Modern business enterprise has appeared in all technologically advanced market economies. Comparable protests, even stronger ideological and political opposition, has not prevented its emergence and spread in western Europe and Japan. In recent years the same type of multiunit enterprises, using comparable administrative procedures and organizational structures, have come to dominate much the same type of industries as in the United States.7 In these industries a new managerial class has become responsible for coordinating current flows of goods and services and allocating resources for future production and distribution. The study of the past history and present operations of modern business enterprise in Europe and Japan provides as significant a challenge to economists and historians as the analysis of the American story.
In Europe and Japan, however, the new institution appeared in smaller numbers and, at least until after World War II, spread more slowly than it did in the United States. Because it came slower and later, its builders and administrators have often looked to the American experience for models and precedents. Therefore one of the most significant questions for economists and historians studying modern business enterprise in its in- ternational setting is to explain why the institution appeared so quickly and in such profusion in the United States.
An obvious, though still untested, reason why the United States became the seed-bed for managerial capitalism was the size and nature of its domestic market. In the second part of the nineteenth century the Ameri- can domestic market was the largest and, what is more important, the fastest growing market in the world. In 1880, the nation’s national income and its population were one and a half times those of Great Britain. By 1900, they were twice the size of Britain’s and, by 1920, three times the size.8 As Simon Kuznets’s carefully drawn data reveal, the rate of growth of the American population and national product was consistently much higher than that of other technologically advanced nations—France and Germany, as well as Britain—during the years between the American Civil War and World War I.
The American market was not only larger and faster growing than in these other nations; it was also more homogeneous. Income distribution appears to have been less skewed than in other nations. Markets were less defined by class lines than they were in Europe. The newness of the American market—much of which had been unsettled wilderness a few decades earlier—also meant that business enterprises were new and busi- ness arrangements had not had time to become routinized and rigid.
Source: Chandler Alfred D. Jr. (1977), The Visible Hand: The Managerial Revolution in American Business, Harvard University Press.