The Vanishing American Corporation

CHAPTER 5SHAREHOLDERS GET THE UPPER HAND

BY THE 1970s, American corporations had reached their peak in size and economic dominance. ITT and its ilk had shown that companies were not limited to a single industry: Under the banner of “synergy,” conglomerates bought smaller businesses in whatever industry seemed promising. The strategy of diversification spread to nearly every major corporation, and the very idea of being in a single industry came to seem outdated. Yet shareholders had good reason to hate conglomerates, as they were frequently worth less than the sum of their parts. An economy-wide spree of acquisitions in the 1960s and ’70s had left the corporate sector bloated, incoherent, and undervalued. The “blue chips” were like a high school ...