the successful development of engines like the Dart, Avon and Spey, the company was overstretched by its far-sighted effort to bring the innovative RB211 engine to the US civil airliner market and specifically to the Lockheed TriStar aircraft. This proved to be beyond the company’s financial resources, bringing it into receivership in 1971, and subsequently into government ownership.
The RB211 and its derivatives in the Trent family of engines eventually proved very successful. The motor car division prospered and was floated off, and the company broadened its activity by providing gas turbine power to navies and the oil and gas industry. These developments helped the recovery of the company, enabling it to return to the private sector through a flotation on the Stock Exchange in 1987. Since then, the company has reached a position where it supplies engines to most major airlines and many smaller ones too; aided by strategic partnerships and acquisitions, it has grown into a major operation in the civil and military aerospace, marine and energy markets of the world.
Diverse enterprises
Some private enterprises established as trusts, charities or provident associations have become very large indeed with the passage of time. In Britain, examples include the charity Wellcome Trust, established in 1936, which funds research to improve human and animal health; the National Trust, formed in 1895 to look after places of historic interest or natural beauty; Oxfam, founded for the relief of famine in 1942; and the health and care company BUPA, which can trace its origins to the British Provident Association established in 1923.
Some co-operative and mutual organisations are also substantial, like The Co-operative Group in Britain, part of a worldwide movement modelled on a small store which opened in Rochdale in 1844; and the Mondragon Cooperative, started in 1943 in Spain’s Basque country, now an international group of manufacturing, financial and retail companies. Another interesting example is Reuters, which progressed from a small family news agency to a newspaper co-operative, then to a trust, and subsequently floated as a public limited company before combining, eventually, with a Canadian group. [7]
Reuters
Paul Julius Reuter founded his news agency in London in 1851. The British provincial press acquired control in the 1920s, and sold a 50% share to the national press in 1941, in wartime, when the Reuter Trust Agreement was drawn up. This proclaimed that the first objective of the company was “to maintain in every event its position as the leading world news agency”. [8] It also aimed “to protect the agency from outside influence and interference, notably by the British Government. But equally it aimed to protect Reuters from inside corruption, from any abandonment of standards by the directors or management”. [9]
In the 1960s the company embarked on a transformation of its business, and entered what the Chairman, Sir Denis Hamilton, subsequently described as “a period of incredible risk taking and technical innovation”. [10] At this time the company was making a modest annual surplus, essentially as a co-operative collectively owned by newspaper publishers, some of whom were in financial trouble and more interested in realising their investment than in investing any more. So funding came from bank loans.
Alongside its traditional business, by the early 1980s the company was enjoying the remarkable success of its Monitor market data and news services business, and was funding, still with the aid of bank loans, a major development programme aimed at providing new dealing services for the financial markets. Eventually, for a variety of reasons, it decided to go public.
The flotation in 1984 enabled the company to further increase its capital fund for development and acquisitions; it enabled its owners to recognise the full value of their investments; it provided a means of rewarding senior management; and it strengthened the Reuter Trust, which had turned out to be simply a shareholders’ agreement capable of being altered or scrapped by them. The Trust ended up with a ‘Founders’ Share’ controlled by the trustees, enabling them to outvote the entire body of shareholders in the event of any threat to Trust principles.
The company went on to enjoy remarkable growth through its Monitor and dealing services, and through successful acquisitions. It was declared an internet company and its stock rose in the boom and fell in the bust around the turn of the century, as it suffered a severe reversal in its fortunes. Eventually in 2008 it combined with The Thomson Group of Canada to form a new company, Thomson Reuters.
Clubs and societies
Clubs and societies often start locally. Thus in Britain, some have their origins in London coffee houses, and have grown into august institutions like the London Stock Exchange, Lloyd’s of London and the Royal Society of Arts. [11] Most clubs remain small, but others grow, like the All England Lawn Tennis Club, the not-for-profit organisation which runs Wimbledon, and now attracts over 500,000 visitors, as well as commercial sponsorship coverage worldwide on broadcast television.
A few grow into major enterprises, like the Royal Automobile Club, The Automobile Association, and football clubs like Manchester United. These may hive off operations into public companies or even become public companies themselves. Thus, many building societies, which came about through people clubbing together to build their homes, have also either turned into or become part of major groups.
Ex-public sector
Other private enterprises owe their origins to initiatives set up or encouraged by the state and public authorities. Examples in Britain include the development finance institution, CDC Group, formerly the Commonwealth Development Corporation, which was restructured in 2004 in order to invest indirectly through private fund managers; the Industrial and Commercial Finance Corporation, set up in 1945 to supply long-term finance for small and medium-size businesses, and floated in 1994 as 3i plc; and the National Research Development Corporation, the inventions and technology agency, which formed the core of the group listed on the stock market in 1995 as BTG plc.
Key factors in the origins of enterprise
There is accordingly a rich heritage of enterprise in Britain and elsewhere, so it is worth examining how these diverse enterprises came into being. Important factors include the role of the entrepreneur, a secure environment with developed systems of law and property rights, and the facility of capital and credit systems. The introduction of the limited company as a vehicle for business and enterprise also made a major contribution to the development of business in Britain and elsewhere by enabling investors to limit their otherwise open-ended liability to the amount of their investment. We will now look at these four factors in turn.
The entrepreneur
At the origin of each and every enterprise, great and small, it is generally possible to identify one or more of the founders: an entrepreneur who makes it happen. Thus, the grand enterprise of postwar European integration owes its origins to the practical visionary and one-time brandy merchant Jean Monnet, “a little man from Cognac”. [12] The institution of the Red Cross was founded by the Swiss businessman Henry Dunant, after he witnessed the appalling suffering of war on the battlefield of Solferino in 1859. And Britain’s NHS, “the biggest single experiment in social service that the world has ever seen undertaken”, [13] was launched in 1948 by Aneurin Bevan.
The origins of great industrial and business enterprises can usually be traced to the leaders and entrepreneurs, or projectors as they were sometimes called, who launched them. Thus Rolls-Royce can be traced back to Henry Royce and the Hon. Charles Rolls, and the Reuters news and information agency to Paul Julius Reuter; behind the American firm General Electric, there were men such
