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Why a firm is born in a certain place and not in another

The birth, progress and development of firms also stem from the historical, institutional and social conditions of entrepreneurs. Or rather the particular nature of firms, their culture, style and potential for growth are apparently closely linked to the historical age during which they are set up. For a better understanding however the information and interpretations have to be organised in a logical sense. Guides are needed, such as the one prepared by Geoffrey Jones (from the General Management Unit of Harvard Business School) who in just over 70 pages tells of the development of the relationship between entrepreneurship, firms and development from 1850 to date.

The study integrates knowledge on the role of entrepreneurship and firms in the analyses of why Asia, Latin America and Africa have been so slow in catching up with the West after the industrial revolution and the advent of modern economic growth and of how today, instead, some areas of the world are growing much more than Europe and North America.

In order to guide the reader through over one hundred years of corporate and economic history Jones divides the whole into large phases: the creation of wealth and poverty in the age of the “first global economy” and up to the First World War, the upset caused by the Second World War and the evolution of the post-war years, the phase of the “second global economy” to date. All this narrated rather than stated, so as to build a story and not just an academic essay.

The conclusion according to Jones is that the explanations which concentrate on shortcomings by institutions, on the low tendency towards development of human capital, on geography and culture are important, but not sufficient for understanding the growth of firms and their way of facing up to reality. Today the social and cultural rooting of new technologies launches important entrepreneurial and cultural challenges which the various areas of the world tackle differently and with different results. As Jones says at a certain point, local and western managerial practices have often been combined for the production of hybrid corporate forms.

Entrepreneurs, Firms and Global Wealth Since 1850

Geoffrey Jones 

Harvard Business School – General Management Unit, Working Paper No. 13-076, 2013.