Business and gender in Spain (19th-20th centuries):
A long period of cheap women´s services outsourcing
Lina Gálvez Muñoz (Carlos III University) and Paloma Fernández Pérez (University of Barcelona)[1]
“During many centuries economic activity relied greatly on the creativity of the most audatious men who created around them centres of work, firms, original projects they offered to the society in which they were born or where they had come to from other countries. This reality has been overcome and today we live an era of full incorporation of women to the labour market either as workers or as entrepreneurs”.
(Rodrigo Rato, former Spanish Minister of Economy and current President of the IMF)[2]
I. Introduction:
One wonders whether the “creativity of the most audatious men” could be the basic factor that may explain Spanish business history during the last two centuries. Many economic and business historians trained in Marxist and neoclassical traditions would doubtlessly include other agents that have been fundamental in such history –like unions, policy makers, bankers, international institutions, business groups and networks-. Less often we find among these economic agents women. Were they totally absent from business activity and economic life? The answer is no. Not only because there are exceptional individual cases, both in the past, such as Beatriz de Sampayo, royal banker in 17th century Spain, and in the present, as Ana Patricia Botín from the Santander Group, but also, as we will demonstrate, because they have been everywhere, especially providing services within firms. The aim of this paper will be first, to provide an approach to Spanish business history from a gender perspective. And second, to show that women´s economic activity has especialized in the cheap or free provision of services, which were more important than it is recognised for explaining the rise and consolidation of modern business.
Women have always been present in business activity, but only very recently they have been as such in academic analysis, thanks to the incorporation of gender as a main analytical tool, questioning concepts, sources and theories. One of them could be the classification of economic activity in sectors which constitutes the basis for most accepted theories of economic development and structural change that identify growth with industrialization. These theories usually do not indicate that industry brought about tertiarization of the secondary sector before the service sector became dominant in most Western economies in terms of employment and GDP. The ordering of society according to gender greatly influenced the tertiarization process of the industrial sector and the consolidation of the capitalist firm in the Western world. According to Claudia Goldin, gender is today declining as a an ordering element of the economic life, but a century ago its importance was growing.[3] In fact, during the first industrial divide the new professions and jobs were designed or consolidated as male or female, and production, technology, wages and the capitalist firms in general were organised using gender differences in society[4]. In this division, women continued to basically provide services for the household, the family business and the new firms.[5]
Women´s specialization in providing services did not imply a change in law and tradition regarding women´s recognition of their work. Most of the services they provided within family businesses were done for free, without contracts, without social benefits. Nevertheless, the experience these women acquired trained them and created human capital at a low cost for the local and national governments. Low cost of women´s services must not related to productivity reasons, as memories of entrepreneurs and records from private firms indicate. Rather, it has to be related to the performance of dead-end jobs in which promotion was not contemplated and were therefore jobs men rarely would accept to enter according to what society expected from them, as the enshrined bread-winners.[6]
Because in Spain the big corporate firms were exceptional, the huge and visible demand for new jobs they created in other countries like Germany or the US, simply did not exist.[7] Instead, most Spanish firms were SMEs owned by families with an autocratic and personalistic style of management in which blood ties with male relatives was the first criteria for promotion to top managerial positions and ownership and in which loyalty and not meritocracy often served as the basic criteria for stability and improvement in the working place. In Spain, most of these services provided by women outside firms and within family firms remained unrecorded and unpaid in official statistics, yet they slowly created human capital that the Spanish economic system will only fully use during the second half of the 20th century, when after the end of the Franco’s dictatorship Spain rapidly reduced the economic and political gap which it has had for two centuries with its European neighbours. Finally, from 1975, women did not need any more by law to ask their husbands for permission to open a business, ask for credits, sign a legal document, or to move to another city.
In order to answer the questions asked in this introduction, this paper is divided in three main parts. A revision of the main theoretical concepts and approaches is the focus of the first section of the paper in which newinstitutional and evolutionary approaches are presented as the best theoretical frameworks for including gender in business history. The second part deals with institutional framework that shaped, limited and influenced women entrepreneurial activity in Spain from late early modern times until nowadays. Finally, the last section indicates the specialization of such activity in providing services within and outside the firm at a low cost for firms and governments -and at a high cost for women. Institutional factors that conditioned different access to education, finance, salaried work, property management, and politics together with quantitative and qualitative data about women in business will lead to criticize mainstream theories about economic and business development.
