This article deals with the diffusion and standardization rivalry between two similar but incompatible formats for home videocassette recorders (VCRs): the Betamax, introduced in 1975 by the Sony Corporation, and the VHS (Video Home System), introduced in 1976 by the Victor Company of Japan (Japan Victor or JVC). Despite being first to the home market, the Beta format fell behind the VHS in market share during 1978 and declined thereafter. By the end of the 1980s, Sony and its partners had ceased producing Beta models. This study analyzes the history of this rivalry and examines its context—a mass consumer market with a dynamic standardization process subject to “bandwagon” effects that took years to unfold and that were largely shaped by the strategic maneuvering of the VHS producers.

In its early years, the disk drive industry was led by a group of large-scale, integrated firms of the sort that Alfred D. Chandler, Jr., observed in his studies of several of the world's largest industries. The purpose of this history is to explore why it was so difficult for the leading disk drive manufacturers to replicate their success when technology and the structure of markets changed. The most successful firms aggressively developed the new component technologies required to address their leading customers’ needs, but this attention caused leading drive makers to ignore a sequence of emerging market segments, where innovative disk drive technologies were deployed by new entrants. As the performance of these new-architecture products improved at a rapid pace, the new firms were eventually able to conquer established markets as well. As a consequence, most of the integrated firms that established the disk drive industry were driven from it, displaced by networks of tightly focused, less integrated independent companies.

The following article provides a thorough chronicle of the microcomputer industry. That industry is a striking case, in which industrial growth took place through the creation of “external” capabilities—that is, capabilities produced by and residing in a specialized market network rather than in large organizations enjoying internal economies of scale and scope. In the microcomputer industry, the most successful products were those that took the greatest advantage—and allowed users to take the greatest advantage—of the market; and the greatest failures occurred when business enterprises bypassed the external network and attempted to rely significantly on internal capabilities.

Growth is governed by a creative and dynamic interaction between a firm's productive resources and its market opportunities. Available resources limit expansion; unused resources (including technological and entrepreneurial) stimulate and largely determine the direction of expansion. While product demand may exert a predominant short-term influence, over the long term any distinction between “supply” and “demand” determinants of growth becomes arbitrary.

A review of theories of competition and business strategy over the last half-century reveals a fairly linear development of early work by academics and consultants into efforts to understand the determinants of industry profitability and competitive position and, more recently, to add a time or historical dimension to the analysis. The possible implications of the emergence of a market for such ideas are also discussed.

The purchasing strategies of the dominant U.S. automakers form a topic neglected by both economists and business historians. The following article examines the automakers' changing relations with their suppliers throughout the twentieth century. Using the exit/voice paradigm, it establishes a framework that can account for both current and past strategies, even when they seem to contradict the logic of economic theory.

How does economic organization affect economic performance? This analysis of the historical transformation of the U.S. economy from the business model of the “old economy” to that of the “new economy” demonstrates that the Japanese challenge of the 1980s was an important catalyst for the shift. Anchored by the “Chandlerian” corporation, the old model delivered economic growth that was much more equitable and stable than the new one. Furthermore, the business model that underpinned the Japanese challenge represented a superior version of the old U.S. prototype. The fi nancialization of corporate decision-making under the new paradigm has been the prime source of inequity and instability in U.S. economic performance over the past three decades. As manifested in outsized executive pay and massive stock buybacks, the fi nancialization of the U.S. corporation threatens long-term economic growth.

Almost unnoticed in the midst of revisionist attacks on progressive history and the rise of the New Left, an organizational synthesis has been emerging which offers much to the student of modern America. Professor Galambos presents a historiographical survey of this synthesis and concludes that its chief strength is a mode of analysis blending the traditional tools of historical thought with ideas from the behavioral sciences.

The recent surge of emerging-economy multinational enterprises (EMNEs) has prompted a debate on whether existing international business theory—particularly internalization theory—can accommodate this phenomenon. Our view is that no new, EMNE-centric theory is required to study EMNEs. Using historical evidence, we argue that “new” internalization theory is sufficient to address the complexity of EMNEs, and we illustrate our argument with examples of ten successful EMNEs from Asia and the Americas. We further argue that a business history lens can illuminate the behavior of developed-economy multinationals. We show how management scholars can advance their research agendas by engaging with business history and how business historians can use internalization theory to analyze the history of multinationals.

This article surveys the expansion of American management consulting companies to Western Europe in the twentieth century. It focuses on the way these consultancies built and sustained activities outside their home country. A number of elements facilitated expansion abroad, including the creation of new and distinctive “products,” or approaches to management, and the use of domestic multinational clients as “bridges” to foreign countries. But to be successful in the long run, American consulting companies needed to create relationships with clients in the host country. In this respect, social and, sometimes, political contacts with the local elite, usually established through a few well-connected individuals, proved a crucial advantage.

In this article, Professor Chandler compares and contrasts the emergence of managerial capitalism in the United States, Great Britain, Germany, and Japan. Though he observes that large firms tended to evolve according to a common pattern, he is equally impressed by international differences in the pace, timing, and character of change.

