the Corporate Form and English Company Law, 1500-1900

The Development of English Company Law before 1900

By: John D. Turner (Queen’s University Belfast)

Abstract: This article outlines the development of English company law in the four centuries before 1900. The main focus is on the evolution of the corporate form and the five key legal characteristics of the corporation – separate legal personality, limited liability, transferable joint stock, delegated management, and investor ownership. The article outlines how these features developed in guilds, regulated companies, and the great mercantilist and moneyed companies. I then move on to examine the State’s control of incorporation and the attempts by the founders and lawyers of unincorporated business enterprises to craft the legal characteristics of the corporation. Finally, the article analyses the forces behind the liberalisation of incorporation law in the middle of the nineteenth century.


Ditributed by NEP-HIS on: 2017-02-19

Review by Jeroen Veldman (Cass Business School, City University)


The article provides an overview of the development of English company law in the four centuries leading up the 20th century, showing how five key legal characteristics, i.e. separate legal personality, limited liability, transferable joint stock, delegated management, and investor ownership developed.

What may be most striking about Turner’s account is the way in which it shows the contingency of the development of these distinct concepts and the configurations in which they appear. As Woodward (1985a: 12), quoted by Turner, says it is “shocking how non-laissez-faire are the roots of the corporation – a quintessentially laissez-faire institution”. Turner shows how James I needed the money from corporate charters, as they provided an attractive source of revenue for the Crown that allowed to bypass Parliament. (Turner, 2017: 5), making the grant of such corporate charters the object of an ongoing war between Crown and Parliament in the 16th and 17th Century. Subsequently, he shows how the Bubble Act in the 18th Century was not so much a means to keep companies from forming, but rather  a means “… to limit alternative investment opportunities so that capital would be diverted towards shares in the South Sea Company.” (Turner, 2017: 8).


Arms of the East India Company (New York Public Library. Digital ID: 414409). Retrieved from

The contingent development of company law is also apparent in the use of corporations as an important instrument for colonial administrative organization overseas and the use of trading monopolies as a key instrument in foreign policy (Turner, 2017: 5). Furthermore, the establishment of specific Companies, such as the Bank of England in 1694 was pivotal for the lending of money to the State, and the raising and administration of the public debt (Turner, 2017: 9). The conceptual development of the modern corporation was thus connected to and contingent upon the simultaneous development of ideas about sovereignty, the state, and the representation of group rights and obligations (Kantorowicz, 1997; Maitland, 2003).

Turner then shows how the further development of the corporation in the 19th century is driven largely by the growing power of an emerging enriched middle class looking for outlets and protection for its investment. The development of the five key legal characteristics provided an architecture for the public corporation that functioned as an excellent vehicle to accommodate the wealth accruing to this new class, as it allowed to drop managerial obligations and to focus on a liquid share market instead (Ireland, 1996 and 1999; Veldman and Willmott, 2017).

Turner concludes by saying that “…the common law judiciary in the 18th and 19th centuries was extremely conservative and did not respond in a dynamic fashion to the new business environment which had arisen” (Turner, 2017: 22). His account therefore shows how, contrary what is commonly believed in the law and economics debate, common law did not develop as a highly dynamic and pragmatic practice-following type of law. What Turner convincingly shows, then, is that the development of English Company Law started to change from the 19th century, that this development led to development and acceptance of the five key legal characteristics and that the specific configuration of these elements that come together in the modern corporation. He also shows how the changes in English Company Law that allowed for these elements and their configuration were related to the institutionalization of particular political and economic interests.

In relation to the contingent development of the elements and configuration that make up the core characteristics of the modern corporation that Turner describes we may ask a number of questions of the specific model of the modern corporation that was developed during the 19th century and which still provides a template that is very much followed worldwide.

