The contribution of the Stephenson Company, engine manufacturers to the genesis of the British railway industry c.1823-1840

Abstract

AbstractThe paper investigates the Stephenson Company’s contribution to genesis of the railway industry by exploring its business model in its formative years. The Company capitalised on a well-developed business and technological infrastructure in the North-east of England that provided the building blocks for the creation of a new industry. It gained from its linkages with two social networks which provided it with a financial safety-net during the locomotive development phase and the mechanical expertise it required: the closed Quaker network and the regional network of colliery and mechanical engineers. Whilst bridging between and across these social networks facilitated the Company’s development, it was not central to its strategic decision-making. This was shaped by the externalities of market conditions, which the Com­pany sought to influence by producing a viable product that would convince customers of its utility, and investors of the potential gains to be had through investing in railway construction.Keywords: Early railway developmentengineeringaccounting evidencesocial capitalsocial networkscapital conversionsintangible assets Disclosure statementNo potential conflict of interest was reported by the authors.Notes1 The quest to gain competitive advantage by producing larger steam locomotives with greater tractive potential than their predecessors continued right through to the demise of steam in the 1950s (Fleming et al., Citation2000), but from the 1840s these improvements were incremental.2 In terms of accounting and finance research alone, Bianchi et al. (Citation2023) identified 162 articles involving social network analysis between 2000 and 2021.3 In the USA, for example, it was the Baldwin Company which dominated.4 According to Usselman (1991, p. 1050), “American railroads always exhibited a high degree of cooperation in technical affairs…In technical matters, railroads harbored no secrets”. Sinclair (Citation1974, p. 7) noted that, “the mechanics’ institute began simultaneously in Britain and the United States.”5 “Other men of business were partners or employees in a single fixed enterprise, went to the counting-house … or factory in the morning and returned home in the evening. For the Stephensons, [home] was only the base from which they were conducting a range of large-scale undertakings that had no parallel at the time. Some were short-term jobs, others lasted for several years. In supervising or inspecting these projects, they were often only home for brief periods” (Ross, Citation2010, p. 158).6 The variation in selling price could not simply have been the result of an extra allowance from the customer for interest due to delays in the settlement of bills of exchange as Bailey (Citation1999, p. 294) suggests, as sometimes it was the other way round with the contract price exceeding the final selling price.7 This was also the case at Baldwin Locomotive Works in the U.S., until the financial crisis known as the Panic of 1837 when cost control became paramount.8 The ineffectuality of the British Government’s attempts ending 1843 to restrict the export of technology commented on by Jeremy (Citation1977), is reflected in the locomotive works list compiled by Bailey (Citation1984, Appendix IV), which shows the Company exporting locomotives from 1828 and its export market accelerating from 1833.Additional informationNotes on contributorsNeveen AbdelrehimDr. Neveen Abdelrehim is a Senior Lecturer (Associate Professor) in Accounting and Finance at Newcastle University Business School. Her research interests cover the development of the railway industry, corporate governance, role of accountability, disclosure and financial reporting, corporate social responsibility, risk, business history and accounting history.Tom McGovernTom McGovern is a Professor of Business History and Management at Newcastle University Business School. His research takes a longitudinal, historical focus on strategy formation and implementation. He is particularly interested in industry emergence, organisational growth, decline and turnaround strategies. His current research is focusing on the history of business schools in the UK and leadership development in Saudi Arabia.Tom McLeanTom McLean is an Honorary Fellow in Durham University Business School; he has published widely in the field of management accounting history.David OldroydDavid Oldroyd is a professor of accounting at Newcastle University. The main aim of his research is to gain an understanding of the relationship between accounting and the wider economic, social, institutional and political contexts in which it exists. In particular he is interested in systems under stress or ones undergoing a process of transformation.Thomas N. TysonDr. Tom Tyson is Professor Emeritus of Accounting at St. John Fisher College in Rochester, New York. He has published and presented widely in the areas of 19th c. plantation accounting and textile mill accounting practices. His research interests also include assurance of sustainability reports and IFRS.