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Towards a ‘Managerial Revolution’ in European Business? The transformation of Danish and Spanish Big Business, 1973–2003

2007; Taylor & Francis; Volume: 49; Issue: 4 Linguagem: Inglês

10.1080/00076790701296217

1743-7938

Verónica Binda, Martin Jes Iversen,

Italy: Economic History and Contemporary Issues

Abstract This article examines the growth strategies and ownership of the 40 largest corporations in Spain and Denmark from 1973 to 2003 in the light of European economic integration. It follows the tradition of the Harvard Program and builds on the work of Richard Whittington and Michael Mayers on the history of European corporations. These studies have been extended in three ways: geographically, introducing a small north European and a medium sized south European economy; methodologically by supplementing internationalization to diversification as main growth strategies; and chronologically by analysing three decades of corporate changes, 1973–2003. The result showed no convergence in diversification or ownership patterns while in both countries the largest corporations were less market oriented and more international at the end of the period. Keywords: SSOP AnalysisBig BusinessCorporate OwnershipDiversification StrategyInternationalization StrategyEuropeanizationDenmarkSpain Acknowledgements We would like to express our gratitude to Franco Amatori, Albert Carreras and John Wilson for providing us with support and valuable suggestions during our research. A first version of this article was presented at the 10th Annual Conference of the European Business History Association, Copenhagen, August, 2006. We wish to thank the participants and in particular Richard Wittington for their many useful comments. Special thanks finally to Anita Iversen for her precious help. Notes 1 The so-called Harvard Program from the 1970s focused on the strategy–structure development in the US, Great Britain, Germany and France from 1950 to 1970. In more recent studies, Whittington and Mayer, The European Corporation, analysed the SSOP development of the 100 largest British, French and German manufacturing enterprises in 1983 and 1993, while Markides, Diversification, Refocusing and Economic Performance and Nohria et al., Changing Fortunes focused on the American enterprises. 2 Denmark is a small country which belongs to the North European institutional tradition of stable democracies while Spain is a medium-sized South European country which had its first democratic post-war elections in 1977 and only joined the European Community in 1986. 3 See, for instance, Schröter, "Small European Nations." 4 See, for instance, Joel Mokyr's analysis of the small successful European economies, in Mokyr, "Successful Small Open Economies and the Importance of Good Institutions." 5 Fligstein and Merand, "Globalization or Europeanization?"; Whittington and Mayer, The European Corporation; Marginson and Sisson, European Integration and Industrial Relations. 6 Iversen, "25 år som Revolutionerede Dansk Erhvervsliv"; Guillén, "The Ride of Spanish Multinationals." 7 Fortune Magazine, 26 June 2006. 8 http://www.corporate-denmark.dk. 9 Chandler, The Visible Hand; also see the discussion in McCraw, The Essential Chandler. 10 See McCraw's analysis of Henry Ford and Alfred P. Sloan in McCraw and Tedlow, "Henry Ford, Alfred Sloan, and the Three Phases of Marketing" and in Chandler, Strategy and Structure. 11 Strategy and Structure had an immediate impact on various academic disciplines, including sociology, economics, history and especially business administration, and it was extensively used by private consultancy companies such as McKinsey. McCraw, The Essential Chandler, 13. 12 Chandler, Strategy and Structure; Channon, Strategy and Structure of British Enterprise; Dyas and Thanheiser, The Emerging European Enterprise; Pavan, "Strategy and Structure"; Scott, "The Industrial State"; Rumelt, Strategy, Structure and Economic Performance; Wrigley, "Divisional Autonomy and Diversification." 13 Channon, Strategy and Structure of British Enterprise; Dyas and Thanheiser, The Emerging European Enterprise. 14 It is worth noting that the Harvard Program had its halcyon days in the mid-1970s. In the 1980s and early 1990s the strategy–structure approach was challenged theoretically by a post-modern critique of the generalizing development-in-stages idea and empirically by poor performance of diversified conglomerates. See analysis of the post-modern critique in Whittington and Mayer, The European Corporation, 32–40. 15 Markides, Diversification, Refocusing and Economic Performance; Nohria et al., Changing Fortunes. 16 Whittington and Mayer, The European Corporation. 17 Whittington and Mayer separate 'Chandlerism' from 'Chandlerian' studies. Chandlerism refers to a modernistic approach built on 'stage' theory with diversification–divisionalization as the final ultimate corporate combination while 'Chandlerian' studies refer to studies built on Chandler's key concepts. Whittington and Mayer, The European Corporation. 