The first question is whether we can imagine a coherent alternative, in which the elements and their configuration had developed differently. Can we imagine limited liability, perpetuity, transferable joint stock with fully paid up shares and a secondary share market, the removal of ultra vires, separate legal personality, the development of delegated and professional management, rentier investment by shareholders with a shielded position largely external to the architecture of the modern corporation and, later, the development of holding companies and transnational operations as the outcome of the institutionalization of legal privileges for specific groups? And can we still imagine the institutionalization of these privileges as contingent and conditional?

The second question is whether we can rethink the presumed optimality of the current configuration of the corporation. It may be argued that the arrangements developed for the modern public corporations were developed in a specific political and economic context that provided a strong background for the development of ideas about minority shareholder protection at the time (Freeman et al., 2011; Johnson, 2010), for instance. The question is, how the specifics of that configuration relates to more recent changes in the corporate governance environment, such as the phenomenal rise of institutional and activist investors, increases in foreign ownership and high frequency trading, and the development of transnational group structures.

More specifically, we may consider that the development of the elements and configurations of the core characteristics of the modern corporation have had large effects on subsequent macro-economic developments (Chandler, 2003; Hannah, 2010), and continue to impact on the distribution of social wealth (Ireland, 2005). Turner observes that “The evolution of corporate law after 1900 … was chiefly concerned with resolving the agency problems which arose out of conflicts created by the coming together of these characteristics, i.e., shareholders vs. managers, shareholders vs. shareholders, and shareholders vs. other constituents (e.g., creditors and employees).” (Turner, 2017: 3). Considering that the present configuration that defines the modern corporation is based on the interests of an emerging class of rentier investors in the mid-19th century we may need to consider whether those agency problems have been sufficiently resolved and whether the specific configuration that developed during the 19th century still delivers an optimal configuration for all parties involved in corporate governance arrangements and outcomes (Veldman et al., 2016).

In the light of the description of the contingent nature of the development of company law and corporate governance theory, it is interesting to note that Turner chooses to describe the development of ‘the corporate form’ and its five key characteristics as an almost teleological process in which “the evolution of company law in England up to 1900 was all about the struggle to enable business enterprises to have all five of the core structural characteristics outlined above” and that this evolution was hampered by “the efforts of the legal system and the political elite to stifle the development of particular characteristics during most of this era.” (Turner, 2017: 3). Such a teleological approach to the development of company law has been criticized more broadly as naturalizing the development of existing corporate governance configurations into a necessary or optimal end point, and ignoring the development of company law as the institutionalization of particular interests (Ireland, 2005; Johnson, 2010).

Turner’s account provides all the necessary ingredients to engage with the development of the five key legal characteristics and their configurations as the result of the capacity for countervailing powers to engage in the corporate governance debate. In this light, the continuous absence of particular characteristics and configurations in the debate pre-19th century can be viewed, not as the ‘stifling’ of a necessary or optimal ‘evolution’, but rather as the result of a different configuration of interests. Such a view of the development of the elements and configuration that make up the modern corporation as a contingent and interest-inflected development makes an interesting contribution to the current debate on corporate governance, and allows to relate the debate on the historical institutionalization of these choices to current debates on the broad opportunities and risks that are associated with choices about the institutionalization of privileges, rights and obligations for specific groups in a theory of corporate governance (Veldman and Willmott, 2016).



Chandler, A. D. (2002). The Visible Hand: The Managerial Revolution in American Business. Cambridge, USA: Harvard University Press.

Freeman, M., Pearson, R., & Taylor, J. (2011). Shareholder democracies?: Corporate Governance in Britain and Ireland before 1850. Chicago: University of Chicago Press.

Hannah, L. (2010). The Rise of the Corporate Economy. Oxon, UK: Routledge.

Ireland, P. (1996). Capitalism without the Capitalist: the Joint Stock Company Share and the Emergence of the Modern Doctrine of Separate Corporate Personality. The Journal of Legal History, 17(1), 41–73.

Ireland, P. (2005). Shareholder Primacy and the Distribution of Wealth. Modern Law Review, 68(1), 49–81.

