The Significance Of Managerial Capitalism In The 19th Century

930 Words4 Pages
Managerial capitalism is defined as – capitalism where ‘basic decisions concerning the production and distribution of goods and services were made by teams, or hierarchies, of salaried managers who had little or no equity ownership in the enterprises they operated’ The technological revolution was the major change that led to the dominance of managerial capitalism. Mass production was made possible by the innovations in transport and communication for example the railroad and cable. ‘these new high volume technologies could not be effectively exploited unless the massive flows of materials were guided through the process of both production and distribution by teams of salaried managers’ In the 1850’s and 1860’s the first examples of managerial hierarchies were used to ‘coordinate the movements of trains and flow of goods over the new railroad networks, and messages over the new telegraph system’ Each of the large Industrial enterprises grew in similar ways. ‘in nearly all cases they became large, first, by integrating forwards (that is, investing in marketing and distribution facilities and personnel); then, by moving backward into purchasing and control of raw and semifinished material; and sometimes, though much less often, by investing in research and development.’ ‘they soon became multinational by investing abroad, first in marketing and then in production. Finally they continued to expand their activities by investing in product lines related to their existing
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