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Entrepreneurial decline and steel: the British debate The question about enterprise strategies and technical progress in the German and British steel industry must in the end refer to the assessment of the relative efficiency and capacity for innovation of these two industries, including the entrepreneurs who ran them. While the technical competence and managerial ability of the German steel industrialists was never in doubt and the discussion was primarily sparked off by the political consequences of their dominant position in the Reich, their British colleagues were subjected to occasionally destructive criticism and were made partly responsible for Great Britain's gradual loss of her hegemony around the turn of the century. The different structures of the German and British steel industries, whose development has been studied in this book, have led to the conclusion that, by the late nineteenth century, there was a successful German way based on the Thomas process and the use of poor, domestic iron ores. The origins of the British steel industrialists' tendential decline lay in their failure to follow this successful model, which is attributed solely to incompetence on the part of British entrepreneurs. This orthodox picture was subjected to a fundamental revision by McCloskey at the beginning of the 1970s, which gave a strong boost to the debate about ‘entrepreneurial decline’ in Great Britain. Before we undertake a comparative assessment of the efficiency and capacity for innovation of the German and British steel industrialists on the basis of our preceding research, we intend to make a critical analysis of the positions adopted by the two most important antipodes of this debate: Burn and McCloskey. [ABSTRACT FROM AUTHOR]

If the first phase of the new steel industry, which was distinguished by a uniform product, still bore the familiar features of unmistakable British superiority and of diligent imitation on the Continent, maintained by tariffs and cartels, the following phase of diversification, however, brought forth two clearly differentiated autonomous structures. While the terms of the institutional frameworks in both countries continued to be retained as far as possible – state protectionism and collective restrictions on competition in Germany and, after the brief episode with the IRMA, free competition and entrepreneurial autonomy in Great Britain – their production mechanisms developed along quite different directions. Whereas capacities in Germany were further extended for the newly opened markets mainly by using the Thomas process, in Great Britain mainly the open-hearth process was used instead. Much significance has been attributed to this difference for explaining British steel production's lower growth rate during the following decades, claiming that the British steel industry would have been able to maintain its lead on the world markets had it applied the obviously successful ‘German’ production technology. Before we deal with the question of entrepreneurial prescience in both countries, let us first investigate how these different structures and their underlying conditions and motives came into being. Basic Bessemer steel The introduction of the Thomas process When assessing the great economic importance of the Thomas process above all for the German steel industry, it is often overlooked that, in technical terms, it involved only a slight modification to the original Bessemer process. [ABSTRACT FROM AUTHOR]