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6 - Corporate performance

Published online by Cambridge University Press:  06 July 2010

Paul Johnson
Affiliation:
London School of Economics and Political Science
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Summary

At the beginning of the nineteenth century the incorporation of business was prohibited by the Bubble Act; companies could be formed only by grant of royal charter or letters patent, and incorporation was restricted to large-scale enterprises deemed to be in the public interest. By the century's end, the limited liability company had become the dominant form of business organisation in Great Britain. This radical transformation of business structures coincided with the sustained growth and structural change in the British economy that turned it into the ‘workshop of the world’, and it is possible that there was some link between these two developments. A strong causal relationship might be one in which economic development created pressure for organisational change, with the new organisational forms themselves promoting further economic growth by increasing the efficiency of business operation. This is the underlying model that institutional economists have commonly applied when considering the rise of what has been called the ‘classical capitalist firm’ – that is, a company with shareholders, managers and workers. The rise to dominance of the corporation is seen to reflect the relative efficiency of that form of business organisation over any alternative. In a competitive economy, organisational forms that are less responsive, less adaptable and less profitable will be crowded out by their more efficient competitors in an economic process of natural selection which will serve to reduce social costs and increase overall welfare.

Type
Chapter
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Making the Market
Victorian Origins of Corporate Capitalism
, pp. 167 - 194
Publisher: Cambridge University Press
Print publication year: 2010

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  • Corporate performance
  • Paul Johnson, London School of Economics and Political Science
  • Book: Making the Market
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511750533.008
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  • Corporate performance
  • Paul Johnson, London School of Economics and Political Science
  • Book: Making the Market
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511750533.008
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Corporate performance
  • Paul Johnson, London School of Economics and Political Science
  • Book: Making the Market
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511750533.008
Available formats
×