Ireland, P. (1999). Company Law and the Myth of Shareholder Ownership. Modern Law Review, 62(1), 32–57.

Johnson, P. (2010). Making the Market: Victorian Origins of Corporate Capitalism. Cambridge: Cambridge University Press.

Kantorowicz, E. H. (1997). The King’s Two Bodies : A Study in Mediaeval Political Theology. Princeton ; Chichester: Princeton University Press.

Maitland, F. W. (2003). State, Trust and Corporation. (D. Runciman & M. Ryan, Eds.) Cambridge Texts in the History of Political Thought. Cambridge: Cambridge University Press.

Turner, J. D. (2017). The Development of English Company Law before 1900 (No. 2017–1). Belfast: Queen’s University Centre for Economic History. Retrieved from

Veldman, J., & Willmott, H. (2016). The Cultural Grammar of Governance: The UK Code of Corporate Governance, Reflexivity, and the Limits of “Soft” Regulation. Human Relations, 69(3).

Veldman, J., Morrow, P., & Gregor, F. (2016). Corporate Governance for a Changing World: Final Report of a Global Roundtable Series. Brussels and London: Frank Bold and Cass Business School.

Veldman, J., & Willmott, H. (2017). The Corporation in Management. In G. Baars & A. Spicer (Eds.), Critical Corporation Handbook. Cambridge, UK: Cambridge University Press.

Woodward, S. (1985). The Struggle for Fungibility of Joint-Stock Shares as Revealed in W.R. Scott’s Constituion and Finance of English, Scottish, and Irish Joint-Stock Companies to 1720 (No. 377). UCLA Economics Working Papers. UCLA Department of Economics. Retrieved from


How do we eliminate wealth inequality and financial fragility?

The market turn: From social democracy to market liberalism

By Avner Offer, All Souls College, University of Oxford (

Abstract: Social democracy and market liberalism offered different solutions to the same problem: how to provide for life-cycle dependency. Social democracy makes lateral transfers from producers to dependents by means of progressive taxation. Market liberalism uses financial markets to transfer financial entitlement over time. Social democracy came up against the limits of public expenditure in the 1970s. The ‘market turn’ from social democracy to market liberalism was enabled by easy credit in the 1980s. Much of this was absorbed into homeownership, which attracted majorities of households (and voters) in the developed world. Early movers did well, but easy credit eventually drove house prices beyond the reach of younger cohorts. Debt service diminished effective demand, which instigated financial instability. Both social democracy and market liberalism are in crisis.


Distributed by NEP-HIS on: 2017-01-29

Review by: Sergio Castellanos-Gamboa, Bangor University


This paper emerged from Avner Offer’s Tawney Lecture at the Economic History Society’s annual conference, Cambridge, 3 April 2016 (the video of which can be found here).

In this paper Offer discussed two macroeconomic innovations of the 20th century, which he calls “the market turn”. These are the changes in fiscal policy and financialisation that encompassed the shift  from social democracy to market liberalism from the 1970s onwards. Social democracy is understood as a fiscal innovation which resulted in the doubling of public expenditure (from aprox. 25 to 50 per cent of GDP between 1920 and 1980). Its aim was reducing wealth inequality. Market liberalism encompassed a monetary innovation, namely the deregulation of credit which allowed households to increase their indebtedness from around 50 to 150 per cent of personal disposable income, mainly for the purpose of home ownership. According to Offer the end result of market liberalism was increasing wealth inequality. See Offer’s depiction of this process in the graph below.

Two macroeconomic financial innovations in the 20th century, UK calibration. (Note: Diffusion curves are schematic, not descriptive.)

Two macroeconomic financial innovations in the 20th century, UK calibration.
(Note: Diffusion curves are schematic, not descriptive.)

