Organisational configuration consists of the structures, processes, relationships and boundaries through which a company operates. They are influenced by the strategic options adopted by managers, the technological features of the company and its industry, the stage of life of the company, and its external environment. Thus, we have left the analysis of organisational configurations to the end of our study in order to examine the features of design and structure that are associated with longevity and big business.

Australian corporate leaders demonstrated many of the trends identified in studies of overseas developments in the corporate economy. Corporate leaders in several sectors invested in science-based technologies to exploit economies of scale, and expanded into products and markets through the use of multidivisional structures. We describe these developments in organisational configuration as companies developed core and related markets through horizontal and vertical integration.

Australian corporate leaders also faced unique geographical conditions that meant they had to deal with coordination problems and information flows over large distances if they wished to achieve national coverage. Pastoral agents, banks, retailers and property companies leveraged core competencies and replicated expertise across multiple sites, leading to an ‘organic’ multidivisional organisation. The size of the local market prevented companies from establishing scale in any other way.

Another point of differentiation from international experience was the position of multinational subsidiaries in providing demonstration effects to domestic firms.

Research about the rise of large-scale enterprise has concentrated on the world's leading industrial economies, particularly the United States, Britain, Germany, France and Japan. By way of contrast, this study discusses the evolution of large business enterprises in an economy at the ‘periphery’ of the world's economic system rather than at the ‘centre’. The drivers of the emergence of big business in Australia were fundamentally the same as those operating in many other mature and later starting industrial economies. However, it will be argued that the nature of the Australian economy, and particularly its economic relationship with the rest of the world, had a powerful impact on the timing of the emergence of big business and its subsequent character. These local issues will be explored before turning to an examination of the characteristics of top 100 non-financial and 25 financial firms operating in Australia at various dates from 1910 up to 1997. This chapter deals with aggregate data and trend movements rather than the identification and histories of individual firms. The rise of firms within industries is considered in Chapter 3.

Drivers of big business in Australia

The large-scale industrial firms that emerged in the United States and Europe in the later part of the nineteenth century were powerful agents of economic change. Utilising new technologies in communication and production, they transformed existing industries and created new ones through research and development-related diversification, and widened markets from local to regional to national and, in many cases, international.

The financing decisions for our corporate leaders were influenced over time by a range of macroeconomic and firm-specific factors (for example, the institutional structure of finance markets, the size of the firm, current sources of finance, ownership structure). The availability of finance from private and public markets affects the cost of capital for the firm, and dictates the extent to which it must fund growth from internally generated sources. Financial regulations, tax regimes, the openness of the economy to international capital flows, and investor sentiment (to name a few), all influence the nature and structure of the domestic finance market. At the firm-specific level, the financing decision involves judging whether to retain earnings for growth, or to raise new capital from debt or equity. Alternatively, firms might draw on networks of relationships to fund expansion and growth. If external sources are chosen, management is required to address more complex questions associated with the maturity and seniority of finance, and the nature of future payments (for example, fixed or floating interest rates, the currency of denomination, and dividend payouts).

In this chapter we examine the sources of finance utilised by Australia's corporate leaders. We begin by describing the sources of finance available to firms: retained earnings, networks, equity and debt. We then examine how each of these sources were used to finance corporate strategies and sustain competitive advantages. We conclude with an examination of the rise of financing operations in the corporate head office of two corporate leaders: Dunlop and BHP.

Large corporations are dominating institutions in Australia, their influence pervading economic development, social structures and political relationships. Whether they provide the cost efficiencies and overseas contacts to drive economic growth and increased wealth or, alternatively, are bureaucratic leviathans that use their power to extract rents from the rest of society, is a question of sustained interest and discussion. While our principal corporations today are well known, we are far less familiar with their early development and predecessors. By investigating their evolution over the course of the twentieth century we intend to uncover a much closer understanding of Australia's leading corporations, particularly the bases of their success and their role in modern economy and society.

It is surprising how little we know about the growth of big business in Australia. Economic historiography has focused primarily upon the broad macroeconomic changes of the economy and the role of government in those changes. Little attention has been paid to analysing the evolution of business enterprises and their contribution to the nation's economic development. Recent research in business history, however, indicates that Australians are slowly discovering the similarities and differences between domestic and overseas corporate development. However, at this stage there is no comprehensive identification and investigation of Australian corporate leaders – that is, our major business enterprises – in the twentieth century. We propose to fill this gap in our nation's knowledge.

Australia s leading corporations today are household names — Telstra, Qantas, BHP-Billiton, AMP, Commonwealth Bank — to name but a few. They have contributed to and had influence over our economic progress throughout the twentieth century, and their broad spread of shareholders helps to keep them in the public consciousness. Few Australians, however, would know much about how our leading corporations came into being or which firms were our corporate leaders 100 or even 50 years ago. The history of Australian enterprise has not been well served by academic scholarship (the exceptions are few), which has focused largely upon the evolution of the broad macroeconomy. We lack the rich tradition of business history scholarship available in nations such as the United Kingdom or the United States.

This book begins the process of redressing these omissions. It brings to light our corporate leaders and analyses the course of their progress over the twentieth century, locating their experience within the broader Australian economy and the comparative experience of enterprise in other developed nations. We are less concerned with the operational detail of these firms and more with their broad and long-run strategic directions. In particular, we focus upon the common (or unique) features of their corporate strategies and structures.