Debating the Responsibility of Capitalism in Historical and Global Perspective

This working paper examines the evolution of concepts of the responsibility of business in a historical and global perspective. It shows that from the nineteenth century American, European, Japanese, Indian and other business leaders discussed the responsibilities of business beyond making profits, although until recently such views have not been mainstream. There was also a wide variation concerning the nature of this responsibility. This paper argues that four factors drove such beliefs; spirituality, self-interest; fears of government intervention; and the belief that governments were incapable of addressing major social issues

"Power from Sunshine": A Business History of Solar Energy

This working paper provides a longitudinal perspective on the business history of solar energy between the nineteenth century and the present day. Its covers early attempts to develop solar energy, the use of passive solar in architecture before World War 2, and the subsequent growth of the modern photovoltaic industry. It explores the role of entrepreneurial actors, sometimes motivated by broad social and environmental agendas, whose strategies to build viable business models proved crucially dependent on two exogenous factors: the prices of alternative conventional fuels and public policy. Supportive public policies in various geographies facilitated the commercialization of photovoltaic technologies, but they also encouraged rent-seeking and inefficiencies, while policy shifts resulted in a regular boom and bust cycle. The perceived long-term potential of solar energy, combined with the capital-intensity and cyclical nature of the industry, led to large electronics, oil and engineering companies buying entrepreneurial firms in successive generations. These firms became important drivers of innovation and scale, but they also found solar to be an industry in which achieving a viable business model proved a chimera, whilst waves of creative destruction became the norm

Historical Origins of Environment Sustainability in the German Chemical Industry, 1950s-1980s

This working paper examines the growth of corporate environmentalism in the West German chemical industry between the 1950s and the 1980s. It focuses on two companies, Bayer and Henkel and traces the evolution of their environmental strategies in response to growing evidence of pollution and resulting political pressures. Although German business has been regarded as pioneering corporate environmentalism, this study reveals major commonalities between the German and American chemical industries until the 1970s, when the two German firms diverged from their American counterparts in using public relations strategies not only to contain fallout from criticism, but also as opportunities for changes in corporate culture. The working paper finds no evidence for variety of capitalism explanations why German firms should have been early in their sustainability strategies, partly because of the importance of regional as opposed to national influences, but the study is supportive of organizational sociology theories which have identified the importance of visibility in corporate green strategies

Entrepreneurship and Business Groups: An Evolutionary Perspective on the Growth of the Koç Group in Turkey

This working paper examines the origins and development of the Koç Group, which grew to be the largest business group in Turkey. This enterprise was an important actor in the emergence of modern business enterprise in the new state of the Republic of Turkey from the 1920s. After World War II it diversified rapidly, forming part of a cluster of business groups which dominated the Turkish economy alongside state-owned firms. This study shows how the founder of the Group, Vehbi Koç, formulated his business model, and analyzes how his firm evolved into a diversified business group. The research supports prevailing explanations of business groups which identify the role of institutional voids, government policies and contact capabilities, but it also builds on and extends earlier suggestions in both the management and business history literatures that entrepreneurship needs incorporating more strongly as an explanatory factor. This working paper argues that Koç acted as both a Kirznerian and Schumpeterian entrepreneur to build his business group, both in its formative stages and later in its subsequent growth into a diversified group

Business History, the Great Divergence and the Great Convergence

This working paper provides a business history perspective on debates about the Great Divergence, the rise of the gap in incomes between the West and the Rest, and the more recent Great Convergence, which has seen a narrowing of that gap. The literature on the timing and causes of the Great Divergence has focussed on macro analysis. This working paper identifies the potential for more engagement at the micro level of business enterprises. While recognizing that the context of institutions, education and culture play a role in explanations of wealth and poverty, the paper calls for a closer engagement with the processes how these factors translated into generating productive firms and entrepreneurs. The challenges of catching-up were sufficiently great in the Rest that initially minorities held significant advantages in capital-raising and trust levels which enabled them to flourish as entrepreneurs. Yet by the interwar years there is evidence of more general emergence of modern business enterprise in Asia, Latin America and Africa. Many governmental policies after 1945 designed to facilitate catch-up ended up crippling such emergent business enterprises without putting effective alternatives in place. The second wave of globalization from the 1980s provided more opportunities for catch up from the Rest. Firms from emerging markets had the opportunity to access the global networks which replaced large integrated firms. There were also new ways to access knowledge and capital, including through management consultancies and hiring graduates from business schools. The upshot was the rise to global prominence of firms based in the Rest, including Foxcomm, Huawei, HNA, Cemex, and TCS

Entrepreneurs, Firms and Global Wealth since 1850

This working paper integrates the role of entrepreneurship and firms into debates on why Asia, Latin America and Africa was slow to catch up with the West following the Industrial Revolution and the advent of modern economic growth. It argues that the currently dominant explanations, which focus on deficient institutions, poor human capital development, geography and culture are important, but not sufficient. This is partly because recent research in business history has shown that several of the arguments are not empirically proved, but especially because the impact of these factors on the creation and performance of innovative business enterprises is not clearly specified. Modern economic growth diffused from its origins in the North Sea region to elsewhere in western and northern Europe, across the Atlantic, and later to Japan, but struggled to get traction elsewhere. The societal and cultural embeddedness of the new technologies posed significant entrepreneurial challenges. The best equipped to overcome these challenges were often entrepreneurs based in minorities who held significant advantages in capital-raising and trust levels. By the interwar years productive modern business enterprise was emerging across the non-Western world. Often local and Western managerial practices were combined to produce hybrid forms of business enterprise. After 1945 many governmental policies designed to facilitate catch-up ended up crippling these emergent business enterprises without putting effective alternatives in place. The second global economy has provided more opportunities for catch up from the Rest, and has seen the rapid growth of globally competitive businesses in Asia, Latin America and Africa. This is explained not only by institutional reforms, but by new ways for business in the Rest to access knowledge and capital, including returning diaspora, business schools and management consultancies. Smarter state capitalism was also a greater source of international competitive advantage than the state intervention often seen in the past

