Are we any nearer, after decades of research and debate, to a settled judgement on the failings of British business organisation and management? Recent work – reassessing the European experience – appears more cautious than certain, raising questions about the conclusiveness of available evidence. Amongst the many areas of contention, family firms and their presumed weaknesses have received particular attention, and revisionism might usefully be applied to several corporate types. Other issues have also caused controversy: the comparative performance of British industry, the suitability of U.S. corporate structures to other nations, and the almost-exclusive emphasis on systems internal to the firm have all been cited. Interestingly, holding companies encapsulated these disputed points: they developed in Britain during a period of relative economic decline; they differed in important respects to the hierarchical managerial enterprise; and they facilitated external linkages between companies, arguably at the cost of inward dimensions. They have, therefore, been prominent targets of a sustained and powerful critique, in which the deficiencies of large-scale companies are portrayed as compounding the economic difficulties of inter-war Britain. From this perspective, many concerns located in the staple industries could not fully adapt to changes in international and domestic demand, because loosely co-ordinated structures and a weak strategic, headquarters function hindered schemes of rationalisation. British holding companies of the 1920s and 1930s have been reproached as the worst examples of such weaknesses, because inadequate central direction and integration enabled uncompetitive constituent firms and detrimental family-control to continue. As a group, they are seen as handicapped in comparison to international competitors and to the rising model of integrated, managerial enterprise; in other words, their assumed lack of professional personnel, organisational hierarchy, and formal procedures were inappropriate to the challenges of modern industry.¹ Other judgements have been less condemnatory, because some of their early structural and administrative failings were quickly corrected. Further re-assessment of the empirical evidence might review the reputation of the British holding company. On matters of interpretation, the ‘rationality’ of any managerial structure has been linked to varying economic, financial, or legal circumstances. The universal applicability of a single model is consequently in doubt.² We might ask if holding companies offered commercial and operational advantages, despite their being associated – often justifiably – with institutional sclerosis and vested interests.

In attempting to understand the organisational forms adopted by British business, the term ‘holding company’ may act as a barrier to understanding, because its use conceals a broad spectrum of arrangements in governance and operations. Holding companies have been linked in British business history to the maintenance of family control and the existence of business groups or alliances, although neither association is automatic. In essence, they describe a main company with a controlling interest in or authority over legally separate and mainline subsidiaries, which are given responsibility for production or operations. In some cases, this arrangement might have formalised existing private or family-based holdings; in other cases, it might be the result of newly-merged interests or acquisitions; or, alternatively, an attempt to liberate the management of distinct units which were once more integrated or supervised. Where the ownership of constituent firms is reposed within a parent company, a number of variations in organisational characteristics may result. At one extreme, those directly associated with member businesses may retain voting control, and prefer to maintain separate operations and administrative functions. This internal settlement may be very similar to a business group or alliance, or even to a price-fixing arrangement, despite the formal pooling of interests within a main company. Such arrangements were typical of British mergers in textiles, tobacco, and building materials at the turn of the century.⁴ Yet the link between firms is permanent rather than merely opportunistic, as in the case of business alliances, and creates the possibility of further organisational developments. As a result, many of the early large-scale companies in the textile industry were subsequently restructured. The headquarters function of holdings companies is, indeed, too frequently viewed as permanently weak, just as the span of operations is seen as highly diversified or even unrelated.⁵

The criticisms of British big business and its holding companies in the inter-war period have emerged from our growing understanding of managerial enterprise. The successful ...