German Industry and Global Enterprise: BASF -- The History of a Company (review)

In his introduction to this study of BASF's nearly 140-year history, which was financed by the firm, Werner Abelshauser addresses possible concerns about the independence of the authors, and does so persuasively. Their efforts have resulted in a model corporate history, using archival material that facilitates fresh insights on many levels.

Abelshauser and his coauthors use the history of Badische Anilin- und Soda-Fabrik in part to study larger questions of corporate development and to shed light on the dynamism of the German economy and the origins and growth of the knowledge society. The firm has pursued two strategies consistently, the first based on a corporate culture of science-based production, the second based on the growth of an interconnected system of technologies and factories that use a few basic resources to produce primary and intermediate products—the so-called Verbund principle—which yield spinoffs and reduce costs and waste.

The early history of BASF is covered in the first three sections by Wolfgang von Hippel and Jeffrey Johnson, who deftly interweave archival material with information from the published sources. In the third and fourth section, Raymond Stokes and Abelshauser rely primarily on archival material concerning finance, organization, marketing, environmental policies, and political strategies that is helpful not only in presenting a complete account of the firm's history but also in gaining insight into its chief personalities. Center stage in the earliest period is Heinrich Engelhorn, who combined patient southeast German capital, his own systematic plan for construction of the first plants, and a dedication to seeking information from academically trained chemists, enticing Heinrich Caro to take a leading technical position. Along with Engelhorn's successor, Heinrich Brunck, Caro then devised a research strategy aimed at the development of synthetic dyes.

Jeffrey Johnson focuses on the first quarter of the twentieth century, when the major German dye firms sought business combinations to circumvent ruinous competition and the increased capitalization costs needed for larger, more complex processes. Brunck led the firm into ammonia synthesis when a world shortage of nitrates loomed, and a junior engineer-chemist, Carl Bosch, collaborated with Fritz Haber to develop the first successful high-pressure catalytic hydrogenation synthesis of ammonia— providing precious nitrates for the German war effort. The momentum of this basic process facilitated spinoffs of synthetic methanol and gasoline. After the war, Bosch continued Brunck's risk-taking technological strategy while dramatically increasing the numbers of academically trained staff.

In his analysis of the period from 1925 to 1952, Stokes writes the finest analysis to date of the relationship between BASF and IG Farben. Even though an oil glut and depression seriously endangered the viability of synthetic fuels, BASF refused to forsake the high-pressure technology, seeking protection from the Weimar government and then from the Nazis. BASF's corporate culture remained largely unchanged throughout the Nazi period; even as the Nazis took control of ever more of IG's business decisions, technical personnel retained much of their decision-making power. They also developed common ground in a number of construction projects, such as at Leuna and the notorious Auschwitz-Monowitz factories, whose designs were classic examples of the Verbund principle. Synthetic fuel processes dovetailed with synthetic rubber and plastics, receiving the lion's share of investment within IG and fostering an esprit de corps among scientists and technicians that carried on into a reborn BASF after World War II.

In the final section of the book, Abelshauser discusses BASF's responses to a highly competitive global market. The firm's reputation for cutting-edge research, interlocked factories with integrated technologies, devotion to quality products, a well-trained work force, and cooperation with other firms helped facilitate renewed growth. BASF was the first German chemical firm to switch to a petrochemical basis, and in 1963 it shifted from a technology-driven to a profit-planning strategy. Its earnings blossomed. Later...