Abstract: Entrepreneurial Behavior within State Industries: The Case of German State Enterprises at the End of the Nineteenth Century

Jan-Ottmar Hesse and Ralf Banken


In nineteenth-century Germany state-owned enterprises were a common part of the industry structure in a whole group of branches from transportation and communication to mining and energy providers, including some of the greatest firms in Germany before World War I. Illustrating the cases of the mining corporation of the Saar region and the federal post and telegraph administration, the paper will show that the enormous growth of these two firms in the first phase of their development was the result of the entrepreneurial behavior of their management. The great room for maneuver especially allowed Leopold Sello and Heinrich von Stephan to practice a flexible market strategy. After the first two chief officers were dismissed, their successors lost the possibility to follow an independent corporate strategy. Because of the expanding enterprises at the end of the nineteenth century, the state administration became more and more bureaucratized, limited also by the interests of the secretary of finance and the parliament. Nevertheless the administrative managements still tried to safeguard the interests of the two firms.