II. A critical approach to theories and sources in business history from a gender perspetive
II.1. From neoclassical concepts to a gendered business history
Traditional neoclassical approaches to economic and business history are based on rational choice and the existence of a perfect knowledge of information held by the economic agents.[8] For some neoclassical and Keynesian thinkers after the II WW and right until the 1960s the importance of the State and capital investment in economic growth contributed to create indifference even around the figure of the entrepreneur regardless gender definitions.[9] Neoclassical and Keynesian premises in themselves deny the existence of women as economic agents because, to begin with, and with the exception of some countries, in general there is no perfect quantitative information about their activities, and frequently no information at all because of the sources in themselves but also because of the questions researchers have traditionally addressed to these sources.[10] Newinstitutional and evolutionary approaches have criticized the rational choice and perfect information premises for entrepreneurship and have underlined the importance of information costs, transaction costs, and path-dependence concepts in the development of entrepreneurship. R.O. Coase, and O. Williamson contributed to spread the idea that to operate in the market economic agents need to reduce the costs related to the exchange of information and the operations required to seal transactions.[11] Ideas from E. Penrose, R. Nelson and Winter recognize that firms change their competitive advantages in front of changes that take place in the environment where they operate (technology, markets, competitors). In a short overview about the implications of new institutional studies for business studies, Mary B. Rose has argued that theoretical work with this perspective has highlighted either convergence or divergence: some studies have indicated paths of development in a country or economic sector that other countries or sectors would try to imitate (à la Chandler), and other studies emphasize the divergent paths of development that have led to different models of growth.[12]
U.S. and some European business and economic historians, particularly A. Kwolek-Fowland, M. Yeager, M. Nash, M.Walsh, L. Gálvez, K. Honeyman, C. Borderías, L. Andersson-Skog, and C. Sarasúa, have applied some of these concepts to the study of women´s activity, demonstrating that women particularly before the information revolution did not have equal access to information about the market compared to men´s, which influenced their differential economic behaviours. Among accepted reasons that explain such differential information we do have the fact that women had different access to property, education, business formal and informal clubs and associations, legal recognition of their economic activities, legal services and protection, and credit, among other key elements that allowed entrepreneurs the development of business activities. The information and the social and legal framework women entrepreneurs had were therefore restricted, and conditioned the sort of business they could develop.
On another ground, influential studies about innovation and growth from A.D. Chandler Jr., who followed the transaction cost theory of Coase and Williamson, have focused on the dynamic interaction between the innovative growth strategies of firms pursuing economies of scale and scope and the development of professionally managed hierarchical structures in the United States. Using and critizing Chandler´s framework, W. Lazonick emphasized that in Britain high levels of specialization and on labour relations served as obstacles to innovation in the twentieth century.[13] In both cases Chandler and Lazonick focused on industrial activity and in proprietary industrial capitalism respectively, which vastly excluded services and non-proprietary capitalism. However, services and non-proprietary entrepreneurship are precisely the two areas which according to available studies constituted the dominant specialties of women´s participation in economic life, in Spain as it seems to have been the case in the rest of the Western world.[14]
Lazonick´s works contain, however, two arguments that have great potential to include such specialties.[15] First, Lazonick outlines the importance of work and innovation in the shop-floor in front of the Chandlerian insistence of managers as main agents of innovation in the firm. A gender reading about the implications for business history of such ideas are that workers matter and that innovation can be produced from bottom to top –not always in the opposite way. In addition, for Lazonic, the SCIE (social conditions of innovative enterprise) lies on industrial conditions (technology/ market/ competitive), organizational conditions (cognigtive/ behavioural and strategic), and institutional conditions (employment, financial and regulatory). Again, a gender reading of such assumptions applied to business history would reinforce Galambos´and Granovetter´s theories about the diversity that firms, organizational routines, business strategies, financial choices may adopt in different environments and business groups. Thus, employment institutions and family groupings in highly personalistic societies determine how a society develops the capabilities of its present and future labor forces, including education, research, and training systems. Also, how it structures the availability of employment and the conditions of work and remuneration. Female entrepreneurs face common problems with female workers as well as other specific to them which are also discriminatory. In many Western countries until after the II WW civil codes forbade women to own any business, to be masters of guilds or had an individual access to finance -mainly reserved to men. Regulatory institutions determine how a society assigns rights and responsibilities to different groups of people over the management of society´s productive resources and how it imposes restrictions on the development and utilization of these resources. Institutional, organizational and industrial conditions interact historically to determine a unique set of rights, responsibilities and restrictions that characterize a particular economy and society in a particular era.
