Tag Archives: networks

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

DOI: https://doi.org/10.1017/eso.2015.64

URL: https://www.cambridge.org/core/journals/enterprise-and-society/article/ibm-rebuilds-europe-the-curious-case-of-the-transnational-typewriter/35D5A3FD95F5948F12754DBE07E9D89F

Free download (for limited time): https://www.cambridge.org/core/services/aop-file-manager/file/59e769bb60a7c0f73791cd84

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.

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Does educational stratification put toffs at the top?

Social mobility at the top: Why are elites self-reproducing?

by Elise S. Brezis (Azrieli Center for Economic Policy, Israel) & Joël Hellier (EQUIPPE, Univ. de Lille, Bar-Ilan University, Israel and LEMNA, Univ. de Nantes, France)

URL: http://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2013-312

This paper proposes an explanation for the decrease in social mobility that has occurred in the last two decades in number of advanced economies, as well as for the divergence in mobility dynamics across countries. Within an intergenerational framework, we show that a two-tier higher education system with standard and elite universities generates social stratification, high social immobility and self-reproduction of the elite. Moreover, we show that the higher the relative funding for elite universities, the higher the elite self-reproduction, and the lower social mobility. We also analyse the impacts of changes in the weight of the elite and of the middle class upon social mobility. Our findings provide theoretical bases for the inverted-U profile of social mobility experienced in several countries since World War II and to the ‘Great Gatsby Curve’ relating social mobility to inequality.

Reviewed by Mark J Crowley

This paper was circulated by NEP-HIS on 2014-01-10, and was of particular interest to me, primarily since I spent my formative years attending primary and secondary school in an area of the South Wales valleys prioritised by the European Union for what was then termed as ‘Objective One funding’ in recognition of its lack of social inclusion and opportunity – a position precipitated by the closure of the coalmines in the 1980s, which deprived thousands of their livelihoods. It stored up numerous social problems for the future, primarily owing to the absence of a cogent plan to replace and maintain the community’s employment following the completion of the area’s pit closures in the late 1980s, but was exacerbated, following the removal of these employment opportunities, by the deeply-embedded mindset of the coalfield communities vis-à-vis academic and/or cultural education, symptomatic of that seen in the movie ‘Billy Elliot’ (2000). Although disliked, inequality was largely accepted almost as a fait-accompli. For the Conservative Party of the 1980s, as Peter Dorey has argued, it was regarded as inherently necessary and positive in contemporary Thatcherite political thought (Dorey, 2010).Economic inequality became deeply clear from the 1908s in Britain

Summary

Citing the fact that society has been ‘constructed’ since medieval times, enforcing people’s ‘place’, whether it be as a member of the Feudal society or as a designated member of a particular ‘social class’, scholars have traditionally argued that inequalities have primarily been enforced according the socially-assigned opportunities during childhood. In the UK, the frequent use of the vernacular such as ‘toff’ and ‘poshboy’ by those of the opposition Labour Party (despite many of them, too, having received an elite education) in response to the perception of the British government’s inability to connect with the grassroots, picks up on the main concerns of this paper, that being that the current social and educational construct in many advanced European economies helps to perpetuate the development of an elite social class who, despite forming the smallest percentage of the nation’s overall population, receive the greatest power and highest chances of success.

This paper claims that the stratification of universities according to ‘elite’ and ‘secondary’ categories propagates an inequality that helps nurture the protection and development of an ‘elite’ through better resources afforded to those universities according to their finances and staffing. The transition of graduates to a higher social class, facilitated by their better education, and affording them with the skills maybe not available to their parents to secure a middle-class, white collar job enforces, at least superficially, the so-called ‘New right’ rhetoric of an ‘upwardly mobile’ society, but one which is fundamentally and inherently contradictory.

