Managerial Inefficiency and Technological Decline in Britain, 1860-1914

British economic decline in the late nineteenth and early twentieth centuries has been attributed to the growing inability of British industries to compete technologically and organizationally with their American and German competitors. This paper argues that British firms' growth and adaptability were hampered by organizational weakness and that the major cause of Britain's managerial problems was the failure of British entrepreneurs to delegate enough authority to their subordinates in the firm. British industrialists' lack of delegation of authority is demonstrated to have prevented the actions necessary to keep up with foreign competition in the core industries of the Second Industrial Revolution. More specifically, it prevented the development of formal R&D programs, the promotion and efficient rationalization of mergers, the coordinated evelopment of multiple parts of a technology or of the firm, and the balanced growth needed to keep up with foreign competition in all aspects of the firm, such as research, production, sales, marketing, accounting, and finance. At key moments in the development of many industries, British firms needed to invest in more extensive structures of management and failed to do so. Evidence from the development of the electrical and synthetic dye industries, as well as other examples of firms employing inadequate management structures, will be used to show how industrial and technological development were slowed by inadequate delegation of authority. Much of the recent literature on British economic decline considers the