In the following article, Professor Baskin traces the evolution of corporate finance from its beginnings among the British trading companies to its modern transformation in the United States at the end of the nineteenth century. He argues that deductive theoretical analyses based on perfect capital markets cannot always explain actual historical developments, and that financial history generally has not received sufficient attention from either economic theorists or historians. Professor Baskin suggests that financial markets developed as they did largely as a result of efforts to minimize the problems created by the asymmetry of information between company insiders and potential investors.

Business historians have illuminated how first movers in many emerging industries secure an enduring leadership position, but have devoted less attention to the processes by which industry leaders relinquish their dominance. This paper examines why rubber industry leader Firestone Tire & Rubber failed to respond effectively to new technology and foreign competition. The author argues that Firestone did not respond by doing nothing, but rather accelerated activities that had contributed to its past success. Firestone's response was constrained by managers' existing strategic frames and values, and the company's processes and long-standing relationships with customers and employees.

During the twentieth century, the pharmaceutical industry experienced a series of dramatic changes as developments in science and technology generated new opportunities for innovation. Each of these transitions forced existing firms to develop new capabilities. The authors examine the most recent such transition, the shift to molecular genetics and recombinant DNA technology (1970 to the present), and explain how and why this transformation differed from the previous ones in pharmaceuticals. Small biotech startups played an important role in this transition, and the large pharmaceutical firms that began to enter the field had to develop new strategies for innovation. Two major strategies were adopted by the early movers, all of which created various kinds of alliances with the small biotech businesses. By the mid-1990s, the leading pharmaceutical manufacturers had established significant capabilities in the new field, but they were continuing to work with specialized biotechs in order to innovate across a broad range of therapeutic categories.

This article argues that a cultural and narrative perspective can enrich the business history field, encourage new and different questions and answers, and provide new ways of thinking about methods and empirical material. It discusses what culture is and how it relates to narratives. Taking a cultural and narrative approach may affect questions, sources, and methodologies, as well as the status of our results. Finally, a narrative approach may contribute to our historical understanding of entrepreneurship and globalization.

In this suggestive essay, Professor Galambos surveys the large number of books and articles, published since 1970, that together point toward a new “organizational synthesis” in American history. Expanding upon an earlier, more tentative essay on the same subject published in the Autumn 1970 issue of the Business History Review, he contrasts the widely disparate postures adopted in recent years by historians studying organizational behavior. His survey reveals a rich diversity of opinion, less reliant than was previous scholarship upon abstractions drawn from the social sciences. This diversity of opinion, Galambos concludes, provides the organizational synthesis with much of its continued vitality, and makes possible “the kind of moral judgments that have always characterized the best historical scholarship.”

The Mittelstand sector of the German economy, which is made up of small and medium-sized family firms, is generally not mentioned in debates about German capitalism. This article makes the case that the focus of research on the German economy should shift from large corporate structures to these smaller firms. The classic Mittelstand model, which dominated the economy until about 1970, was characterized by identity of ownership and management, strong emotional investment by owners and staff, and an emphasis on continuity, paternalism, and independence. Beginning in the 1960s, this model was undermined by fundamental changes in the country's economic and sociocultural environment. In response, the firms abandoned a number of their traditional attributes, a process that led to the demise of some businesses and the regeneration of others. Although the modern form adopted by the surviving Mittelstand firms allows them to be less dependent on individual families, to enjoy more access to external capital, and to display more openness and international orientation, they can no longer rely on the prospect of long-term stability, as they did in the past.

The Xerox Corporation has devised several strategies for managing the numerous spin-off firms that independently commercialized many of its technologies. From 1979 to 1998, thirty-five technology-based organizations emerged from Xerox's research centers. Contradicting the common perception that Xerox “fumbled the future” by letting its technology walk out the door, in fact the company set in motion a series of deliberate initiatives to manage its spin-off organizations. After initially adopting a laissez-faire approach, the company soon turned to ad hoc methods, which evolved into a formal internal venture capital structure and culminated in a triage process, with the result that only companies perceived by Xerox as fitting into its overall corporate strategy were retained. By using spin-offs to withdraw gracefully from areas it considered to be marginal, Xerox for feited the potential to realize value from their research. Some, but not all, of the spin-offs obtained venture capital financing from outside sources and thus prospered independently. Their success demonstrated the opportunity that Xerox missed in managing its spin-offs.

Much has been written about late-nineteenth-century multinationals and their relationship to the transnational firms of the present, but both historians and economists have largely discounted the relevance of the earlier chartered trading companies to this discussion. In an article emphasizing transaction cost analysis and the theory of the firm, Professors Carlos and Nicholas argue that the trading companies did meet the criteria of the modern MNE—the growth of a managerial hierarchy necessitated by a large volume of transactions and of systems to control those managers over space and time.

In this article, Professors Dutton, Thomas, and Butler trace the sixty-year history of a major managerial technology—the progress function—from its discovery in post-World War I airplane manufacture to its post-World War II popularity among management consultants. By statistically analyzing the large number of progress function studies, they demonstrate that its investigation has become balkanized by academic discipline, and that applied researchers have frequently ignored the contingencies stressed in the leading theoretical studies. Their article is thus a revealing example of how social scientific concepts get translated into business practice.