The methods used by the authors to convey their point are very persuasive.  The use of the intergenerational earnings elasticity model, with the use of gender and parental income as the variable helps to demonstrate the extent of the ‘elite construction’ which is the main theme of this paper, and is used as a method to measure intergenerational social mobility. Their findings suggest a constant increase in intergenerational social mobility in the countries where the so-called ‘dual’ (i.e. elite and secondary) education exists, namely France, the UK and the USA, but are contrasted with Nordic countries that do not have this system to show that such a trend does not exist here.  However, they are also keen to emphasise that a range of factors could have contributed to these changes, with sociological factors after the Second World War being cited as a major example of changes to the demographic of society in the post-1945 period, such as the number of blue collar workers entering the elite class in the USA during the 1960s being double that of countries such as Britain, France and Germany, although after the 1980s, the extent of their social mobility was severely decreasing. (Brezis & Hellier, 2013:6)

Yet the authors believe that the growth of tertiary education is possibly one of the largest reasons to explain this shift, with this form of education accounting for 60% of students in the present period, compared with 10% in the post-war period, representing an increase of 525% in enrolment to the ‘non-elitist colleges’ in the USA between 1959-2008, and an increase of 250% in elite colleges for the same period.  (Brezis & Hellier, 2013: 7)  Coupled with this of course is the fact that elite universities (Ivy League), particularly in the USA, have become more selective in their recruitment, recruiting only those with the highest grades and thus creating a small student body, and in turn spending treble the money per head  compared to secondary universities.  On the other hand,  recruitment to secondary universities has increased, largely, according to what the authors believe to be a more lenient admissions policy, but one that has led to a larger student body, and less money per head being spent on students.( Brezis & Hellier, 2013, 8)

However, the authors are also keen to correlate educational attainment with family background.  Citing the fact that at its highest, children of upper class families were 40 times more likely to enter an elite educational institution compared to those from lower social classes clearly demonstrates this class divide, and that, to a large extent, this divide is possibly ever-increasing.  (Brezis & Hellier, 2013, 8)

Using the idea that a two-tier education system prevailing in many advanced economies could be considered as a major source pertaining to rising inequality and reduced social mobility, this paper asserts that stratification of universities has also affected the level of spending per head on students, and thus influenced their educational opportunities and attainment. Declaring that the so-called ‘elite universities’ tend to recruit students from the higher social classes, it implicitly suggests that those from the lower social orders are disadvantaged at the recruitment stage, despite possessing requisite, identical and in some cases better evidence of academic attainment. Although the latter issue remains controversial, the authors have certainly identified a phenomenon that the universities concerned attempt to rebuff, and policymakers try to ‘level out’, but one that remains virtually impossible to eradicate, especially in view of the fact that many of the elite universities are in receipt of significant funds from rich benefactors, many of whom are alumni.

Those with the most power in society have appeared to be in the minority - a position influenced by growing affluence in the higher classes

Critique

The authors have engaged in a very deep analysis of the social class and its impact on entry into elite universities, and have also clearly shown the divergence between social class and educational attainment at university level. Drawing on a large range of quantitative methods and materials, this research clearly attests to the ‘Gatsby Curve’ pertaining to social mobility and inequality, demonstrating that this is relevant across several nations in developed economies.

To further amplify the impact of this research, perhaps the authors could consider exploring the difficulties faced by universities today in terms of marketing themselves to students? In the UK, and also in the US, this has become especially pertinent over recent years, and has, superficially at least, made the distinction of ‘elite universities’ more blurred, particularly in view of the spike in tuition fees implemented in the UK by the Conservative-Liberal coalition. Tied with these was the option for universities to level fees within a prescribed range, leaving many universities, even those considered among the ‘secondary’ level, to charge higher fees to avoid enforcing, or indeed accepting a position both statistically and in the public mind, as a lower-level institution. In fact, this position does raise deeper questions concerning the definition of ‘elite’ institutions. Is it based on its historical tradition, research output (as is often used as the arbiter of much government funding), student satisfaction, quality of teaching, or student attainment after graduation?

