Factory Productivity and the Concession System of Incorporation in Late Imperial Russia, 1894–1908

Abstract

In Imperial Russia, incorporation required an expensive special concession, yet over 4,000 Russian firms incorporated before 1914. I identify the characteristics of incorporating firms and measure the productivity gains and growth in machine power enjoyed by corporations using newly-constructed factory-level panel data compiled from Russian factory censuses. Factories owned by corporations were larger, more productive, and more mechanized than unincorporated factories. Higher productivity factories were more likely to incorporate and, after incorporating, added machine power and became even more labor productive. Russian firms sought the corporate form’s full set of advantages, not just stock markets access, to obtain scarce long-term financing. (JEL D24, G31, G32, L60, N43, N63)

The Births, Lives, and Deaths of Corporations in Late Imperial Russia

“…McCaffray, 1996). Only very recently have works such as Gregg (2020) and Kulikov and Kragh (2019) explored larger samples of firms across sectors to better identify the factors underpinning or constraining industrial growth. 5 Despite these advances, empirical evidence on the nature of entry and dynamics of firm survival is practically non-existent.…”

“…Imperial Russian corporations faced high barriers to entry, because the government maintained a costly system of incorporation by special concession. This key distortion constrained capital investment and firm growth by reducing the number of companies that could benefit from the limited liability and easier access to capital markets that incorporation offered (Gregg 2020). While Gregg (2020) examines the causal effects of this concession system by comparing corporate and non-corporate manufacturing establishments, this paper, rather than examining all firms, takes advantage of new and highly detailed data on corporations to document and analyze the characteristics and life-cycle dynamics of the industrial firms that did incorporate.…”

“…Practically no empirical work has been undertaken with micro-level data to examine just how institutional and economic conditions impacted firm behavior and outcomes. Exceptions include the recent work by Gregg (2020) and Gregg and Nafziger (2019), who find that firms adopting the corporate form of organization demonstrated flexible financial strategies, leading to greater capital accumulation, investment in new technologies, and growth.…”

Not Backward: Comparative Labour Productivity In British And Russian Manufacturing, Circa 1908

“…Factory inspectors, who resolved the disputes between workers and companies, simply lacked human resources to provide adequate oversight and accountability (Pushkareva et al, 2011, p. 160). Amidst these distortions, joint-stock corporations and big businesses prospered (Gregg, 2020a;Kulikov & Kragh, 2019). Corporations owned about five per cent of all industrial factories, yet they accounted for over 40 per cent of the total output generated between 1894 and 1908 (Gregg, 2018, p. 8).…”

Capital structure and corporate performance in late Imperial Russia

“…Furthermore, when corporations wished to change elements of their charters, such voting rights or capitalization levels, they returned to the Ministry to obtain formal revisions. Initial chartering and rechartering were certainly costly processes, which limited the appeal of incorporation for most Russian firms (Gregg 2015a).…”