Financial institutions and corporate strategy: David Alliance and the transformation of British textiles, c.1950-c.1990

This article introduces and assesses a conceptual model of institutional and corporate change. In particular it seeks to integrate strategic choice and associated corporate structure with the role of the market for corporate control (MCC) as a governance mechanism. The model is illustrated using longitudinal case studies from the British textile industry with particular reference to the acquisition policy of David Alliance as he built up the Spirella Group and then used this as a vehicle to acquire, in turn, Vantona, Carrington Viyella, Nottingham Manufacturing Company and Coats Patons. These policies are contrasted with the acquisition strategies of the Lancashire Cotton Corporation (LCC) and Courtaulds and Imperial Chemical Industries (ICI). The evidence indicates that there was no relationship between the depth of the MCC and restructuring success, but to the extent that the market lacked depth, abnormal profits accrued to market-making entrepreneurs such as Alliance. There is evidence that decentralized market-led strategies were more successful than strategies based on the integration of production for the achievement of scale economies. Successful adoption of these strategies was also based on the acquisition of financial resources through appropriate network connections and associated political lobbying channels.