Additionally, in an age where having staff whose capabilities extend beyond the traditional realms of research and teaching has become ever-more necessary in view of the growing commercialisation of universities in the twenty-first century, with its leaders becoming more financially-savvy, and turning more towards international outreach to attract large external funding, perhaps the authors could explore whether they think the growing commercialisation of universities has deepened the class divide, thus forcing many away from pursuing a university education on the grounds of cost, or whether the growing competition among educational institutions, much of which now has a strong business-orientated approach, especially with the creation, in some universities, of the position of ‘Chief Executive’, will work to level out the ubiquitous class divide.

References

Dorey, Peter (2010) British Conservatism : The Philosophy and Politics of Inequality , London : I.B. Tauris.

David Cameron and Boris Johnson in the livery of the Oxford University Bullingdon Club (crica 1986)

David Cameron and Boris Johnson in the livery of the Oxford University Bullingdon Club (crica 1986)

So, who was lightning the bulb in Latin America?

Foreign Electricity Companies in Argentina and Brazil: The Case of American and Foreign Power (1926 – 1965)
[Original title: Companhias estrangeiras de eletricidade na Argentina e no Brasil: o caso da American & Foreign Power (1926-1965]

By Alexandre Macchione Saes (alexandre.saes@usp.br), Universidade de São Paulo – FEA/USP and Norma S. Lanciotti (nlanciot@unr.edu.ar), Universidad Nacional de Rosario – CONICET

URL: http://econpapers.repec.org/paper/spawpaper/2013wpecon14.htm

Abstract

The article analyses the evolution, strategies and position of American & Foreign Power subsidiaries in electric power sector in Argentina and Brazil from their entry in the mid-1920s to their nationalisation. We compare the economic performance and entry strategies followed by the American holding in different host economies. We also examine the relations between the American electricity firms and the Governments of both countries, focusing on the debates and policies that explain American & Foreign Power’s withdrawal from Argentina and Brazil in 1959-1965. Finally, the article reviews the role of foreign direct investment in the development of electric power sector in both countries. The study is based upon the Annual Reports and Proceedings of American & Foreign Power (1923-1963) and other corporate reports, Government statistics and official Reports from Argentina, Brazil and the United States.

Review by Beatriz Rodríguez-Satizábal

This paper was circulated by NEP-HIS on 2013-11-02. Its topic deals with the popular subject of energy provision. Indeed, there has been no shortage of turning points in the history of the energy markets around the world. Since the development of the electricity in the late nineteenth century, energy markets have been a constant cause for debate. The discussion ranges from technical and engineering issues (such as heated debates around Nikola Telsa and Thomas Alva Edison), to the adoption of common standards, to questions as to who will provide the service, to a wider debate on government policies such as pricing and, more recently, on how to become “greener” (see for example the debate on UK gas and electricity providers).

Kilowatt

In the developing countries, the debate on energy has been tied to the relation between the foreign direct investment, the efficient provision of electricity, and nationalization policies (topics that, by the way, were picked up from a business history perspective in William J. Hausman, Peter Hertner & Mira Wilkins “Global Electrification” (2008, CUP). The question on the relation between foreign companies investing in such countries and the debate on the effects of imperialism is also latent in recent research (see for example the work of Marcelo Bucheli, Stephanie Decker, or Niall Ferguson). In this line of work, the paper by Macchione Saes and Lanciotti further explores the intricate relationship between a foreign company and its host countries but, at the same time, offers a contribution to the literature on Latin American foreign investment during the second half of the twentieth century.

According to Alexandre Macchione and Norma Lanciotti, the arrival of the American and Foreign Power Co in Brazil and Argentina marked the start of an expansion of US direct investment in those countries, while seeking new consumer markets during the 1920s (p. 2). However, it is important to notice that the company arrived to the region more than 20 years after the first electricity companies had established. Therefore, the case of American and Foreign Power Co offers an example of the aggressive expansion of an electricity company that only few years after its arrival suffered the effects of the crisis of 1929 and later on, had to deal with centralization and nationalization policies.

