Chapter Content
Okay, so, um, let's talk about the, uh, "hollow corporation." Yeah, it's kind of a weird term, right? It brings to mind this, like, empty shell of a business. But it's actually a really interesting concept that's changed how we think about, like, companies and how they operate.
So, back in the day, you had guys like Henry Ford. He, like, wanted to control *everything*, from the raw materials to the finished product. I mean, he even tried to grow his own rubber in Brazil. Crazy, right? And William Morris, same deal, super hands-on, wanted to make *everything* himself. There's this story about how he even had his own publishing company just to make the owner's manuals for his cars. Like, seriously?
But then you get to General Motors, and Alfred Sloan had a totally different idea. He believed in, uh, more decentralized management, letting different parts of the company kind of do their own thing. This led to GM's decision to buy Fisher Body, which made their car bodies. And that purchase became *super* famous, like, endlessly debated by economists. Apparently, there was this economics conference, and someone was like, "Please, no more Fisher Body papers!" And Ronald Coase, this famous economist, was all, "Nope, that's my next paper!" Hilarious, right?
Even Ford, who was obsessed with control, bought his Model T bodywork from another company, Briggs. And Morris, in the UK, partnered with Budd for bodywork, but it didn't work out so well. It just goes to show that figuring out what to "make" versus what to "buy" is tough!
Anyway, so, this "make or buy" decision has become *the* question for businesses. You know, should they try to control everything, or should they outsource stuff? And that's where we get to this whole "hollow corporation" idea. Some guy, Norman Jonas, used that term to describe how companies were outsourcing more and more to independent suppliers. And that trend has, like, exploded.
And it's not just business, either. It's a political question too. Has outsourcing hurt Western economies? Should governments contract stuff out to private companies?
Of course, there are still factories that are like those old Ford plants. Except now, they're often in places like Mexico and Asia. Which is kinda ironic, because, like, communist China sometimes seems to be using good old capitalism better than capitalist America!
You see this in, you know, places like Bangladesh. There was this factory fire, Tazreen Fashions, with no fire exits, and tons of people died. And that factory made clothes for some US companies. It's a scary reminder of the Triangle Shirtwaist Factory fire, right? History doesn’t repeat itself but it rhymes, as they say.
So, what about globalization? Thomas Friedman, this New York Times journalist, he's the big guru of globalization. He talks about global branding and international supply chains, saying "the world is flat." And Nike is often used as an example of a "hollow corporation," because they don't make anything themselves. It's all outsourced to factories in Asia. Even the swoosh logo was outsourced! Like, wow.
And people have criticized this "Nikefication" of the economy. You know, some of it's just that people are attached to manufacturing. But there's real concern about what happens to communities when factories close down.
And what about the people who *make* the stuff? The workers in places like Bangladesh? They're making like next to nothing, right? And some folks say, "Well, maybe we shouldn't buy clothes from there." But the thing is, buying those clothes is often the *best* hope those countries have for escaping poverty. So if you don't buy the shirt, you're actually hurting them. It's a real ethical tightrope, that's for sure.
Ultimately, these countries need to get help building their own skills and capabilities. And Western corporations should try to operate at standards that are decent for those local expectations. Of course, if corruption or child labor is way out of line, it might be impossible to do business there at all.
You know, look at Apple. They outsource their manufacturing to companies like Foxconn and TSMC in Taiwan and China. And those economies have just *boomed* over the last few decades.
So, globalization has allowed for, you know, *huge* division of labor. And the dramatic drop in poverty in Asia shows there's more to it than just cheap clothes.
Now, the Covid pandemic did raise questions about how strong global supply chains really are. Maybe companies cut costs too much and made themselves vulnerable. And these days, with Russia invading Ukraine and the Taiwan situation, those concerns are even bigger.
Oh, and let's not forget franchising! It's been around for a while. But Ray Kroc, the McDonald's guy, really took it to another level. You know, he created this system where you could get the same Big Mac, the exact same experience, no matter where you are in the world. And that idea has been copied by *tons* of other companies.
And then there are platforms like Facebook, Twitter, YouTube, eBay, Google. They've created this totally new kind of corporation. And the key is, you don't have to own everything to make money. You just need to control the source of your competitive advantage.
And the "gig economy" has taken this even further. Platforms like TaskRabbit and Mechanical Turk connect people who need tasks done with people who want to do them. One survey found that, like, over a third of working Americans are making money from freelance work.
And then there are companies like Airbnb and Uber. They're kind of like platforms, connecting hosts with guests, drivers with riders. But they also have to act like franchises, making sure the quality is good.
So, all these "hollow corporations" have one thing in common: they've trimmed down their operations to focus on the *one* thing they do really well. It’s about access and support for the functions where they don’t have an advantage. If the assembly line was the big deal in the 20th century, maybe the hollow corporation is the big deal of the 21st. It's a wild time, you know?