32 Pages

The Dutch Family Firm confronted with Chandler's Dynamics of Industrial Capitalism, 1890–1940

In his book Scale and Scope, Chandler compares patterns of industrial growth and competitiveness in the United States, Germany and Great Britain. In his view, the ability of a nation to create an international competitive industry depends, to a large extent, on investment in managerial capabilities. In the US a business system developed where decisions were made by salaried managers not owners. This system was highly competitive and Chandler therefore describes the US industrial capitalism as 'competitive managerial'. In contrast, British industrial capitalism is found to be 'personal', because the British held on to their family firms and failed to invest in managerial capabilities, as well as in production and distribution. As a consequence, the British failed in the core sectors of the 'Second Industrial Revolution'. By attempting to maintain market power solely through use of patents, advertising, cartel arrangements and mergers, the family firms lost competitiveness, concludes Chandler. The Germans were more similar to the North Americans in that they created large companies and large managerial hierarchies. However, according to Chandler, they differed from the US in their preference to cartel agreements. Their capitalism is termed 'cooperative managerial capitalism'. 1

The Netherlands are geographically situated between Germany and Great Britain and have maintained close commercial relations with both countries. In this article we will explore whether the Dutch industrial capitalism can be characterised as 'personal' or as 'co-operative managerial'. Having reached a conclusion about the typology of the Dutch industrial capitalism, we will study the performance of the Dutch firms in regard to the industries of the Second Industrial Revolution. Chandler's generalisations suggest there is a causal connection between the adherence to personal capitalism and the family firm and a poor performance in these sectors. In conclusion we will compare and contrast our findings with Chandler's harsh judgement on the family firm.