Judging Salomon: Corporate Personality and the Growth of British Capitalism in a Comparative Perspective
| Author | Simon P Ville |
| DOI | 10.22145/flr.27.2.3 |
| Published date | 01 June 1999 |
| Date | 01 June 1999 |
| Subject Matter | Article |
JUDGING
SALOMON:
CORPORATE PERSONALITY
AND
THE
GROWTH
OF
BRITISH CAPITALISM
IN
A
COMPARATIVE PERSPECTIVE
Simon PVille*
British business
in
the second half of the nineteenth century
was
characterised
by
the
continued
predominance of small private firms
at
atime
when
competing nations
such
as
Germany
and
the United States were more commonly embracing large corporations.
Alfred
Chandler
has contrasted
personal
capitalism
in
Britain
with
competitive
managerial
capitalism
in
America
and
attributes the alleged
poor
performance of British business
and,
through
it, national rates of economic
growth
to the uncompetitive small family
firm.1
Applying
internalisation
and
transaction cost analysis
he
argues
that
such
firms
failed to achieve economies of scale
and
scope or to develop sophisticated
administrative hierarchies
managed
by
tiers of professional executives, features
increasingly
common
in
America
by
the
end
of the nineteenth century.2
An
alternative
tradition has
used
the economics of information
and
the networks
paradigm
to
argue
for the benefits of small-scale cooperative capitalism
in
both Britain
and
Japan.3
Various reasons
have
been offered to explain the structural differences
between
British
and
American firms particularly
in
terms of
product
market
size, tradition,
capital markets,
and
the degree of vertical integration. There is, perhaps, also alegal
perspective to the slowness to
adopt
the large-scale corporation
in
Britain. Before the
reforms of the 1840s to 1860s incorporation could be
an
expensive
and
protracted
process
which
discouraged its
adoption
by
most
enterprises. Deed of settlement
companies
trading
with
some legal rights,
but
mostly unrecognised
by
statute
law,
flourished. The situation
was
radically altered
by
the mid-century legislation
which
enabled
sole traders
and
partnerships to gain the benefits of incorporation, notably
limited liability
and
legal personality,
without
the
need
to
expand
their scale
or
relinquish control of the enterprise
through
apublic float.
What
emerged,
unintentionally, from the legislation, therefore, were large
numbers
of private
companies
*
1
2
3
BA,
PhD,
(University College, London).
Reader
in
Economic
History,
Australian
National
University. I
am
grateful
to Rob McQueen,
Grant
Fleming,
Christos
Mantziaris,
and
participants
at
the
Salomon
conference
at
ANU
for
helpful
comments
on
an
earlier
draft
of
this
paper.
A D
Chandler,
Scale
and
Scope:
The
Dynamics
of
Industrial
Capitalism
(1990)
at
11-13.
Similar
ideas
are
discussed
in
the
work
of
WLazonick, for
example,
Business Organization
and
the
Myth
of
the
Market Economy
(1991).
R
Church,
"The
Family
Firm
in
Industrial
Capitalism:
International
Perspectives
on
Hypotheses
and
History" (1993) 35 Business
History
70; W M
Fruin,
Japanese
Enterprise
System'.
Competitive
Strategies
and
Cooperative
Structures
(1992).
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