The large industrial enterprise and the dynamics of modern economic growth

Abstract

Ever since the Second Industrial Revolution exploded in the last decades of the nineteenth century, the large industrial enterprise has continuously played a central role in the dynamic growth of the international economy and the economic transformation of all major nations. Among the new forms of large enterprises, manufacturing firms have been at the forefront not only of capital formation and productivity growth but also of technological progress and knowledge augmentation. This is not simply because modern economic growth on a global scale has taken the general form of industrial development. It is also because manufacturing enterprises, especially those in capital-intensive and knowledge-intensive industries, have historically accounted for most of the research and development which became essential to continuing technological innovation in the twentieth century. From their beginnings in the late nineteenth century large enterprises in capital-intensive industries have systematically embodied the latest scientific and technological advances and have commercialized these into marketable products. In industries which led the Second Industrial Revolution, “first movers” – often start-up firms which invested in manufacturing facilities large enough to exploit economies of scale – established themselves as dominant oligopolistic players in domestic and then international markets. They invested not only in manufacturing facilities but also in extensive marketing and distribution networks and competent managerial hierarchies. They became truly “large industrial enterprises,” a term broad enough to suggest their nonmanufacturing as well as manufacturing functions.

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