evolved to form the dominant business organization of this period.
Baskerville and Taylor further illustrate the changing pattern of Canadian business
organization in chapter three by describing the colony of New France. This chapter builds on the
strategy and tools employed by France to obtain control and develop an effective structure for
managing affairs between 1663-1763. In 1663, New France was declared a part of France’s
governing structure. Its primary role lay in supplying raw materials to the Mother Country in
exchange for manufactured goods. Although this system implied the development of an
economically active and central state, reality proved otherwise. The head of that state owed
power to a combination of provincial class and familial groupings. Therefore, the primary way
to acquire the support of the nobility was through the sale of chief financial and judicial offices.
As financial and tax collection offices continued to be sold to private hands, the managing and
spending of state funds became further decentralized. Louis XIV contributed to this problem by
choosing advisors from the non-noble rank in an attempt to rule without a first minister.
However, these individuals built up their own support base by employing the rentier and
patriarchic tactics at their command for personal gain. Therefore, the inability to distinguish
between state and personal ends, and the primacy of noble life in France characterized the
organization of business activity in Canada during this period and curtailed economic
diversification.
In chapter seven, the bitter corporate rivalries between the Hudson Bay Company and the
North West Company that occurred in the fur trade era may also reveal the changing patterns of
business organization. This chapter investigates the new forms of strategy and structure that
emerged from 1763-1871, a period of major transition in capitalist business activity. The NWC
was divided into regional departments, each one managed by a partner who overlooked its
operations. Every year, these men would meet together and exchange information. Costs would
be cut, specific furs targeted, and posts shifted quickly and efficiently. In contrast, HBC’s
managerial structure was less flexible and responsive to changes. Significant decisions were
made in London by the advisory committee and the governor of HBC. Another major problem
with HBC revolved around the distribution of incentive money to managers based on the value
of their yearly fur shipments, resulting in destructive competition between store clerks. In this
challenging environment, the HBC undertook a major change in structural organization. A profit
sharing incentive system similar to the NWC was introduced to decrease the rivalries among post
managers. The transmission of fur trade news to London was streamlined and standardized so
decisions could be made quickly. Post activity also became more and more routine and directed
from the centre. Individual posts began to carry out specialized functions – some gathered fur,
while others acted as shipment points. Labour relations changed dramatically as well. Company
policy made it a point to have an equal proportion of mixed-blood, Irish and Scottish workers to
weaken the possibility of collective resistance and increase the ease of managerial control. HBC
also made use of new technology in the form of steamboats providing the speed and efficiency
required to remain in a competitively commercial environment. The HBC’s operational
strategies were shared by many other smaller enterprises during this time, representing another
major change in the pattern of business organization. Companies had now begun to centralize
managerial control, divide workers along ethnic lines, and experiment with new transportation
technologies in order to increase the effectiveness of business operations. This trend was a
dramatic development from the early periods of French chartered companies and represented a
significant improvement in the structure and strategies of enterprises in Canada.
The second dimension outlined by Baskerville and Taylor builds from the first. The
authors admit that many other parts of the capitalist world experienced similar patterns of
change and stability in business organization. However, they also go on to describe some of the
distinctive features of Canada which have produced a unique configuration of business
arrangements. One of these attributes includes a government that has placed constraints on the
operations of private enterprises. In chapter thirteen, this may be seen during the emergence of
electrical utilities. Electrical utilities meant improved urban transportation and diversified
industrial development. However, the initial costs of installing such systems were high.
Therefore, distribution companies attempted to lure in investors by issuing stock at below-par
value, exploiting the sense of public excitement for quick profits. Over time, large scale
enterprises developed and were able to expand and penetrate regional markets. During this
period, utility promoters attempted to exploit the Canadian federal system to obtain charters
which would enable them to gain exclusive rights to provide services in municipalities.
Although municipalities could prove troublesome over time, they were subject to provincial
laws. Similarly, the federal government had chartering authority, and promoters began selecting
the jurisdiction most likely to back their actions. Opposition began to surface in many areas of
Canada, fearing that such businesses would establish monopolies, thereby, preventing future
growth of the industry. Consequently, a movement for public power of utilities gained great
strength. In the prairies, government ownership appeared first at the municipal level. In 1905,
Winnipeg established a public hydro-electric system. Alberta and Saskatchewan also
“nationalized” their telephone systems. Overall, private utilities were among the first industries
to become targets of government intervention in the form of regulation. The notion of public
ownership began to emerge early in the twentieth century, laying the foundation for a distinctive
feature of Canadian business arrangements.
Another characteristic that has produced special configurations in the conduct of
Canadian business revolves around a political system that has attempted to balance “national”
interests against regional and continental economic pressures. For example, chapter twenty
reveals that following a massive influx of American capital in Canada’s industries, US
ownership grew steadily in such areas as oil and gas. This posed a number of problems. A US
balance-of-payments problem emerged in the 1960s and Washington began imposing restraints
on capital outflows. In 1971, when the US experienced deficits in both trade and payment
balances, import ceilings and surcharges were enforced. Although exemptions from such trade
restrictions were provided, the over-dependence on the US and multinational firms became
clearly evident. Consequently, the government began a series of programs aimed to protect
“national” interests. This was most evident in the National Energy Program of 1980-1981. This
program was intended to expand Canada’s energy resources, augment federal control over
domestic prices and exports, and reduce foreign ownership in the nation’s oil and gas industry.
The Petroleum Incentives Program also provided tax benefits and subsidies to companies with
more than 50 per cent Canadian ownership that embarked on exploratory ventures. Such
measures created resentment from regions like Alberta that were now unable to increase prices.
Additionally, the US was infuriated by the export restrictions and insults to free-market
principles that discriminated against their companies. Nonetheless, the Canadian government
remained committed to their policies, signifying their dedication to protecting national interests
despite harsh criticism. The above examples expose the fact that distinctive features of the
Canadian government and political system have shaped the principles and nature of Canada’s
unique business community.
The final dimension outlined by Baskerville and Taylor centres on the international
setting of Canadian business. The authors focus on explaining how Canada’s place and role in
the global business environment has been defined. This is primarily achieved by describing the
impacts that multinational corporations have had in terms of shaping Canada’s business
practices. For example, chapter twenty indicates that increases in world trade and international
direct investment encouraged the US to develop sales and production facilities abroad. By 1960,
US investment in Canada exceeded $17 billion and that figure more than doubled over the next
ten years. This meant the US dominated ownership in several of Canada’s industries, resulting
in severe consequences. For example, parent companies restricted branch plants to short
production runs for the small domestic market, rendering them unable to achieve economies of
scale. Similarly, multinationals did not equip their subsidiaries with research capabilities or
state-of-the-art processes and products. Many of the brightest Canadians were also being
induced into multinational organizations while Canadian entrepreneurship remained stagnant.
These conditions characterize Canada’s economic vulnerability on the international
scene. The authors then describe how aspects of the first two dimensions interact with these
conditions. For instance, as earlier chapters indicate, government intervention and political
systems were used as a way of contesting foreign ownership and dominance. However, the
globalization of financial, commercial, and industrial markets damaged these attempts. By the
early 1980s, there was a resounding push for open markets, free enterprise, and the lessening role
of state in economic affairs.
Overall, Peter Baskerville and Graham Taylor successfully trace the evolution of
Canadian business through three interconnected dimensions. These dimensions provide an
insight into the progression of Canada’s business activities throughout the years and ultimately
explain how internal and external factors have contributed to the role of Canada in the area of
business.