Entrepreneurship in the Natural Food and Beauty Categories before 2000: Global Visions and Local Expressions

This working paper examines the creation of the global natural food and beauty categories before 2000. This is shown to have been a lengthy process of new category creation involving the exercise of entrepreneurial imagination. Pioneering entrepreneurs faced little consumer demand for natural products, and little consumer knowledge of what they entailed. The creation of new categories involved three overlapping waves of entrepreneurship. The first involved making the ideological case for natural products. This often entailed investment in education and publishing activities. Second, entrepreneurs engaged in the creation of industry associations which could advocate, as well as give the nascent industry credibility and create standards. Finally, entrepreneurs established retail stores, supply and distribution networks, and created brands. Entrepreneurial cognition and motivation frequently lay in individual, and very local, experiences, but many of the key pioneers were also highly globalized in their world views, with strong perception of how small, local efforts related to much bigger and global pictures. A significant sub-set of the influential historical figures were articulate in expressing strong religious convictions. The paper concludes that by the 1990s it was evident that the success of entrepreneurial pioneers in building the market for green products created a new set of issues, especially related to the legitimacy of their businesses and of the concept of greenness

Business Groups Exist in Developed Markets Also: Britain Since 1850

Diversified business groups are well-known phenomenon in emerging markets, both today and historically. This is often explained by the prevalence of institutional voids or the nature of government-business relations. It is typically assumed that such groups were much less common in developed economies, and largely disappeared during the twentieth century. This working paper contests this assumption with evidence from Britain between 1850 and the present day. During the nineteenth century merchant houses established business groups with diversified portfolio and pyramidal structures overseas, primarily in developing countries, both colonial and independent. In the domestic economy, large single product firms became the norm, which over time merged into large combines with significant market power. This reflected a business system in which a close relationship between finance and industry was discouraged, but were there few restrictions on the transfer of corporate ownership. Yet large diversified business groups did emerge, which had private or closely held shareholding and substantial international businesses. The working paper argues that diversified business groups added value in mature markets such as Britain. In the domestic economy, Pearson and Virgin created well-managed and performing businesses over long periods. The much-criticized conglomerates of the 1970s-1990s era such as Hanson and BTR were also quite financially successful forms of business enterprise. The demise of many of them appears to owe at least as much to management fads as to serious financial under-performance

Alternative Paths of Green Entrepreneurship: The Environmental Legacies of the North Face’s Doug Tompkins and Patagonia’s Yvon Chouinard

This working paper examines the impact of two entrepreneurs who offered alternative paths to reach their shared goal of a more sustainable world. Yvon Chouinard and Doug Tompkins were respective founders of the prominent outdoor apparel brands Patagonia and The North Face. Chouinard pursued incremental sustainability strategies over decades at his firm. Tompkins, who went on to manage the fashion company Esprit, opted in 1989 to exit business entirely having concluded that capitalism could never be sufficiently sustainable to reverse environmental degradation. He purchased 1.5 million hectares of land in Chile and Argentina which he converted to protected areas and national parks. The Chouinard strategy represented best practice green entrepreneurship which if widely adopted might markedly reduce the environmental impact of business, but its full execution appeared possible only because Patagonia was a private company. The Tompkins dual strategy of exit from business and application of entrepreneurial skills to conservation resulted in large environmental gains, including sequestering and storing an estimated 80 million tons of carbon. We lack the metrics and methodologies to compare rigorously which offers the better path to sustainability, but a case can be made that the application of entrepreneurial talents to activities beyond for-profit business (of which conservation is one example) might be a more effective strategy

Entrepreneurs and the Co-Creation of Ecotourism in Costa Rica

Between the 1970s and the 2000s Costa Rica became established as the world’s leading ecotourism destination. This working paper suggests that although Costa Rica benefited from biodiversity and a pleasant climate, the country’s preeminence in ecotourism requires more than a natural resource endowment explanation. The paper argues that the ecotourism industry was a co-creation of the public, private, and tertiary sectors. While the role of the government and conservation NGOs is acknowledged in the existing literature, this study draws attention to the critical role of small entrepreneurs. Making extensive use of oral history, the working paper demonstrates the role of tour companies in drawing affluent Western ecotourists to the country, and of the creators of ecolodges and other forms of accommodation in providing them with somewhere to stay. These entrepreneurs, many of them expatriate Americans, helped ensure that formally protected areas remained sustainable parks and reserves, by providing revenues, education in conservation to tourists, and community development and jobs. Clustering created positive externalities for new entrepreneurs to enter the industry, who could also learn from knowledge spillovers. There were downsides to the new industry, however. The creation of the national image of a natural paradise enabled many businesses which were not environmentally sustainable to free-ride on the green image. Even values-driven ecotourism entrepreneurs faced questions about their impact as they expanded the scale of their operations. While scaling was a sign of success and delivered many benefits to Costa Rica, there were distinct drawbacks from a sustainability perspective