Abstract: Alfred Marshall argued that the malaise of public companies in Edwardian Britain was due to the separation of ownership from control and a lack of professional management. In this paper, we examine the ownership and control of the c.1,700 largest British companies in 1911. We find that most public companies had a separation of ownership and control, but that this had little effect on their performance. We also find that manager characteristics that proxy for amateurism are uncorrelated with performance. Ultimately, our evidence suggests that, if Marshall was correct in identifying a corporate malaise in Britain, its source lay elsewhere.
Lay summary: Alfred Marshall (1842-1924) was an English economist who suggested that British businesses were less successful than their German or US equivalents because the owners did not play a role in the management of their company, instead leaving management roles to ‘amateurs’. This paper examines this idea in pre-First World War Britain, and asks whether ownership actually matters for performance at all?
Cite this article: Michael Aldous, Philip T. Fliers, John D. Turner, ‘Was Marshall Right? Managerial Failure and Corporate Ownership in Edwardian Britain’, The Journal of Economic History, Volume 83, Issue 1, March 2023, pp. 131 – 165
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