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The Industrialization of America
By the end of the American Civil War, American industrialists had forged a way through which high volumes of productions were realized at significantly low costs in their manufacturing entities. These manufacturing entities served to meet the needs of the expansive American markets as well as make new grounds into foreign markets. The United States’ domestic market encouraged both big and small business to apply novel technological breakthroughs towards mass production in an effort to meet market demand. This paper is a summary of the article titled Big and Small Business in Industrializing America.
Both big businesses and small businesses thrived in the post Civil War American society with large business significantly in their operating systems as compared to smaller business enterprises. Big businesses rose from partnerships and sole proprietorships to form corporations which led to the development of managerial hierarchies. In most big businesses, industrialization trends fostered the total internalization of organizational operations from the sourcing of raw materials to the distribution of finished products. This trend evolved in a much faster pace than was realized in Europe and more so Britain at the time.
As the 19th century came to a close, the number of American industries turning into corporations grew through progressive incorporation laws enacted in most American states. Sole proprietorships and partnerships embraced this trend leading to the development of capital intensive corporations under incorporation laws which ensured that investors were not considered liable to failures of their own corporations. The first corporations were mainly in the textile industry and in the early 20th Century in the Steel industry.
The big corporations that arose thereafter had to develop organizational structures suiting the emerging market trends and fundamentally different from earlier business structures. The huge American domestic market fueled these developments leading to the exploitation of economies of scale as well as economies of scope. Economies of scope enabled big business to use the same factories to produce a diversified array of goods for the insatiable American domestic market.
Competition served to precipitate further developments such as innovative industrial practices and the development of vertical and horizontal integration. Vertical integration allowed corporations to fully control the source of raw materials, production process and the sale of finished products. This allowed for big business in the country to combine both mass production and mass distribution. This not only allowed for the development of new marketing structures but also for the development of appropriate technologies and innovative practices.
Horizontal integration on the other hand allowed for companies with similar organizational goals to conglomerate in an effort to more control in the expansive American market. This allowed for likeminded companies to merge, a situation which was then followed by trends towards critical integration within defined market segments.
Small businesses remained highly important in the US economy more so with regard to ensuring job creation among the growing American population. Many small businesses survived the onslaught from big markets by satisfying the demand for specific niche markets. They were able to adapt to flexible production requirements in a more cost effective manner than big companies could. It is important to note that sales and services segment remained the arena for small businesses.
In conclusion, both the small and big businesses played an important role in the industrialization of America allowing for development of American labor unions, technological and innovative developments entry into the international market and the growth of the American federal Government as having legislative means to act as an oversight mechanism towards the standardization of business practices.
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