AlexandreNorma

The aim of the paper is to analyse the evolution, strategies, and position of the American and Foreign Power Company in both countries between 1926 and 1965. Divided in four sections, including an introduction and the concluding remarks, it presents first the greater attention that US companies gave to Latin America after the First World War, looking mainly to the evolution of the company in the US market and the subsidiaries in Brazil and Argentina. Then, the paper discusses the shift of the regulation and describes the complex relation between the state and the company. As a result, the main sections widely discuss the investment strategies which focus was in improving the service while achieving higher returns.

Three important issues emerge from this paper, namely:

1) The US investment was dominated by a few large holding companies that controlled the utilities supply in various countries. The localization in South America answers to both the search of economies of scale through new consumer markets and the need to diversify investment (p. 3). In order to keep growing in the local markets, the electricity companies acquired small and medium concessions keeping their organizational structure. Clearly, this served to the purpose of increasing returns, but there is no mention of the effects of this choice in the need for improving the service. In other words, how efficient the company became as a result of greater scale.

2) The effects of the Great Depression were greater than expected for the directors of the company. As explained by Macchione and Lanciotti, their main concern was that currency devaluation would damage the sustainability and profitability of their investments (p. 13), but they did not expect the shifted in the regulation that followed in the 1930s and 1940s. The link between government policy and business strategy is then questioned by the authors and the company strategies are evaluated. Small differences between the two countries are noticed, opening space for a future discussion on how foreign companies deal with diverse economic and political contexts, including an analysis of their role as regulators.

American and Foreign

3) One of the main factors for the company’s decision to withdraw from the region was the expropriation lead by the Latin American governments since the late 1950s (p.22). But to what extent expropriations responded to the inefficiency of the company? Macchione and Lanciotti explained that the low quality of the service added to the fluctuation of the long-term revenues and, in some cases, led to the confiscation of assets by the local national government. These arguments, of course, are not to minimise political and nationalistic ideas driving the confiscation of assets in Latin America during the twentieth century.

In summary, the paper Macchione and Lanciotti offers a case study that brings together elements from Latin American economic history that deserve more attention. These include the role of state, the interaction between businesses and regulators, foreign direct investment, and the relative efficiency of domestic acquisitions by foreign companies in the long-term. This paper is an important contribution to understand from the company perspective the links between strategy and government policies.

Are Cartels Pragmatic Responses to Market Failures?

The International Mercury Cartel, 1928 – 1949

By Miguel López-Morell (mlmorell@um.es), Universidad de Murcia and Luciano Segreto (segreto@unifi.it), Università degli Studi di Firenze.

URL: http://d.repec.org/n?u=RePEc:pra:mprapa:46772&r=his

Abstract

Mercury has been one of the most persistent cases in contemporary history of international market regulations and this in spite of its having been affected by important technological changes and the regular discovery of new deposits. This paper offers an approach to the least known period, although perhaps the one in which the greatest rises in process and production occurred as a consequence of market manipulation. The period coincides with a series of agreements between the Spanish and the Italian producers and the outcome was a worldwide cartel known as “Mercurio Europeo” which came into being in 1928. The aims of this work will, therefore, be first to describe the features of the various stages of development of the international mercury market during the first half of the twentieth century, with emphasis on the characteristics and conditioning factors in each period. Secondly, the objective is to analyse the various market agreements that came about, the effectiveness of the clauses therein, the construction of distribution networks and the influence that the increase in production had on other mines and on certain technological developments.

