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The telegraph’s effect on nineteenth century markets and firms (1986)
| Venue: | Sloan School of Management, Massachusetts Institute of Technology |
| Citations: | 3 - 1 self |
BibTeX
@INPROCEEDINGS{Yates86thetelegraph’s,
author = {Joanne Yates},
title = {The telegraph’s effect on nineteenth century markets and firms},
booktitle = {Sloan School of Management, Massachusetts Institute of Technology},
year = {1986},
pages = {149--163},
publisher = {Thomas}
}
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Abstract
The second half of the nineteenth century was a period of extensive, seemingly contradictory change in the economy of the United States. Until that time, the economy was characterized by small, predominantly singlefunction firms operating in local and regional markets. Then, under the influence of improved communication and transportation, local and regional market areas merged into larger national ones. In some industries, fast and efficient national markets arose to coordinate related economic activities within the expanded market areas. In others, small firms grew, merged, and vertically integrated into large, multifunctional firms coordinating various functions or stages of economic activity internally. Since integrated firms were a new development in the US, there was a relative shift towards firm coordination and away from market coordination, though in absolute terms markets were handling more transactions than ever. Many developments affected the trade-offs between the integrated firm and the market as modes of coordinating various functions. This paper explores the telegraph's seemingly contradictory effects on these trade-offs. By radically reducing the time and cost for long-distance communication, it facilitated the emergence of large and efficient markets. In addition, however, it provided an important method by which large firms could efficiently coordinate various activities previously coordinated by markets. The role of the telegraph in the economic expansion of the second half of the nineteenth century has frequently been mentioned, but rarely studied. Alfred Chandler [2] has examined it more closely than most general business
Keyphrases
nineteenth century market telegraph effect nineteenth century integrated firm second half various function singlefunction firm economic expansion regional market area relative shift towards firm coordination general business regional market economic activity efficient national market large firm contradictory effect efficient market expanded market area small firm various activity market coordination important method national one improved communication alfred chandler absolute term market related economic activity new development many development contradictory change long-distance communication united state multifunctional firm
