Rating: 
Summary: Excellent historical analysis
Review: There aren't nearly enough titles available on this topic, yet Micklethwait & Wooldridge manage to fit a comprehensive history of limited liability joint stock companies into 256 pages. Well worth the read whether you're new to the topic or returning from other historical travels.
Rating: 
Summary: Excellent book - just the right length - 4.5 stars
Review: This book is nicely researched and well presented- not too long (not padded out) and not too short (despite its title).I finally understood the origin of the US term 'Trust' as in 'Anti-trust'. It was also interesting to see the role the Railways (Railroad) had played in causing the Company to evolve, from the limited-time partnerships of the Sailing Ships to the 'ownership' by the Pension Funds. Only one irritation - the sub-editor must have been asleep reviewing the proofs (in my UK edition anyway). Each page contains genuine hyphenated terms such as 'joint-stock' and 'Anglo-Saxon', but there are rogue hyphenations such as in 'chap-ter', 'Car-negie', 'custom-ers', 'Gas-kell', and you keep having to re-read them to see what they mean? I found them in 5 different chapters, so its not as if only one piece of text was added/removed and threw out the pagination?
Rating:
Summary: Superb, Pithy History of the Corporation
Review: This short book was simply excellent. The authors, who both work at "The Economist" fill this volume with a pithy, well researched, global history of the joint-stock corporation. They take us from early partnership agreements in 3000BC through the rise of big business in America, Britain, Germany and Japan, to the emergence of powerful multinationals.
The authors definitely have very slight, pro-corporation slant, but not annoyingly so. They simply emphasize that corporations have improved productivity and lifted standards of living, and leave the many anti-corporate arguments to others. But given that the corporation has risen to be a such a large influence in society, eclipsing states, politics, and church, understanding the history of the corporation may be important as knowing the history of our nation. I found the topic interesting, and the book to be well researched, insightful, and well written. Therefore, I recommend this book highly.
The book covers a lot of ground, and below is a summary of some of the topics covered.
The pre-history of the corporation begins with the Sumerians & the Assyrians, who negotiated contracts and had partnership agreements. The origins of more formal corporate law, however, can be traced back to the Romans. By the 16th century, large corporations such as the East India company & Hudson Bay company existed; these were monopolies chartered by royal governments to grab the riches of the new worlds opened by Columbus, Magellan, and Vasco da Gama. In this era, few corporate charters were granted by governments. Furthermore, those corporations were restricted to the task they were chartered for. Typically, these were for public projects such as canals, toll bridges, turnpikes.
All that changed in the mid 1800's. With the landmark Joint Stock Companies Act in 1856 in Britain, companies didn't have to be chartered by the state, but could incorporate simply by registering with the state. Corporations were free to do as they wished. They also were granted limited legal liability, so investors could be held liable for no more than their investment. This landmark legal action was the start of the modern corporation.
Limited liability proved to be immensely attractive to investors, and some said it was the greatest single discovery of modern times. Indeed, it attracted a flood of capital to the first major corporations, such as the railroads. The railroads were the first modern businesses; they required huge amounts of capital, and large armies of managers to administer an entire transportation network. The ability to sell shares allowed capital to be collected, and railroad shares this drove the growth of the NY Stock exchange. Also during this period, large corporations began to merge, and/or to be held under an umbrella corporation using laws for "trusts." The monopolistic practices of these trusts, like Standard Oil Trust, led to modern anti-trust laws.
Corporations themselves began to evolve. Improved management gave rise to "managerialism," and the rise of loyal "company men" and professional managers. Business schools began to spread. The 1950's-60's was the heyday of the "company man," who valued the traditions of stable office life, promises of a status tokens such as a better parking place or the gold watch upon retirement, and who would work hard to achieve them. Critics worried that they were "other directed" rather than "inner directed," too worried about fitting in rather than following their own inner compass or entrepreneurial urges.
Today, that corporate environment is gone. In the 90's, the youthful entrepreneurial, meritocratic Silicon Valley held the country's attention, and tie-less entrepreneurs in start-up companies became our heros, not men in gray-flannel suits in blue-chip companies. Companies slimmed down, focused on their "core competencies" and began to fight foreign competition, such as the Japanese. Other companies grew to be huge multi-nationals that spanned borders. By 2000, 37 of the top 100 economies of the world were corporations; in fact, Wal-Mart's profits were larger than the GDP of Peru.
The financing of modern business also played a key role in their history. Today, institutional investors, typically large pension funds, own over 60% of all public company shares. Their short-term focus drives a short term-focus for corporate performance. In the 1980's, some companies tried to escaped this pressure and make enormous profits for their owner-managers by going private during the leveraged-buy-out craze. Years later, the technology boom and the strong stock market led to a heyday of "easy money" for public companies, which weakened checks and balances & corporate governance at those companies. Eventually, many managerial abuses and accounting fraud were found, such as those at Tyco, WorldCom and Enron.
Finally, the authors discuss a recurring question that comes up as they discuss corporate history: "For whose benefit is the company run? For stockholders only? For the workers? For society as a whole?" One early argument was that since governments granted corporations the privilege of limited liability, that they had some obligation to the public. Around 1900, the German corporate legal environment emphasized cooperation & a company's social role rather than competition. But in the US in 1916, the Michigan Supreme Court ruled that a business works primarily for the profit of the stockholders. So despite the fact that protesters today cry for corporations to become more ethical, honest, humane, and socially responsible, corporations are legally mandated to make money for their shareholders as a primary goal.
This legal history is interesting, but unfortunately some legal history has been omitted; this is my one small criticism of the book. There is some debate about corporate "personhood" that anti-corporate protestors often cite. In the eyes of the US legal system, a corporation is a dis-embodied person, with associated rights, privileges, and obligations. Corporate lawyers have often used the 14th amendment to protect corporate interests, and critics point out that this distorts it's intent, as it was originally directed at protecting the rights of former slaves. This entire topic not discussed in this book, though it's an important legal issue in the history of corporations.
Nevertheless, overall, I thought this book was enjoyable, informative, readable, and well researched. I highly recommend it.
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