Review by Beatriz Rodríguez-Satizábal

There are two sides to every argument and the different forms of competitive collaboration is no exception. On the one hand, the claim against cartels and other forms of collusion is the loss of efficiency and the dampening of incentives for technological progress. These are exacerbated by the potential to influence the political process (e.g. lobbying, regulatory capture, etc.) and the potential to augment economic inequality through biased distribution of profits. On the other hand, business historians have documented the importance of cartels for industrialisation in Germany as well as to achieve network externalities in banking (particularly around payment systems). Legally sanctioned competitive collaboration can provide an industry with a guaranteed profitability and a secure competitive path by being more stable, dividing up markets, and securing price and production.

The case of competitive collaboration around the extraction of mercury documented by López-Morell and Segreto, distributed by NEP-HIS on 2013-05-11, looks at the cartel known as Mercurio Europeo, to advance arguments which favour collaboration in industries were collusion allows producers to achieve economies of scale as well as foster technological change and reduce market prices in the long-term. The central question is whether a cartel was or not a pragmatic response to the imperfect allocation of the resources between the Spanish and Italian mercury producers from 1928 to 1949.

Based on the assumption that cartel agreements have been around for a while, López-Morell and Segreto present a thorough revision of the strategies during its early years. The agreement between Minas de Almaden y Arrayanes (Spain) and Monte Amiata (Italy) was signed in 1928 as a way to control the supply of mercury in a very stable market. In other words, the cartel was organized in order to deal with an unchanging demand. The result was a cartel with a complex internal organization that, in a very short time kept, managed to place the price of mercury close to monopoly levels but, at the same time, failed in achieve greater efficiency in production and/or increase sales volume.

López-Morell and Segreto explore in detail the reasons for the formation of the Spanish-Italian mercury cartel while arguing that there was a desire to stabilise production levels in order to increase profits without losing market share nor, as it was mainly in the Italian case, to invest in new technology. The cartel strategy proved to be effective because the demand for the product was inelastic and the collusion between the two producers increased the profit without harming the individual production targets.

Although, López-Morell and Segreto omit a discussion of the relative efficiency of collusion and competitive collaboration, from their empirical evidence it would seem that a carel was the best organisational option for the case of mercury. Mercurio Europeo was successful at least in part because during the 1928-1949 period mercury was a key input in the production of other metals and at the time there were only a handful of mines around the world. A cartel, therefore, became the answer to best manage scarcity.

Benito Mussolini (1883-1945)

However, the argument by López-Morell and Segreto is in need of a counter factual. Perhaps one that explores the option of a monopoly with private ownership (such as the Rothschild family) rather than a cartel agreement. In other words, could the absence of a cartel change ownership structures, market share, and international price levels? Further, there is a need to understand the role of both governments in the agreement. The 1928-1949 period coincides with fascist governments in both Spain and Italy, which characterised by radical nationalistic ideas, peculiar forms of corporatism, the role of the state (e.g. protectionism, interventionism), economic self-sufficiency and autarky, among others. Hence, the particular form of cooperation between Spanish and Italian mines could well be the result of institutional pressures (including, the war effort) rather than the behaviour of consumers.

Francisco Franco y Bahamonde (1892-1975)

In summary, the paper by López-Morell and Segreto is an interesting contribution to the study of collaboration because it focuses on the strategies taken by two national companies to organise a cartel. It builds upon surviving internal documents (e.g. analyses of Board meeting minutes) of each company to bring about a better understanding of changes in the market. Moreover, it shows that the strategic decision to whether co-operate or cheat within the cartel has a profound effect on the market outcome.

Successful Entrepreneurship: A Matter of Location?

Entrepreneurship and Geography: An Evolutionary Perspective

By Erik Stam (Utrecht University)

URL: http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa10p1267&r=his

Abstract

This paper is an inquiry into the role of entrepreneurship in evolutionary economic geography. The focus is on how and why entrepreneurship is a distinctly spatially uneven process. We will start with a discussion on the role of entrepreneurship in the theory of economic evolution. Next, we will review the empirical literature on the geography of entrepreneurship. The paper concludes with a discussion of a future agenda for the study of entrepreneurship within evolutionary economic geography.