Offer considers that both social democracy and market liberalism are norms captured by the single concept of a “Just World Theory” (Offer & Söderberg, 2016).The ideals behind social democracy are said to be supported by ideas found in classical economics, while the ideals behind market liberalism are said to have emerged from a redefinition of the origins and nature of economic value found in neoclassical economics. Contrasting the ideas behind social democracy and market liberalism brings about  questions such as:

  • Where does value come from?,
  • Is it from production or is it from personal preferences and demand for the good/service?,
  • What is just and fair?,
  • What do we as individuals deserve as reward?, and
  • Is there really a trade-off between equality and efficiency?

Answering any of these question is not simple and heated debates abound around them. Offer, however, rescues the idea of life-cycle dependency, where the situation of the most vulnerable individuals is alleviated through collective risk pooling rather than financial markets. According to Offer,  life-cycle dependency was the dominant approach to reducing poverty in most developed countries until the oil crisis of the early 1970s. Then collapse of the Bretton Woods accord that followed, led to the liberalization of credit by removing previous constraints. This in turn resulted in the “market turn”.

Avner Offer

Professor Avner Offer (1944). MA, DPhil, FBA. Emeritus Fellow of All Souls College, Oxford since 2011.

Offer then turns to analyse the events after the collapse of Bretton Woods that led to the increase of household indebtedness while focusing on the UK. The 1970s was a very volatile decade for Britain.  For instance, oil price increases and the secondary banking crises of 1973 resulted in the highest annual increase of the inflation rate on record. Offer argues, while citing John Fforde (Executive Director of the Bank of England at that time), that the Competition and Credit Control Act 1971 was as a leap of faith in the pursuit of greater efficiency in financial markets. This Act was accompanied by a new monetary policy where changes in interest rates (the price of money) by the central bank was to bring about the control of the quantity of money. Perhaps unexpectedly and probably due to a lack of a better understanding of the origins of money, that was not the case. Previously lifted credit restrictions had to be reinstated.

Credit controls were again lifted in the 1980s. This time policy innovations went further by allowing clearing (ie commercial) banks to re-enter the personal mortgage market. The Building Societies Act 1986  allowed building societies to offer personal loans and current accounts as well as opened a pathway for them to become commercial banks (which many did after 1989 and all those societies that converted  either collapsed or were taken over by clearing banks or both). Initially and up to the crash of house prices in September, 1992, personal mortgage credit grew continuously and to levels never seen before in the UK. According to Offer, during this period both political parties supported the idea of homeownership and incentivised it through programs like “Help to Buy”. However, the rise in the demand for housing combined with the stagnation in the supply of dwellings pushed up house prices, making it more difficult for first-time buyers to become homeowners. Additionally, according to Offer, the wave of easy credit of the 1980s brought with it an increase in wealth inequality and an increase in the fragility of the financial system. As debt repayments grew as proportion of income, consumption was driven down, with subsequent effects on production and services. On this Offer opined:

“In the quest for economic security, the best personal strategy is to be rich.” (p. 17)

The paper ends with possible and desirable futures for public policy initiatives to deal with today’s challenges around wealth inequality and mounting personal credit. He argues that personal debt should be reduced through rising inflation,  a policy driven write-off or a combination of both. He also argues to reinstate a regime where credit is rationed. He states that financial institutions should not have the ability to create money and therefore the housing market funding should return to the old model of building societies. He has a clear preference for social democracy over market liberalism and as such argues that austerity should end, since it is having the exact opposite effects to what was intended.

Brief Comment

Offer’s thought provoking ideas comes at a time when several political and economic events are taking place (e.g. Brexit, Trump’s attack on Dodd-Frank, etc.) which, together, could be of the magnitude as “the market turn”. Once again economic historians could help better inform the debate. Citing R. H. Tawney, Offer opened the lecture (rather than the paper) by stating that:

“to be an effective advocate in the present, you need a correct and impartial understanding of the past.”

