Business forms and business performance in UK manufacturing 1871–81

Abstract

We explore which business forms were predominant in the later Victorian economy and why some forms were more effective among large British manufacturing firms during this period. With a dataset of 483 manufacturing firms in 1881 that either employed at least 1000 or had done so a decade earlier, we find that the great majority were partnerships. Public corporations attained higher capital–labour ratios and stronger employment growth than other business forms. The separation of ownership from control was most effective where it was most thoroughly practised, as by public, in contrast to private, corporations. Engineers were frequently encountered in all business forms and associated with expanding employment. But the large public manufacturing corporations employed almost twice the proportion of engineers and professionals in top management as other enterprises. Family firms, proxied by heirs, were present in management of three-quarters of partnerships but in only one-third of public corporations. Heirs reduced the employment growth of the firm, whereas engineers boosted it. Lords, mayors, and landed wealth in management were also associated with faster employment growth of enterprises.