Chapter 9: Entrepreneurship and Vertical Integration: The Origins of the Singer Global Distribution System with Andrew Godley
The emergence of the modern industrial enterprise towards the end of the nineteenth century was associated with the innovation of new managerial methods. It also involved a significant extension of the boundaries of the firm through horizontal and vertical integration. As Schumpeter (1934, 1939) emphasized, such institutional innovations are essentially entrepreneurial. Unfortunately, however, these changes are often analysed as if they were largely routine. They are seen as a consequence of managerialism rather than of entrepreneurialism, and their origins have consequently been misunderstood. This chapter uses the theory developed in the previous chapters to put the historical record straight. It reinterprets the rise of the modern corporation by focusing on the case study of vertical integration par excellence, Singer sewing machines. 9.1 INTRODUCTION The dramatic changes in technology and the global spread of market activity during the second half of the twentieth century were associated with equally dramatic changes in the structure of firms. The dominant corporations that emerged during this ‘second industrial revolution’ were giant, multidivisional, bureaucratic organizations. While powerful for many decades, their structures were later revealed to be inefficient and uncompetitive in what the renowned business historian, Lou Galambos, has called the ‘third industrial revolution’ at the turn of the twenty-first century (Galambos, 2005). Rather it is flexible and dynamic entrepreneurial firms that are competitive today. This transformation of firms and industries is, in historical terms, indeed revolutionary. It has been simplified as a paradigm shift from the big, bureaucratic firms dominant in the second industrial revolution...
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