Offer clearly fulfils the latter, even though some orthodox economists might disagree with his inflationary and credit control proposals. As per usual his idea are a great contribution to the debate around market efficiency in a time when the world seems to be in constant distress. Perhaps we ought to generate more and better research to understand the mechanisms through which market liberalism generated the current levels of wealth inequality and financial instability that Offer describes. More importantly though, is analysing if social democracy can bring inequality down as it did in the past. In my view, however, in a world where productivity seems to be stagnated, real wages are decreasing, and debt keeps growing, it is highly unlikely that the public sector can produce the recipe that will set us in the path of economic prosperity for all.

Additional References

Offer, A., & Söderberg, G. (2016). The Nobel Factor: The Prize in Economics, Social Democracy, and the Market Turn. Princeton University Press.
(Read an excellent review of this book here)

A Gift From Europe to the World: Globalization, Capitalist Expansionism and Professional Bicycle Road Racing

The History of Professional Road Cycling

by Jean-François Mignot


Why did cycling become professional as early as the late nineteenth century, while other sports (such as rugby) and other sport events (such as the Olympic Games) remained amateur until the 1980s? Why are the organizers of the most important bicycle races private companies, while in other sports such as soccer the main event organizer is a nonprofit organization? To what extent have bicycle races changed since the late nineteenth century? And how does cycling reflect long-term economic changes? The history of professional road cycling helps answer these questions and understand many related phenomena. This chapter provides a long-term, historical perspective on (1) professional road cycling’s economic agents, i.e., the public, race organizers, team sponsors and riders, and the relationships amongst them; (2) cycling’s governing body, the International Cycling Union; and (3) professional cycling’s final product, i.e., the show of bicycle races. More precisely, the chapter mostly focuses on the history of male professional road cycling in Western Europe since the late nineteenth century. It is founded on both an analysis of quantitative time series on the Grand Tours (and, to some extent, the classics) and a review of the existing literature on the history of professional cycling, whether economic history, institutional history, cultural history, or sport history.


Distributed by NEP-HIS on 2016-10-02

Revised by: Stefano Tijerina, Ph.D.

The professionalization and commercialization of sports illustrates the forces of capitalism in action, as its culture and institutional structures transition from the local to the global in response to the demands of the market and the increasing interdependence among multiple private and public stakeholders. In his brief history of professional road cycling Jean-François Mignot demonstrates how the sport is transformed throughout the twentieth century as it transitioned from amateur to professional. Mignot argues that the professionalization of this sport anticipated many other international sports because the forces of capitalism pressured the athletes to abandon their amateur status early on in order to secure an income.[1] His research reveals the early infiltration of the private sector within the culture of cycling in Europe, the institutional transformation of the sport, the market’s impact on the institutional structure of bicycle racing, and its integration into the global system. Ultimately, his historic analysis allows the possibility of drawing parallels with the processes of transformation experienced by other goods, commodities, and services that adapted to the inevitable pressures of the expansion of capitalism.


Jean-François Mignot’s research shows that the idea of organizing road race competitions around the commonly used bicycle emerged from the desire of newspapers across Europe to sell more newspapers through this new and creative marketing scheme. Newspapers in France, Belgium, Spain, and Italy began organizing races on public roads in the late 1800s to show the public that human and bicycles could cover vast distances across flat and mountainous terrain. As indicated by Mignot, early races of 25 to 70 hours in duration covering 250 to 400 kilometers became epic sporting events of duration and perseverance among extraordinary European athletes.[2] The media’s construct of these epic figures created the thirst for road cycling, but it was the fact that the spectator standing on the side of the road was only able to watch the spectacle for a few seconds and depended on the print media to recreate the rest of the race, that pushed newspapers into the sponsorship business. It was this interdependent relation between spectator, athlete, and newspapers that inspired the print media industry to organize these road races, hoping that races would become magnets for advertisement sales. As indicated by Mignot, “cycling fans demanded more information” and “pictures of the race,” and the race organizing newspapers were interested in supplying the demand by covering the races in detailed form as they watched circulations increase.[3]

