- German Industry and Global Enterprise. BASF: The History of a Company
BASF (Badische Anilin-& Soda-Fabrik) has long been one the largest chemical companies in the world. Along with Bayer, Hoechst, and Agfa, it formed the core of I. G. Farben, which controlled the German chemical industry between 1925 and 1945. This volume is a both an academic and a company history. BASF provided access to all its records up to 1975, but did not exercise any editorial control on the team of authors, all of them distinguished business historians. Each of the four authors covers one of the major phases in BASF's development. Von Hippel describes BASF from its founding in 1865 to its emergence in 1900 as the world's leading manufacturer of artificial dyes. Johnson covers the creation of cartels, the First World War, and the creation of I. G. Farben. Stokes traces the history of I. G. Farben and the re-emergence of an independent BASF in 1952. Abelshauser covers the history of BASF from its re-founding to the 2000. The result is an excellent institutional history of one of the world's most important firms.
A jeweler turned entrepeneur in the gas lighting industry, Friedrich Engelhorn, founded BASF in 1865 as a joint-stock company. Although the legal seat of the firm was Mannheim, Ludwigshafen was, and remained, the site of the firm's plants. BASF succeeded by commercializing the results of the chemical revolution led by scientists such as Liebig and Perkin who created artificial dyes out of materials such as coal-tar rather than plants and roots. BASF leaped ahead of its competitors for several reasons. Through sales of stock and internal reinvestment, BASF mobilized more capital than other companies and expanded aggressively. It avoided becoming dependent on banks by holding down dividends on shares to as low as 5 percent and pouring profits into expansion and research. BASF pioneered scientific industrial research. Already in 1867, Engelhorn hired Heinrich Caro, who was both a brilliant chemist and a excellent builder of ties to the rest of the scientific community. Under the leadership particularly of Heinrich von Brunck, BASF poured millions of marks into synthesizing indigo. A strategic set of cartels, mergers, and sales and research conventions modulated competition. Already in 1904, BASF formed a Dreibund, three member league, to coordinate sales with Bayer and Agfa. BASF [End Page 1235] thus concentrated on investments for long-term growth and research and development. It was the first user of electricity in Germany and created the first telephone connection in Bavaria in 1882. By 1876, BASF's workforce grew to 1,140. By 1900, it was 6,360, and by 1913, 9,200, making it perhaps the largest chemical company in the world, producing 24 percent of the world's coal-tar dyes (96).
BASF achieved its success in spite of having few controls on purchasing and maintaining weak internal accounting methods (89) The informality of its internal structure until the 1970s belies the stereotype of the bureaucratic big business corporation. Intense loyalty from directors and upper management, who made more money from fees and profit-sharing than from salaries, helped keep the firm successful. A collective leadership of the Vorstand, or Directorate, still allowed strong personalities to have influence. Carl Bosch, who joined BASF in 1899, won the Nobel Prize in Chemistry in 1931, and chaired the Aufsichtsrat, or Supervisory Board of Directors, from 1919 to 1925, is the prime example.
Success also depended on holding down labor costs: workers were paid only slightly above the average industrial wage for hard, often dangerous work. Gradually, the firm adopted social welfare measures to stem the huge employee turn- over: in 1897-99, for every 100 workers, there were 74 new hires and 65 workers who quit (107). Strikes in 1906 and 1911 led to small wage increases, but management refused to negotiate with labor unions, used strikebreakers, and formed a "yellow" company union (147-49...