ABSTRACT
Around the middle of the nineteenth century most enterprises were small and managed by their owners. Partnership was the standard legal form, but even incorporated companies were run in a personal manner. Businesses were normally family affairs and businesspeople did not yet feel the need for any other legal form of enterprise. Entrepreneurs thus owned and controlled their own enterprises. The first modern business enterprises which required a large number of full-time employed managers were the railroad and telegraph companies in the US in the 1860s and, as the size of these and other companies grew, general principles and management procedures were developed. Managerial hierarchies were created, and enterprises were defined in organizational manuals and charts. Internally generated data began to be used as a management tool, but in the interests of controlling and disciplining the workers rather than the control of other managers. So long as the enterprises were financed internally from the cash flow generated by high-volume production and distribution, the founders rarely had to raise capital by issuing stock. Increasingly, however, companies became dependent on the supply of outside capital. Investors, in turn, required assurance of the proper management of the capital invested (Chandler 1977:36-146, 381).