The one-day races or “Classics” and the three-week “Grand Tours” became the backbone of professional road racing in Europe. By the 1930s newspapers had monopolized the sponsorship of the events, while fans filled the roadways accompanied by publicity caravans “that distributed product samples to spectators.”[4] Meanwhile bicycle and tire companies became the sponsors of teams, as individual riders were replaced by teams that worked on behalf of the stars that made up the top cycling teams in Europe.[5]


In the early stages of professionalization, cycling stars did not receive any wages and were therefore forced to secure their income through race earnings. The increase in the popularity of the sport was followed by the increase in riders’ income.[6] The interdependent relations necessary for the expansion of capitalism slowly developed; increasing sales motivated the newspapers to improve the quality of the spectacle by increase the race winnings, forcing the sponsors to offer better wages in order to recruit and maintain the loyalty of the top cyclists, ultimately attracting more fan-base that in turn attracted other secondary sponsors that turned the caravans into marketing spectacles as well. This became even more lucrative as other means of communication joined in, particularly radio and later on television.

Jean-François Mignot points out at the first three decades of the Cold War was a period of crisis for the sport in Europe, emphasizing that urbanization and the increasing sales of motorcycles forced bicycle manufacturers to decrease their team sponsorship funding and ultimately sending the salaries of professional riders in a downward spiral.[7] This, argued Mignot, forced the professional rider to seek sponsorships outside of the bicycle world.[8] The stars and their teams began to tap the “extra-sportif” market for sponsorship and this market segment was quick to capitalize on the opportunity.[9]

Jean-François Mignot points out that sponsoring newspapers and bicycle companies interested in protecting their own profit margins opposed the penetration of “extra-sportif” sponsors by trying to control the rules of the sport in order to impede their participation, but at the end the market forces prevailed.[10] This European crisis that unfolded between the 1950s and 1980s was in fact the initial era of global commercialization of the sport. Mignot’s Euro centrism impedes him from moving beyond the region’s Grand Tours and Classics, not recognizing that the “extra-sportif” sponsorships that challenged the status quo took professional cycling outside of Europe and introduced it to the rest of the world. For example, by the 1950s radio transmissions of the European races were common in distant places like Colombia where their own private sectors had replicated the European business model and established lucrative professional road races to supply the local demand for professional bicycle road racing. The first edition of the Colombian Grand Tour, La Vuelta a Colombia, was organized in 1951, and by then several local Classics like the Tunja-Bucaramanga and the Medellín-Sansón were already engrained in the Colombian cycling culture. As in the case of Europe, local newspapers like El Tiempo became interested in sponsoring the local Grand Classic as a means to increase sales and circulation, but contrary to the European distrust of “extra-sportif” sponsors, the Colombian organizers welcomed other private local sponsors including the national airline Avianca, the Bavaria brewery, Avisos Zeón and the Flota Mercante Grancolombiana.[11]

The crisis of professional bicycle road racing in Europe described by Mignot was certainly caused by a decreasing popularity of the sport and the internal struggles over the monopoly of the sponsorship and management of the sport, but it was also the market’s response to the emergence of other professional sports in Europe as well as the professional cyclist’s ability to capitalize on the globalization of the sport. It was an illustration of how, in a capitalist system, the internal saturation of a market led to the natural expansion into other global markets, as in the case of Colombia in the 1940s and 1950s.[12]


Such was the case of French Born, José Beyaerst, the 1948 Olympic road race champion who moved to Colombia after the Second World War, winning the second edition of the Vuelta a Colombia in 1952 and later on establishing a career as the coach for the Colombian national cycling team.[13] Beyaerst would make Colombia his home, developing the professionalization of the sport and becoming a key player in what would later become one of the cycling powers of the world. The expansionism of the sport would reach all corners of the world between the 1950s and the 1980s, it was a period of crisis for Europe as Mignot points out but it was a glorious time for global professional bicycle road racing.

