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Abstract
This article examines how the corporate economy was shaped by government intervention through the facilitation of mergers by the Industrial Reorganisation Corporation (IRC) during the late 1960s. We focus on the IRC-led realignment of the electrical/electronics sector applying a conceptual framework to archival material relating to this sector. We find evidence that the mergers were informed by an enterprise-level view of the market while disregarding product-level decision-making and conclude that the IRC vision for the sector widely ignored the product-level logic associated with the designing, making and selling functions. Instead, they relied on assessments of enterprise-level management character.
Acknowledgment
This paper was prepared for Business History's Leslie Hannah festschrift. The authors would like to acknowledge not just the intellectual inspiration Leslie Hannah has provided us over the years, but also his direct influence on our careers. He made it possible for us to enter the PhD programme at LSE, provided supervision for one author and mentoring the other. We shall always be grateful to Les for his guidance in our studies.
We would also like to acknowledgment the feedback provided at the accompanying workshop and the detailed comments made by the peer review panel.
Notes
1. See, for example, Crafts and Hughes Industrial Policy for the medium to long-term For historical context see Chick Industrial Policy and Milward & Singleton The Political Economy of Nationalisation.
2. An analysis of this speech and a critical analysis of its impact can be found in Edgerton ‘The White Heat Revisited’ and the speech itself can be found at http://nottspolitics.org/wp-content/uploads/2013/06/Labours-Plan-for-science.pdf
3. Hendry, Innovating for failure.
4. Cmnd 2764 (1965) The National Plan, HMSO.
5. Hill, ‘The Industrial Reorganization Corporation’, p64.
6. Ibid.
7. See Tomlinson The Labour Governments, pp109–112 for details on the emergence of the IRC.
8. Cmnd 2889 (1966) The Industrial Reorganisation Corporation, HMSO.
9. Carnevali Europe’s Advantage, p90 and Hague and Wilkinson The IRC.
10. Fransman, Visions of Innovation, p1.
11. Teece ‘Business Models, Business Strategy and innovation’, p172 and p178.
12. Chandler, ‘Enduring Logic of Industrial Success’, p131.
13. Tomlinson The Labour Governments, p112.
14. Teece ‘Explicating Dynamic Capabilities’, pp1322 – 1325.
15. See Prais Productivity, pp 177–178 for details of economies of scale as applied by the IRC.
16. FV 44/37, ‘GEC Exports’ CDJ Lawrence, IRC, 5/12/1969.
17. Nelson & Winter Evolutionary p97.
18. Cohen & Levinthal. ‘Innovation and learning’:
19. Zahra & George ‘Absorptive capacity’.
20. Zollo & Winter ‘Deliberate Learning’.
21. von Hippel, The Sources of Innovation; Yates ‘How Business Enterprises Use Technology’.
22. Bank of England Archive. 6A233/2 Economic Intelligence Department, Industry Group, 23/2/1972.
23. Wilson, Ferranti: A History, Volume 2, p5.
24. Jones and Marriott, Anatomy of a Merger and Williams et al., Why are the British bad at manufacturing.
25. Ibid.
26. Williams et al., Why are the British bad at manufacturing, p135.
27. National Archive EW27/257: RHF Croft, DEA, ‘Rationalisation of the Heavy Electrical Industry’, January 1967.
28. ibid.
29. EW27/257 (DEA): RHF Croft, ‘Rationalisation of the Heavy Electrical Industry’, January 1967.
30. Ibid.
31. Ibid.
32. FV44/33 Hill Samuel ‘Notes for City Editors’, undated.
33. FV44/33 Hill Samuel press release and letter to AEI shareholders on behalf of GEC, 13/10/1967.
34. FV44/33 ‘Hedges and Butler’, internal staff memo 18/4/1967.
35. FV44/33, Arnold Weinstock letter to ‘Ronnie’ Grierson, 17/4/1967.
36. Ibid.
37. Latham, Take-over, p40.
38. Ibid.
39. F44/33, Hill Samuel ‘Offer by the General Electric Company Ltd’, to AEI ordinary shareholders, 28/10/1967.
40. FV44/33, AEI letter to stock holders, 20/10/1967.
41. Ibid.
42. FV11/2 (MinTech) Mergers Panel ‘Proposed acquisition by GEC ltd of AEI Ltd’ undated.
43. FV11/2 Possible GEC/AEI merger, comments by L Division, October 1967.
44. Latham, Take-over.
45. FV44/33, AEI letter to Ordinary Stockholders, 20/10/1967.
46. Ibid.
47. F44/33 IRC Extraordinary Board Meeting, minutes, 23/10/1967.
48. FV11/2, MinTech, meeting note held on 2/11/67.
49. F44/33, JI McLaren, IRC, file note 2/11/1967.
50. FV44/33, Hill Samuel letter to AEI shareholders ‘Increased Offer’, 2/11/1967.
51. F44/33 Financial Times announcement held in the IRC files, 20/11/67.
52. F44/33, IRC letter to SSEB, 21/12/1967 (various other related contracts signed the same day).
53. F44/33, CRE Brooke, memo ‘Hedges/Butler’, 24/7/1967.
54. F44/33, Brooke to FE Glaves-Smith, Board of Trade, 5/10/1967.
55. F44/33, Note from Grierson to Brooke, 18/10/1967.
56. LSE archival collection: Second Lord Nelson, 5/5/64. ‘The development and organisation of the English Electric Company Ltd.’ In London School of Economics, ‘Seminars on the problems in industrial administration’.
