Buccaneers of imperial business

This is a thoroughly researched, well-documented and marvellous book. It will appeal to scholars of South Asia as well as of business history. In the emerging historical research on South Asia some, but not enough, attention has been paid to commercial topics. Too little knowledge is generated about how firms were managed or about the managers themselves. This book sheds light on imperial commercial attitudes and contributes a great deal to the corpus of exciting new work delineating various aspects of colonial rule in South Asia.

The book describes the inter-relationship of commercial, political and social lives of the British businessmen in India during the heyday of empire. The managing agency houses that these businessmen controlled made the primary foreign direct investment in Indian industry.

The managing agency houses' elite numbered possibly between 1,000 and 1,500 at any time - perhaps as many as there were members of the Indian Civil Service. Yet these individuals were responsible for influencing Indian industrial conditions and inculcating an ambience that visibly persisted in pockets of Indian industry (I observed it in Calcutta in the late 1970s), even when there were no expatriates left in India.

The managing agency system has been blamed for retarding Indian industrial growth. The roots of "agency theory", an important theoretical perspective that underlies the contours of debate in contemporary corporate governance, lie in observations of the behaviour of British managing agency houses in colonial India. Therefore, everybody interested in modern corporate governance can profitably read this book.

The approach of these businessmen can be described as the maximisation of personal short-term self-interest, abhorrence for technical knowledge and singular hubris. As the author states with respect to attitudes: "The partner of the managing agency firm was to be a 'buccaneering merchant adventurer' who would respond quickly to new opportunities; good judgement, unimpeded by excessive technical knowledge, was seen as vital for success.Shareholders would thus only constrain the ability of the partner to exercise his judgement and specialists lacked the necessary entrepreneurial instincts." Hubris then led British businessmen in India to become isolated from the civil service, politics and the local business community.

They were unable to capture a share of the economic growth taking place in India, preferring instead to retreat into enclaves assuring exclusivity and autonomy. This insularity bred conservatism, particularly in comparison with the state. The hubris was expressed via employing men of "character", individuals who were not the brightest but were clubbable. Indians might have been technically astute and well-trained professionals (and there were several senior Indian members of the ICS) but they lacked the requisite superior "character" for industry. (Indeed, as Prakash Tandon has written in Beyond Punjab , "Indians might be ready to govern but not to keep the books!") And, of course, so did British individuals who had not gone to the right school or were not of the right class.

Attitudes such as short-termism, abhorrence of new technology and particularly hubris still persist in British industry. They lead to organisational rigidities. There is an inability to adapt as the world evolves. Darwinian natural selection ensures the "death of the lethargic". These factors have led many British icons to disappear in the past two decades. Firms such as Marks and Spencer and NatWest are in deep trouble today. In the light of empirical industrial reality, therefore, it is well worth examining the inter-relationship between the commercial and the social attitudes of the British manager, and asking the song's question: "When will they ever learn?" This book provides a research template for doing so.

Sumit K. Majumdar is professor of strategic management, Imperial College, University of London.