Review by Beatriz Rodríguez-Satizábal

This paper was distributed by NEP-HIS on 2012-07-29. For the business historians immerse in the research of the history of entrepreneurship, this paper by Erik Stam is a piece to read. The thoughtful review of the challenges that the relation between entrepreneurship and geography present to future research invites to open the discussion on the differences among countries based on the characteristics of the entrepreneur’s location rather than only on its cultural values and the institutional environment.

Stam challenges the growing view of entrepreneurship as a subject exclusively to be deal by management scholars. The paper brings the history back to the discussion and innovates in the use of evolutionary economic geography. As Jones and Wadwhani (2006) explain, the historical research on entrepreneurship has been particularly concerned with understanding the process of structural change and development within economies using Schumpeter’s approach to innovation.

Understanding the importance of the newcomers is beyond the focus of only one discipline and the use of economic geography will allow the researcher to deal with the question on how the location increases the chances to have entrepreneurs that introduce organizational and product innovations, without falling in the vicious cycle of explaining the increase of entrepreneurs exclusively by social variables such as religion, family values, or networks.

Moreover, by explaining that the entrepreneurs are hardly lone individuals who rely primarily on their extraordinary efforts and talents to overcome difficulties, Stam introduces the argument that for nascent entrepreneurs the focal choice is what kind of firm to start given their location, not so much choosing a location for a given firm. Therefore, it deals with the concern on the spatial distribution of entrepreneurship by searching the aspects of the interaction between the newcomers and the geographical distribution.

Stam claims that “in order to improve the insights in the spatial variations of entrepreneurship, we need to specify the type of entrepreneurship” (p. 10). Although, this is not new for those who study entrepreneurship, Stam’s proposition to include evolutionary geography gives space to a new research agenda. In the future the study of entrepreneurship should take into account the spatial concentration of the industry, the combined use of the entrepreneur and the firm as a unit of analysis, and the study of the exit of young firms to accomplish a deep analysis of the role of entrepreneurs in economic development.

Who’s Who in Spanish Corporate Governance?

Corporate Structure and Interlocking Directorates in Spanish Firms, 1917 – 1970

By Juan Antonio Rubio-Mondéjar  and Josean Garrués-Irurzun (Universidad de Granada)

URL: http://d.repec.org/n?u=RePEc:gra:fegper:01/12&r=his

Abstract

This paper analyses some of the characteristics of Spanish capitalism between 1917 and 1970. For that purpose, we resort to the technique known as interlocking directorates and applies the methodology of social network analysis (SNA) to the board of directors of the 210 largest Spanish companies, in a benchmark dates (1917, 1930, 1948 and 1970). The results allow us to answer the questions of what has been the evolution of the Spanish business structure over the twentieth century and which sectors have been central to each of the moments analysed. At the same time, we identify the main groups of companies, and the links established among them, assessing the role of financial sector in the national economic structure. Based on the relationships between the members of the Board of Directors and social capital theory, the second objective identifies the circle of Spanish economic power, quantifies the degree of cohesion, and follow its evolution over time, confirming its continuity/ disappearance.

Review by Beatriz Rodríguez-Satizábal

This paper was distributed by NEP-HIS on 2012-05-22. Juan Antonio Rubio-Mondéjar and Josean Garrués-Irurzun offer a striking overview of the corporate structure in Spain during the twentieth century following up the work by Carreras and Tafunnel published in the early 1990s.  Using Social Network Analysis (SNA), the authors build the interlocking directorates of the 210 largest firms by assets (manufacture -200- and insurance -10-) based on information collected from the Anuarios Financieros de Bilbao and Anuario Financiero y de Sociedades Anónimas de España. The examination of the characteristics of the corporate governance seems to be now one of the issues that require a long-term view, this paper offers a general approach to the Spanish case.

