Corporate Governance, Strategy and Structure in British Business History, 1950-2000

Abstract

This article examines why British firms adopted diversification strategies and multi-divisional structures in the middle of the twentieth century and why this strategy and structure was reversed towards the end. Corporate governance mechanisms and the impact on information costs of such monitoring arrangements are considered in conjunction with strategy and structure to explain these changes. Diversification and multi-divisional adoption were associated with ineffective governance, poor monitoring and poor performance, whilst refocusing and divestment after 1980 were associated with more effective monitoring and improved performance. The evidence suggests important relationships between governance, strategy and business performance that help explain the development of British business institutions in the second half of the twentieth century.