Marshalls Trees and the Global Forest: Were Giant Redwoods Different?

This essay examines the fate of the 100 largest industrial firms in the world in 1912 over the period to 1995. Disappearance and decline were the most common outcomes, but a few outstanding performers ù firms like Burmah / BP and Procter & Gamble ù left descendants eight or nine times their initial size, in "real stock exchange price" terms. There were no significant differences between the performance of giant German, British and American firms, other than a slightly greater tendency to disappear among American firms. The convergence of national performance of giant firms is probably related to converging strategies and structures of such firms in advanced industrial countries. Long-run differences in national economic performance in the twentieth century, at least among industrial leaders, are rooted elsewhere: in non-industrial sectors of the economy or smaller industrial firms. The analysis of the long-run evolution of giant firms also suggests that, while firms in "old" industries on average performed worse than those in "new" ones, the 1912 population included equal numbers of each and there was, in any case, greater variability of outcomes within than between industries. No simple formula enables us to discriminate ex ante between long-run corporate success and failure, for reasons inherent in the nature of modern corporate capitalism's success as an economic system.