Television was the game-changer, spearheading the resurgence of professional cycling in Europe in the 1980s. Taking advantage of the integration of Europe, race organizers capitalized on the magic of television to attract new European audiences, redesigning the stage circuits of the Grand Tours (Giro d’Italia, Vuelta a España, and the Tour de France) with the intention of tapping new urban centers that were outside of Spain, France, and Italy.[14] Television also globalized the European Grand Tours, introducing the cycling stars to the world, providing an opportunity for sponsors to reach a global audience, selling commercial air space, and as a result increasing revenues, salaries and profits for the whole sport.

Jean-François Mignot points out that the globalization of the sport also impacted the nature of cycling teams. By the 1980s the teams competing in the Grand Tours were no longer made up of Spanish, Italian, and French riders; their nationalities diversified and so did their sponsors.[15] Although Mignot highlights the fact that by 1986 the American Greg LeMond had won the Tour de France, Colombia’s Lucho Herrera had conquered the Vuelta a España (1987), the Russian Evgueni Berzin the Giro d’Italia (1994), and the Australian Cadel Evans the Tour de France (2011), he does not point out that these foreign cyclists also brought with them new local sponsors that then began to compete with European sponsors.[16] Mignot avoids talking about the American Lance Armstrong, leaving a large gap in the history of the globalization of the sport, considering that the American rider won seven consecutive Tour de France championships (1999-2005) before the US Anti-Doping Agency and the Union Cycliste Internationale stripped him from his titles after a doping scandal. Although LeMond popularized cycling racing in the United States it was Armstrong that converted it into a multi-billion dollar industry bringing in American brands such as RadioShack and Motorola into the world of cycling.


Jean-François Mignot’s research illustrates how the sport expanded globally as the Western World exported the idea of the professionalization and commercialization of cycling, taking advantage of the expansion of Western culture across the world, the increasing leisure time and incomes of the global population, and the increasing communications technology that allowed viewers from across the world to connect with the live stage by stage action of the Grand Tours and the Classics. Nevertheless, his Euro centric approach impedes him from explaining how the professionalization of the sport evolved outside of Europe. Although Mignot clarified early on that his analysis centered on Europe, this approach weakened his argument regarding the globalization of the sport and its repercussion on the European construct, as foreigners began to conquer and dominate the sport as in the case of Americans Greg LeMond and Lance Armstrong, or the current stars South African born Christopher Froome and the Colombian climber Nairo Quintana. The incorporation of a broader global perspective would have allowed Mignot to test whether or not the professionalization of the sport in other markets was also spearheaded by other local newspapers or if on the contrary other media and non-media-based sponsors jumped on this business opportunity. It would have also been important to identify when professionalization took place in other markets to compare whether or not the influence of the European sport transcended the borders in a timely manner or even identifying political, economic, social, and cultural factors that delayed its expansion into other global markets. Moreover, it would have been important for Mignot to link the policies of the Union Cycliste Internationale to the globalization of the sport, as well as the escalation of global competition among bicycle manufacturers, and the global competition between scientists, technological designers, and pharmaceutical industries that centered on the legal and illegal preparation of the current athlete.

[1] Jean-François Mignot. “The History of Professional Road Cycling.” HAL,, June 5, 2016, p. 4.

[2] Ibid., 2.

[3] Ibid.

[4] Ibid., 3.

[5] Ibid.

[6] Ibid., 4.

[7] Ibid., 5.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] “Vuelta a Colombia Historia.” Ciclismo colombiano – La Vuelta a Colombia. April 25, 2007. Accessed November 21, 2016.

[12] Ibid.

[13] Kidnapping of Lucho Herrera (and José Beyaert’s Narrow Escape”. Alps&Andes, March 2000. Accessed November 21, 2016.


[14] Mignot, “The History of Professional Road Cycling,” 5.

[15] Ibid.

[16] Ibid., 6.