This book aims to understand how “The Wealth of Nations” during the past century has been influenced by the dynamics of big business. All the authors recognize big business, particularly large industrial enterprises, as a key microeconomic agent that employs such productive assets as raw materials, machinery and equipment, human resources, and technological knowledge on a vast scale. How such firms emerged and evolved in various economic, political, and social settings constitutes a significant part of the modern development of international as well as national economies (whose “wealth” we consider as equivalent to “national income” in modern economic terms). This historical review of the contributions of large industrial enterprises seems particularly valuable at this time when significant scholarly work has analyzed the role of small firms, networks, and alliances. The essays in this collection help to relate such analyses to the contributing and complementary roles and functions of the large firm, past and present.

The collection consists of an introductory part (Part I), the central section on country experiences (Part II), and a segment of commentaries on the country papers (Part III). The introductory part consists of this overview (Chapter 1) and a chapter on the contributions of the large industrial enterprises to modern economic growth (Chapter 2). The two chapters provide a point of reference, a setting to which the reader can relate the narratives told, the interpretations made, and the insights offered in this wide-ranging, perceptive set of chapters that deal with the historical evolution of large firms and their place in national economies.

Ever since the Second Industrial Revolution exploded in the last decades of the nineteenth century, the large industrial enterprise has continuously played a central role in the dynamic growth of the international economy and the economic transformation of all major nations. Among the new forms of large enterprises, manufacturing firms have been at the forefront not only of capital formation and productivity growth but also of technological progress and knowledge augmentation. This is not simply because modern economic growth on a global scale has taken the general form of industrial development. It is also because manufacturing enterprises, especially those in capital-intensive and knowledge-intensive industries, have historically accounted for most of the research and development which became essential to continuing technological innovation in the twentieth century.

From their beginnings in the late nineteenth century large enterprises in capital-intensive industries have systematically embodied the latest scientific and technological advances and have commercialized these into marketable products. In industries which led the Second Industrial Revolution, “first movers” – often start-up firms which invested in manufacturing facilities large enough to exploit economies of scale – established themselves as dominant oligopolistic players in domestic and then international markets. They invested not only in manufacturing facilities but also in extensive marketing and distribution networks and competent managerial hierarchies. They became truly “large industrial enterprises,” a term broad enough to suggest their nonmanufacturing as well as manufacturing functions.

Alfred Chandler's theory of managerial capitalism has critically influenced all serious research on the rise and development of big business since the Second Industrial Revolution of the late nineteenth century. Originally constructed based mainly on the prime case of the United States from the 1880s to the 1950s, the Chandlerian vision of managerial capitalism emphasized the strategic primacy of discretionary decision making by senior, inside management which possesses the competitive advantages of the knowledge of markets and technology. The Chandlerian model presented a coherent analytical structure centered around the core concepts of learned and accumulated knowledge and organizational capabilities, based on which his approach can be applied to other national economies and different historical time periods. The Chandlerian framework actually has stimulated extensive comparative research on large industrial enterprises of many other nations, this particular book being one of them.

As the most influential historical theory of managerial capitalism, the Chandlerian model has faced a more than fair share of criticism from various perspectives: historical, economic, political, and sociological. From the theoretical viewpoint the most pointed criticism to date has come from an approach broadly called agency theory and corporate governance. Taking as their primary examples the mediocre financial performance and the decline in international competitiveness since the 1970s of many large U.S. enterprises, scholars mainly of finance economics and corporate law have documented many cases of managerial decision making and organizational implementation working against the economic welfare of shareholders, the firm, and the American economy. Sharply pointing out the dysfunction of internal monitoring mechanisms, these critics demanded a drastic overhaul of the corporate governance structure and suggested the enforcement of external disciplinary devices, particularly those of capital markets.