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Network preferences and the growth of the British cotton textile industry, c.1780-1914

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  • Toms, Steven

Abstract

The paper considers the dual aspect of social networks in terms of 1) product innovators and developers and 2) the providers of finance. The growth of networks can be explained as a function of incumbents and entrants’ preferences to link with specific nodes defined according to the underlying duality. Such preferences can be used to explain network evolution and growth dynamics in the cotton textile industry, from being the first sector to develop in the industrial revolution through to its maturity. The network preference approach potentially explains several features of the long run industry life cycle: 1. The early combination of innovators with access to extensive credit networks, protected by entry barriers determined by pre-existing network structures, leading to lower capital costs for incumbents and rapid productivity growth, c.1780-1830. 2. The spread of innovation and productivity through value chain linkages during the nineteenth century. 3. The trust movement, joint stock and personal capitalism: the emergence of large firms and a preference for regional financial markets in Lancashire and Scotland. 4. The consolidation of regional instead of national business groups which help explain the decline of the industry. The paper uses case studies of firms, networks, and market institutions based on a mixture of archival evidence, drawn mainly from the financial records of a large sample of cotton firms, and contemporary publications. It stresses human interactions (as opposed to population ecology mechanisms) as determinants of the character, scale and scope of network evolution. Intergenerational features of the networks are identified and classified by these characteristics. Networks were typically bounded in terms of product innovators and less bounded in terms of finance providers. Consequently, finance providers tend to provide the impetus for the rate of network growth in expansion, maturity and contraction phases.

Suggested Citation

  • Toms, Steven, 2017. "Network preferences and the growth of the British cotton textile industry, c.1780-1914," MPRA Paper 80058, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:80058
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    File URL: https://mpra.ub.uni-muenchen.de/80058/2/MPRA_paper_80058.pdf
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    References listed on IDEAS

    as
    1. Lazonick, William, 1981. "Competition, Specialization, and Industrial Decline," The Journal of Economic History, Cambridge University Press, vol. 41(01), pages 31-38, March.
    2. Igor Filatotchev & Steve Toms, 2003. "Corporate Governance, Strategy and Survival in a Declining Industry: A Study of UK Cotton Textile Companies," Journal of Management Studies, Wiley Blackwell, vol. 40(4), pages 895-920, June.
    3. Macrosty, Henry William, 1907. "The Trust Movement in British Industry," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number macrosty.
    4. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273, Fall.
    5. Toms, Steven & Zhang, Qi, 2016. "Marks & Spencer and the Decline of the British Textile Industry, 1950–2000," Business History Review, Cambridge University Press, vol. 90(01), pages 3-30, March.
    6. Robin Pearson & David Richardson, 2001. "Business Networking in the Industrial Revolution[Earlier ve]," Economic History Review, Economic History Society, vol. 54(4), pages 657-679, November.
    7. John F. Wilson & Andrew Popp, 2003. "Business networking in the industrial revolution: some comments," Economic History Review, Economic History Society, vol. 56(2), pages 355-361, May.
    8. Howe, Anthony, 1984. "The Cotton Masters 1830-1860," OUP Catalogue, Oxford University Press, number 9780198218944.
    9. Mark Casson, 1997. "Institutional Economics and Business History: A Way Forward?," Business History, Taylor & Francis Journals, vol. 39(4), pages 151-171.
    10. Steven Toms, 1998. "Windows of Opportunity in the Textile Industry: The Business Strategies of Lancashire Entrepreneurs, 1880-1914," Business History, Taylor & Francis Journals, vol. 40(1), pages 1-25.
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    More about this item

    Keywords

    Business networks; British cotton textile industry; innovation; finance; regions; entrepreneurship; mergers.;

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N83 - Economic History - - Micro-Business History - - - Europe: Pre-1913
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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