Management and Industry

Case studies in UK industrial history

John F. Wilson, Nicholas D. Wong, Steven Toms

• Publisher: Routledge
• Year: 2020
• ISBN:
  9780429680540
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Wirtschaftsgeschichte

This shortform book presents key peer-reviewed research selected by expert series editors and contextualised by new analysis from each author on how the specific field addressed has evolved.

With contributions on the 'historic turn' in management studies, workers' rights, occupational health, industrial networks and the development of the organisation, practices and principles of large UK businesses, this volume provides an array of fascinating insights into industrial history.

Of interest to business and economic historians, this shortform book also provides analysis and illustrative case-studies that will be valuable reading across the social sciences.

Chapter 1
Business history and organization theory

Michael Rowlinson

There is a growing consensus among business historians that they need to engage with the theoretical concerns from related fields¹ if they are to refute the familiar criticism that they are ‘“inveterate empiricists”, obsessed with setting the record straight, telling the story as it really was’.² In this article I want to examine the implications for business history of entering into a dialogue with organization theory. I hope that this will shed some light on the general dilemmas facing business history if it is to become more theoretical. Inevitably my impressions of business history reflect my own experience of historical research, my background in organizational sociology, and my interest in inter-disciplinary debate in organization theory.³

There is no easy way to define organization theory. It can be said to consist of ‘clusters of research programmes held together by the discourse of specific communities of theorists with overlapping interests’.⁴ Each community of theorists has its own criteria for deciding what constitutes organization theory. Some sociologists, like myself, tend to see it as being characterised by paradigm diversity, if not paradigm incommensurability.⁵ But toleration of alternative paradigms is anathema to economists, who see themselves as the bearers of an ‘incipient new science of organization’ which will eventually subsume organization theory under a dominant economic paradigm.⁶

In considering the potential for dialogue between organization theory and business history I want to explore two themes. One theme is the possibility of business historians having a genuine engagement with organization theory by being able to choose between alternative paradigms, and also by contributing a historical perspective to the debates within and between paradigms. This challenges the implicitly accepted view that in order to become more theoretical it is sufficient for business historians to be passive recipients of theory from economics or sociology. In addition to overcoming the atheoretical stance of business history, a genuine engagement should also highlight the ahistorical nature of most theories of organization.⁷ The other theme is the different implications that alternative perspectives in organization theory have for the narrative company case studies that have hitherto been a mainstay of business history. In my view there is a danger that a more explicitly theoretical orientation may lead to an increased separation of theorised ‘business history’ from narrative ‘company history’.

Given the impossibility of reviewing the whole gamut of organization theory I have chosen to structure this article around the three most prominent discourses that hold the major research programmes together.⁸ The first of these discourses is organizational economics, which is concerned with reconciling economic theory with the existence of organizations. This brings together a family of concepts ranging from repeated games, property rights, principal and agent relationships, and transaction costs, through to evolutionary and resource based views of the firm.⁹ I will focus on transaction cost economics and the advance of economic imperialism. The second discourse, organizational sociology, is concerned with the competing views of change in organizations, from structural contingency, institutional, ecological, and strategic choice perspectives.¹⁰ Finally, the discourse of organizational culture, which is partly derived from anthropology, focuses on the meanings that organizations have for their members.¹¹ I will take this discourse to be comprised of three levels of analysis: corporate culturism, organizational symbolism, and post-modernism.

Organizational economics

Business historians know only too well that the so-called ‘theory of the firm’ in neoclassical economics is ‘not a theory of the firm at all’.¹² It treats the firm as a ‘black box’,¹³ and extreme versions of evolutionary market selection in economics leave little scope for the study of purposive behaviour in individual firms.¹⁴ But economists claim that as a result of various developments in the theory of the firm, economics now has ‘more to offer business historians than ever before’.¹⁵ Some business historians have welcomed these developments, especially transaction cost economics and the resource based view of the firm, which build on the work of Coase and Penrose respectively.¹⁶

It could be argued that the resource based view of the firm allows most scope for a historical dimension because of its emphasis on the importance of path dependence. This leads to a view that the development of certain resources and capabilities by a firm depends upon a unique series of events in the firm’s history.¹⁷ But as yet the resource based view of the firm has had little impact in business history compared to transaction cost economics.¹⁸ Furthermore, the resource based view of the firm has had more impact on the study of corporate strategy than it has in organization theory, whereas transaction cost economics is almost synonymous with an economic perspective in organization theory. Although this does not mean that the resource based view of path dependence has escaped criticism from organizational sociologists for its emphasis on change as an evolutionary process rather than the outcome of conflicts and dilemmas in organizations,¹⁹ which should concern business historians interested in the internal politics of companies.

Given the prominence of transaction cost economics I will rehearse some of the criticisms that can be levelled against it from both historical and sociological perspectives before considering organizational economics in general as a manifestation of economic imperialism and the implications of this for business history.

Transaction cost economics

It is claimed that transaction cost economics ‘subscribes to the proposition that history matters’. The importance of history in transaction cost economics has at least three dimensions. First, it is recognised that situations change over time. For example, a large number of suppliers may compete prior to a transaction. But once one or a few suppliers have made significant investments in assets that are specific to the transaction, the situation is transformed to one of a small number of suppliers who may enter into a bilateral relationship with buyers. Second, it is acknowledged that ‘Tacit knowledge and its consequences’ are important. Finally, it is accepted that ‘The entire institutional environment (laws, rules, conventions, norms, etc.) within which the institutions of governance are embedded is the product of history.’²⁰

The statement that ‘history matters’ might be taken to mean that the compatibility of business history and transaction cost economics is assured. But there are several reasons for treating such a statement with caution. In the first place the statement needs to be qualified with the rider that it does not ‘imply that only history matters’. This allows for a critique of path dependence, which is relegated to a subordinate role whereby it merely delays efficient outcomes.²¹ When it comes to important issues of organizational form the disregard for history in transaction cost economics is revealed. Thus it is maintained that it was ‘Not by history but by logic’ that the owners of capital became the owners of enterprise,²² and the explanation and justification for the existence of conglomerates ‘relies on a combination of a priori theorizing and related natural selection considerations.’²³ What is more, the broad ‘set of consideration related to the history, religion, and culture of societies’, upon which the enforcement of property rights depends,²⁴ tends to be taken as given in transaction cost economics as it is generally in organizational economics.²⁵

When assessing the statement that ‘history matters’ it needs to be remembered that ‘history’ is an ambiguous term. Coase has pointed out that the unreal world of equilibrium and perfect competition, which is so readily susceptible to mathematical analysis, is also a world to which it is difficult to apply a meaningful concept of time.²⁶ However the acceptance that temporal or spatial dimensions need to be incorporated into explanations for the existence of particular organizational forms, does not necessarily require or justify empirical historical research into the origins of those organizational forms. If the logic of history can be explained satisfactorily in theoretical terms, then there is no need to refer to the narration of what has happened, except for the purposes of illustration. Organizational economics can be seen as an advance on the neoclassical theory of the firm, which does not account for time. But a theoretical account of the importance of time does not necessarily entail a sociological or historical interpretation of actual events.

A good example of economists’ preference for ‘hypo...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• List of contributors
• Introduction
• 1 Business history and organization theory
• 2 Management strategies for health: J. W. Roberts and the Armley Asbestos Tragedy, 1920–1958
• 3 The proprietorial theory of the firm and its consequences
• 4 Trust in an industrial district: the Potteries, c. 1850–1900
• Index