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Published by EH.NET (April 2000)

Timothy R. Whisler. The British Motor Industry, 1945-94; A Case Study in

Industrial Decline New York: Oxford University Press, 1999. ISBN:

0198290748 Cloth Price $105

Reviewed for H-Business and EH.NET by Susan Bowden, University of Sheffield,

S.Bowden@sheffield.ac.uk

Four months after the publication of Whisler’s British Motor Industry,

BMW announced its intention to dispose of Rover. The publication of Whisler’s

assessment of the decline of the British motor industry would thus appear to be

well-timed. It is also against this announcement that readers will come to

Whisler’s book for an understanding of how and why this once dynamic industry

floundered.

The British Motor Industry is a welcome addition to the now voluminous

literature on the motor industry in the UK. Whisler’s has produced a “new”

synthesis which aims to place the declining fortunes of the industry into an

overall explanatory perspective. That perspective is grounded in economic

theories of path dependency and lock-in. His thesis is that strategy formed a

managerial lock-in which meant that despite the numerous structural and indeed

personnel changes in the industry over time, the industry was locked into a

prevailing ethos which failed to read the signals of changing market

conditions. The strategy was inherited from the original founder, Morris, and

was to pervade all subsequent manifestations of organizational form and

structure. Strategy was the outcome of a pervading if mis-calculated belief in

the innate superiority of the company’s products: all the company had to do was

make cars.

The thesis was originally set out by Roy Church in the Economic History

Review. In that sense, Whisler’s perspective is not new. What is new is the

detailed elaboration of how that ethos dominated managerial thinking.

Much of the book concentrates on the earlier formations of the company,

most notably events prior to the spectacular collapse of 1975. Chapters follow

a thematic approach detailing, inter alia, with design and development, product

quality and reliability, production methods, domestic and export markets and

distribution structures: all of which contain an immense amount of detail, but

all of which tend to focus more on the specifics of one firm rather than the

industry as a whole.

The problem with the path dependency, lock-in thesis, is that it can become a

retrospective self-justification for the problems of the industry,

especially when applied not, as in the usual case, to technology but to

managerial culture. Thus reference to the new literature on professional

lock-in might have helped – as it is some readers might feel confused as to

exactly how and why cultural lock-in should occur. Equally, readers from the

industrial, economics and managerial disciplines might question why reference

to market signals– most particularly why the strategy and culture did not

respond to changed signals–is not addressed by Whisler.

Thus we have references to issues of asymmetric information and transaction

costs, but such issues are never really fully explored. The role of the

financial markets, shareholders and Government – who were as much agents in

this story as management – is equally never fully assessed. The pages dealing

with divided issues, for example, relies on one source and fails to pick up the

relations between the company and its shareholders.

The issue of Government policy is particularly pertinent in this respect.

The news of BMW’s decision has been dominated by the “employment” question.

If one is to understand path-dependency then one has to look to game theory and

to bargaining between agents. A self-perpetuating ethos may be allowed to

continue, if the agent concerned has superior bargaining leverage.

Whilst Government’s prioritized employment in marginal constituencies (as motor

plants were located), then management was under no real pressure to effect real

change. This theme runs through the entire history of the industry–from the

first assessments of the future prospects towards the end of the Second World

War, to civil servants meetings under the Thatcher Regime and indeed to the

current Government’s reaction to BMW’s decision.

Dissecting and synthesizing the troubled history of the British motor industry

is not an easy task, and Whisler is to be congratulated for taking this on and

for producing a wealth of detailed analysis which makes an important

contribution to the literature. As the above makes clear, this reader would

have welcomed more–but surely an indication of a good book is that the reader

becomes engrossed and finishes wanting not less, but more.