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Tuesday, 17 August 2010

To direct a company, two companies...many companies

In my PhD work I have been thinking about what other directorships the L&SWR board members had. It isn't the most riveting subject. In fact it is quite dull. But, I can't always do everything that I want and a certain amount of mud has to be slung before I get to the gold at the bottom. However, one trend I identified struck me as interesting, as it reflected on the developmental state of the 'corporate' economy in Britain more generally. For this post I will use my research in combination with Geoffrey Channon’s, who's excellent book, Railways in Britain and the United States, 1830-1940, has become somewhat of a bible from me, although unfortunately their wasn't a Gideon-esque service giving them out, the cost of the book being £65.00. Anyway, I digress.
In 1880 a publication came out called the Directory of Directors (DoD), a title from which it wouldn't be hard to determine what its function was. It basically listed every director, of every company, and thus is invaluable guide to how different companies and industries, shared directors. As such, both Channon and I have used the DoD to determine how the board members of the Great Western Railway (GWR), in Channon's case, and the London and South Western Railway (L&SWR), in my case, shared directors with other businesses and sectors of the economy.
In short, we have both identified a pattern that I think represents the changing nature of the British corporate economy after 1900. Between 1880 both Channon and I have shown that the GWR and L&SWR's directors did not sit on many other boards. Now, our studies haven't presented the results of our research in the same way, but they can be compared. In Channon's case he identified that between 1881 and 1885, the majority of GWR directors (13 out of 21 - 61.9%) had no external directorships, with 5 (23.8%) having between 1 and 3, with only 3 having four or above (14.3%). Comparatively, my research has shown that in 1880 9 directors out of the L&SWR's 12 had no directorships (75%), with the remainder having between being on between 1 and 3 external boards. Similarly, in 1885 7 directors (58.33%) had no external directorships, while 5 had between 1 and 3 (41.67%). Thus, the period before 1900 can be considered one where railway company directors did not have many, if any, external directorships beyond their primary concern, the railways.
This is in stark contrast with the period after 1900. In Channon’s sample, between 1906 and 1910 only 4 of the GWR’s 22 directors sat on no other company boards. Yet, 10 (45.4%) had between 1 and 3 external directorships and 8 (36.4%) had between 4 and 6. A similar pattern was exhibited amongst the L&SWR directors. In 1910, 5 directors (41.67%) had no seats on external boards, 4 (33.3%) had between 1 and 3 external directorships and 2 (16.67%) had between 4 and 6. One, Lord Pirrie, sat on 12 company boards, mainly in shipping. In 1914, however, more L&SWR directors were seated on even more boards. Of them, 5 (41.67%) had between 1 and 3 external directorships, 2 (16.67%) sat on between 4 and 6 boards and another 2 had above 13. This left only 3 (25%) individuals who were solely L&SWR board members. In both the case of the GWR and L&SWR directors, most of the directors sat on external boards of companies that were not concerned with railways or transportation. Rather, these external companies were in the sectors of finance, industry and manufacturing.
Therefore, in the period after 1900 there is a clear change in the way that individuals chose to join company boards. For much of the 1900s the railway industry was the biggest, while others were still developing. Therefore, for an aspiring director the railways were some of the few companies on whose boards they could sit. Hence, many railway directors had fewer directorships. This trend may be also indicative of the nature of the business landscape in that many firms were family run and therefore may not have boards of directors. However, after 1900 the number of limited companies expanded, opening up the opportunities for individuals to sit on more boards. This is, therefore, reflected in the results above.

1 comment:

  1. Surprising - I would have expected more interlocking directorships more early. Its interesting that they don't even interlock with other railways. That's a very interesting finding.


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