18 Nohria et al., Changing Fortunes; Markides, Diversification, Refocusing and Economic Performance; Whittington and Mayer, The European Corporation. 19 Whittington and Mayer, The European Corporation, 16, acknowledged the rising importance of the service industries, stating that, 'although many of our firms include service operations – as General Electric does – the relative decline of manufacturing since the 1970s leaves our groups of firms less important in their domestic economies'. 20 The inductive approach in this article is inspired by Alfred D. Chandler's description of the relation to the theories in his 1971 article "Business History as Institutional History": 'A historian's task is not merely to borrow other people's theories or even to test their theories for them. It is to use existing concepts and models to explore the data he has collected in order to answer his own particular questions and concerns … If it [a concept] seems to have value only if it is modified, then he should modify it. And always he should work at developing his own particular analysis.' 21 Whittington and Mayer, The European Corporation, 16. 22 Chandler, Strategy and Structure. 23 Markides, Diversification, Refocusing and Economic Performance, 6. 24 Rumelt, Strategy, Structure and Economic Performance. 25 A 'Business Area' is defined by the UN ISIC codes. 26 Single Business: at least 95 per cent of the revenue is aggregated from one business area; Dominant Business: one business area with at least 70 per cent but less than 95 per cent of revenue; Related Business: no business area with more than 70 per cent of the revenue but with market or technological correspondence between the business areas; Unrelated Business: no business area with more than 70 per cent of the revenue and none or only limited market – or technological – correspondence between the different business areas. 27 International activities cover both traditional export and revenue generated by production in foreign countries. 28 Home Market Oriented: less than 10 per cent of the revenue is aggregated from the international activities; Partly Home Market Oriented: less than 50 per cent but more then 10 per cent of the revenue is aggregated from the international activities; Partly Internationally Oriented: more than 50 per cent but less than 90 per cent of the revenue is aggregated from the international activities; Internationally Oriented: at least 90 per cent of the revenue is aggregated from the international activities. 29 Whittington and Mayer, The European Corporation, 92; Shleifer and Vishny, "Large Shareholders and Corporate Control." 30 Freeman and Loucã, As Time Goes By, 301–335. 31 Fligstein and Merand, "Globalization or Europeanization?" 32 Whittington and Mayer, The European Corporation. 33 O'Sullivan, Contests for Corporate Control. 34 Clifton and Díaz Fuentes, Privatisation in the European Union. 35 Carreras and Tafunell, "Spain: Big Manufacturing Firms Between State and Market." 36 Nohria et al., Changing Fortunes, 36. 37 Danmarks Statistik, Statistical Yearbook (1950, 1997). 38 All the Danish data in this article stems from the database http://www.corporate-denmark.dk. Spanish data has been collected from various sources, including Anuario El Pais, Duns and Bradstreet España, Fomento de la Producción, firms' Annual Reports, the economic press, business cases, business histories, biographies of entrepreneurs. 39 These figures include 1973 companies which merged with companies present on the top 2003 list. 40 Guillén, The Rise of Spanish Multinationals. 41 Martín Aceña and Comín, INI. 42 Cuervo García, La Privatización de la Empresa Pública. 43 Pons, "Banca e Industria en España, 1939–1985." 44 Guillén, The Limits of Convergence. 45 Muñoz et al., La Internacionalización del Capital en España. 46 Binda, "Between the State and the Multinationals." 47 Guillén, The Limits of Convergence. 48 http://www.corporate-denmark.dk. 49 Johansen, Fonde som Fundament for Dansk Erhvervsliv, 57. 50 Thomsen and Rose, Foundation Ownership and Financial Performance. 51 Fligstein and Merand, "Globalization or Europeanization?," 21. 52 Guillén, "Business Groups in Emerging Economies." 53 Binda, "The Strategy of Spanish Industrial Firms." 54 Whittington and Mayer, The European Corporation, 122–155. 55 http://www.corporate-denmark.dk. 56 Whittington and Mayer, The European Corporation, 225. 57 Binda, "The Strategy of Spanish Industrial Firms." 58 Whittington and Mayer, The European Corporation. Additional informationNotes on contributorsVeronica Binda Veronica Binda is a Ph.D. Student in Economic and Social History at Bocconi University, Milan. Martin Jes Iversen Martin Jes Iversen is Assistant Professor of Business History at Copenhagen Business School.