What turns one high tech start-up into a global company that will survive more than a century, and another into a mere shooting star that will burn up as it hurtles down through the skies? Harold James answers that early in his interesting new book Krupp: A History of the Legendary German Firm, identifying four attributes:
develop new technologies and new markets hand in hand;
cultivate a relationship with the state;
find a source of finance sufficiently large and committed for expansion;
develop an organizational structure that fosters loyalty and trust.
The book traces these four strands throughout the company’s history from its initial establishment as a small enterprise in 1811 and fragile early period, with scant profitability but sustained by family money, through a number of commercial and political ups and downs in the late 19th and early 20th century (including the 1848 revolutions, the Franco-Prussian war, the Spartacist years and hyperinflation), its close and subsequently toxic relationship with the government and wartime production in the Nazi era, and post-war rebuilding. The hundred years from the mid-19th to mid-20th century were not uneventful, to say the least. The Second World War and its aftermath formed, unsurprisingly, an uncomfortable episode (dealt with relatively briefly here: Alfried Krupp was arrested and imprisoned but subsequently amnestied in 1951). The capacity of an organization to survive that, and remain a productive and profitable enterprise is rather extraordinary. Harold James relates this resilience to the Continental model of capitalism. He writes:
“Modern management theory….treats managers…as individuals driven by isolated gain-maximizing strategies. It is diametrically opposed to the traditional German and perhaps European vision of a company as an embodiment of some over-arching value system, in which a corporation is a microcosm of a general social equilibrium.”
The Krupp history certainly puts an emphasis on avoiding short-term stock market finance as opposed to family funding and subsequently a relationship form of finance; and on the inevitable links between a large enterprise and the state. The Anglo-Saxon and Continental versions of capitalism ebb and flow in their attractions depending on the context – during the ‘Eurosclerosis’ era the latter did not look so attractive, although the balance has now tipped the other way.
One company’s history cannot deliver a verdict, but this book gives a fascinating insight into the wider debate. It places the company in the wider social context of the family, the local community, the national state and the global economy. Harold James, who is a terrific writer, had access to the Krupp archives for the book. There is more detail here than the general reader will want – an abridged version, though, would make a terrific ‘short’ because Krupp’s history offers a lens on both European history and the very live debate about the best version of capitalism. There is also a German edition of the book.