57. Gandy, The Early Computer Industry.
58. Gandy, The Early Computer Industry.
59. FV44/86, Agreement between IRC and English Electric, page 3, 17/7/1967.
60. FV44/86, file copy of the Board of Trade/MinTech statement to the press, 22/6/1967.
61. F44/29 MJ Knight ‘GEC Marconi Ltd’, 10/01/1968.
62. F44/29, English Electric 1967 Annual Report, March 1968.
63. F44/29 Knight ‘GEC Marconi Ltd’, 10/01/1968.
64. F44/29 Letter to Shareholders, Press Release and Background Notes, SG Warburg on behalf of Plessey 21/8/1968.
65. F44/29, Note of a meeting between MinTech and IRC officials, 21/08/1968.
66. F44/29, Industrial Case for the Merger of Plessey and English Electric, SG Warburg on behalf of Plessey 21/8/1968.
67. Ibid.
68. Ibid.
69. F44/29 IRC “The Plessey bid for English Electric’ ref 68(89) 3/09/1968.
70. F44/29 ‘Meeting with Vickers’ 5/09/1968.
71. F44/29 ‘Plessey bid for English Electric’ ref 68(89) appendix 1, 3/09/1968.
72. F44/29 IRC ‘The Plessey bid for English Electric’ ref 68(89) 3/09/1968.
73. F44/29 GJ Hearne ‘Plessey/English Electric Note for the File’ 29/08/1968.
74. F44/29 MJ Knight, ‘Plessey/EE’ 3/09/1968.
75. F44/30 MJ Knight, ‘Plessey Company’ 13/09/1968.
76. Ibid.
77. Ibid.
78. Ibid.
79. Gandy and Edwards, ‘Enterprise Logic vs. Product Logic’, p2.
80. F44/30 MJ Knight, ‘Plessey Company’ 13/09/1968.
81. F44/29, Note of a meeting between MinTech and IRC officials, 21/08/1968.
82. F44/29 IRC ‘The Plessey bid for English Electric’, ref 68(89), 3/09/1968.
83. Ibid.
84. Ibid, draft p13.
85. F44/29 CA Hogg, ‘Plessey/EE: Meeting with Thorn’, 30/08/1968.
86. F44/30 CA Hogg, ‘Meeting with Sir Jules Thorn’, 12/09/1968.
87. F44/29 GJ Hearne ‘Plessey/English Electric’, note for file, 23/08/1968.
88. FV44/29 English Electric ‘Press Announcement’, 23/08/1968.
89. F44/29 CRE Brooke ‘Plessey/EE’ file note 28/08/1968.
90. F44/29 Arnold Weinstock, GEC, to Sir Frank Kearton, IRC, 30/08/1968.
91. F44/29 CRE Brooke ‘Note for Meeting with Ministers’, 3/09/1968.
92. F44/29 ‘English Electric and GEC to merge’, joint statement 6/09/1968.
93. F44/30 ‘Statement by the President of the Board of Trade on GEC/English Electric merger’, 13/09/1968.
94. F44/30 CRE Brooke ‘GEC/EE/Plessey’ note to file of discussion with Miss Piercy of MinTech, 2/10/1968.
95. F44/30 DJ Ewart ‘English Electric Loan’, note on discussions between Hambros, representing the IRC, and Lazards, representing English Electric 11/11/1968.
96. Plessey would face two unsolicited takeover bids by GEC in the late 1980s. The final bid battle took place in 1988–1989 via a joint GEC and Siemens offer which would be accepted by shareholders and which then divided the Plessey businesses between the two bidders, avoiding Mergers and Monopolies Commission restrictions on purely GEC bid for Plessey.
97. F44/30 ‘General Electric & English Electric Companies’ internal memo 29/11/1968.
98. Ibid.
99. BT333/17 (Board of Trade) ‘Briefing for President’s meeting with Lord Nelson on 25 March 1969’.
100. F44/30 LD Ziman, file note on meeting with Weinstock on 17th April 1969, 29/04/1969.
101. BT333/17 HAH Cortazzi (Commercial Counsellor, Tokyo) to M Montague ‘General Electric/English Electric’ 20/01/1969.
102. Ibid.
103. EWM Magor, 23/1/1969 BT333/17 ‘GEC’s attitude to exports’.
104. Ibid.
105. FV 44/37, ‘GEC Exports’ CDJ Lawrence, IRC, 5/12/1969.
106. BT333/17 CHF Croft to Mr .Fell, 15/1/1969.
107. Cmnd 2889 (1966) The Industrial Reorganisation Corporation, HMSO.
108. Hayward The British Aircraft Industry, p14, and National Archive AVIA 63/135, 21st October 1959.