The paper is divided in four sections. The first presents a review of the theoretical literature on corporate governance and economic entrenchment, including an overview of the literature on Spanish capitalism. The next two sections discuss the methodological approach and the results of building the interlocking directorates for 1917, 1930, 1948, and 1970. The final section is a short conclusion that opens a discussion regarding the proliferation of business groups and the role of the board members.

Firms network in 1917 (p. 49)

The paper strikes the reader in two ways. First, the discussion on the theoretical approach to interlocking directorates presents the importance of identifying the networks in order to prove the existence of a traditional business elite. This follows the sociological approach on the role of the elites, but do not include the recently findings on the rise of business groups as an organizational form to increase the entrenchment of the business people. It is shown that between 1917 and 1970 the members of the boards in the largest Spanish firms were related and share common professions and family names. Moreover, the names collected proved that there have been only small changes in the corporate governance among the twentieth century. The old families remained and only a few new names appeared after 1948. However, there is no discussion in regards to the family businesses, an issue that has been well studied in the last decade by the likes of Paloma Fernández, Jesús Valdaliso, Eugenio Torres, Nuria Puig and others.

Secondly, Rubio-Mondéjar and Garrués-Irurzun introduce a hypothesis on the importance of the interlocking directorates among the largest firms as an answer to the close relationship between the industry and the banks. The result is that the interlocking directorates affected more than 80 per cent of the firms studied, with the majority of the members linked in both the manufacture industry and the banks. This brings back the discussion on the role of banks in development started by Alexander Gerschenkron, but also poses into discussion the relationship between politicians and businessmen. There is a novelty approach to the former, the results show that there is no a unique network that linked all the firms together and the banks did not used a collusive strategy; could this mean that the firms used other ways to increase their market power and keep their ownership control; or, maybe, there are some regional differences. In the case of the later, the results are a surprise for those who use Spain as a comparative case with the Latin American countries: differently from what is expected, a politician usually became a member of the board, but not the other way around. This gives a new meaning to the professional lobbying and poses a question on the links between the political and business elites, traditionally assumed as the same.

This paper brings a discussion on the literature on Spanish corporate governance that could be useful for those studying other countries. The methodological approach combines the use of historical data with the social network analysis, bringing the question of who is who to the understanding of the economic development of a late development country. Moreover, it leaves questions open for future research such as the relation between the changes in the economic and social environment with the interlocking directorates.

The History of Media Entrepreneurs

Who Are the Entrepreneurs: The Elite or Everyman?

By Heather Haveman (University of California, Berkeley), Jacob Habinek (University of California, Berkeley), and Leo A. Goodman (University of California, Berkeley)

URL: http://d.repec.org/n?u=RePEc:cdl:indrel:qt392635v2&r=his

Abstract

We trace the social positions of the men and women who found new enterprises from the earliest years of one industry’s history to a time when the industry was well established. Sociological theory suggests two opposing hypotheses. First, pioneering entrepreneurs are socially prominent individuals from fields adjacent to the new industry and later entrepreneurs are from an increasingly broad swath of society. Second, the earliest entrepreneurs come from the social periphery while later entrepreneurs include more industry insiders and members of the social elite. To test these hypotheses, we study the magazine industry in America over the first 120 years of its history, from 1741 to 1860. We find that magazine publishing was originally restricted to industry insiders, elite professionals, and the highly educated, but by the time the industry became well established, most founders came from outside publishing and more were of middling stature – mostly small-town doctors and clergy without college degrees. We also find that magazines founded by industry insiders remained concentrated in the three biggest cities, while magazines founded by outsiders became geographically dispersed. Finally, we find that entrepreneurship evolved from the pursuit of a lone individual to a more organizationally-sponsored activity; this reflects the modernization of America during this time period. Our analysis demonstrates the importance of grounding studies of entrepreneurship in historical context. Our analysis of this “old” new media industry also offers hints about how the “new” new media industries are likely to evolve.

Review by Beatriz Rodriguez-Satizabal

The paper was distributed by NEP-HIS on March 28, 2012. The study of entrepreneurship is nowadays a hot

Heather Haveman

topic among historians, sociologists, and economists. The title of this working paper by Heather Haverman, Jacob Habinek, and Leo A. Goodman should capture the attention of all these academics and particularly historian interested in the history of entrepreneurship.

Jacob Habinek

The resurgence of the entrepreneur as an important figure in the economic theory, after have been neglected for many years (when compared to say, the strategies of multinationals). This resurgence has been marked in the last three decades by an increase number of biographies of successful entrepreneurs, the creation of research projects such as the Global Entrepreneurship Monitor, and the recent proliferation of public policies towards financing entrepreneurs in order to promote economic development.

Leo A. Goodman

Dealing with the issue of the social background of the entrepreneurs has been an essential part of the discussion of who are they, what are their characteristics, and why they exist. In general, researchers have found that the background varies across countries, cultures, and industries, and, more importantly, being a successful entrepreneur offers a chance to increase social mobility.

Guided by the perception that recent research has not incorporated a historical perspective that assumes changes across time and space in the industry where the entrepreneurs are performing its activities, Haverman et al. goal is to answer to the question: how the social positions of entrepreneurs vary across the path of industry development? Basically, their interest is to know if there are any differences between the entrepreneurs enter early in the industry’s history and those appearing in its development later on. This represents the challenge of the paper; it is calling the attention over the relationship between the entrepreneur and the industry. In other words, the entrepreneur cannot be study without a full understanding of its industry, its dynamics and the causes that result in changes within it. Is returning to the basic approaches to entrepreneurship lead by J. Schumpeter, W. Sombart, and more recently, Mark Casson. It also offers a way to deal with this approach using quantitative analysis.

Taking as case study the American magazine industry between 1741, when the first magazines appeared, and 1860, the eve of the Civil War, the authors centred their attention on the social positions of the entrepreneurs (occupation, education, location) in two periods of the industry: 1741 to 1800 during which time American magazines were few in number, poorly understood, and small, and 1841 to 1860, when American magazines were common, generally accepted means of communication, and many reached mass audiences. The mass media industry is becoming a subject of interest both as a unit of analysis and a source (e.g. Richard John’s paper in the last number of Enterprise & Society),but there is still a lack of a specific definition of what is an entrepreneur in the media mass industry, which are the variables that define it; moreover, when today there is a boom of media innovators and journalists. Understanding that the scope of the study was limited by the information available is important to mention that the use of social positions as a starting point is not a revolutionary idea and the authors could enrich the paper by including other variables related with the social and political networks, the economic background, and, why not, the innovations they brought to the industry.

One of the first publications by Andrew Bradford dating to 1741.

Using a wide variety of sources that includes the magazines, dictionaries of biography, and books on the history of publishing, Haverman et al. gathered a sample of the founders of 148 magazines for the first period and 150 for the last one. To assess their hypothesis that in the early years of an industry the entrepreneurs are part of the elite and it changes when the industry is mature, the authors follow three methods: bivariate analysis, multivariate analysis, and log-linear analysis, the last being the one where the authors claim the novelty for future entrepreneurship studies that are willing to involve a historical perspective. As a result, Haverman et al. conclude that the entrepreneurs during the early years of the magazine industry where professionals (mostly lawyers), highly educated, members of the publishing trades, and mainly located in the cities known for being the first publishing centres (New York, Boston, Philadelphia). After the early years, this pattern changed. The audience for magazines increase, the production and distribution technologies were cheaper, and the copyright law developed making space for a new wave of entrepreneurs from different social backgrounds, ages, and located across the country.

This ambitious working paper brings a discussion on how to relate the history of entrepreneurship (the people) with the history of the industry (firms and aggregate supply). Relating the sociological characteristics of the entrepreneurs with the maturity of the industry seems to be a good idea, but the risk is that in the way of catching the individual characteristics of the links with the industry can be omitted.