L. Galambos, one of the most influential theorists about innovation in business history has emphasized and outlined the relevance of networks of public, private and non-profit institutions in sustaining innovation in science-based, high-tech companies. The idea about the relevance of networks of institutions for businesses has been broadened by a school of sociologists to define more diverse elements that compose business groups. M. Granovetter and R. Swedberg have defined in a broad way the informal and formal networks influential in the creation of business groups regardless the economic sector and technological content. According to Granovetter and Swedberg and the network analysis theorists business networks can be composed of individuals linked by religion, ethnicity, politics, culture, and kinship. The common key element in all of them is that they base business in high-trust relationships in societies with a high personalistic component, which helps reduce transaction costs. [16] Applications of such ideas to business history have provided several analysis about family firms across sectors and territories, and have allowed a critical reappraisal of the family firm in economic and business theories.[17]
A critical reading of these ideas would lead to a central question in business history: could we apply gender to understand and explain entrepreneurship? Relatively recent work in business history is trying to be at the crossroads of these contributions from new institutionalists, evolutionary theorists and sociologists. A. Kwolek-Fowland or M. Walsh for the U.S., Evridiki Sifneos for Greece, Kirsi Vainio-Korhonen for Finland, M.E. Wiesner for Germany have written with these new perspectives about the world of services, and the world of non-proprietary capitalism, with a gender perspective that has allowed the inclusion of different forms of entrepreneurship historiography has undersestimated: women´s entrepreneurship.[18] Some of the implications of these works are to reconsider classical theories about economic development, like the theory about the tertiarization of the economy in the western world. According to these new studies influenced by new institutionalism, sociology, and gender studies, women´s massive specialization in economic life has been in the service sector. The consequences of such observation are important doubtlessly: the dominance of the tertiary sector in the economy would have taken place much earlier than we believe, by taking statistics with a gender approach.
II.2. The tertiarization of the Spanish economy with a gender approach
The classical theory about tertiary activities can be traced back to the 1930s, when the economic crisis and the related mass unemployment of that time demanded solutions, to what it was considered not a temporary phenomenon but an structural crisis. This idea led to a growing interest in economic structure, both in research and in politics. The clasification of the economic activity in three different sectors was developed in the 1930s[19]. This classification was inspired in the utility of the goods produced: absolutely essentials –primary sector-; no longer essential –secondary sector-; and even less essential -tertiary sector-, a sector characterized by lack of regulation, scarce remuneration and feminization–.[20] Few years later, it was added to that explanation the idea that it was the possibility or impossibility to increase production which was the crucial difference. The causes of this could be found in the increased application of technology.[21] But not all sectors receive the same impact from technological progress and growth. Agriculture would have a limited increase, industry can increase production to an almost unlimited extent. And tertiary activites could be influenced by technological change but in a rather limited way. Of course, within this theory is was contended a theory of economic development as a serie of stages dominated by an economic sector or activity.
Nowadays, it is clear that services can be affected by technology in a really deep manner as computerization and internet have showed. Also that, as a result of the continuing division of labor, many activities no longer contribute directly to the realization of a particular product due to the increased practice of service outsourcing. Some of the consequences of these changes are that many people counted within industry will be in fact providing services within industrial firms. If we accept this argument then the tertiary sector already started to grow in Western Europe before the Second World War and not, as is generally assumed, after that event.[22] The provision of services within firms would, thus, be essential in explaining the development of corporate capitalism, and because women played an essential role in servicing the industry from within and from the outside women´s role in the tertiarization of the economy would have been. The conclusion would be that female did play an essential and not always visible role on that development. Specially in countries such as Spain charactised by the predominance of SMEs mainly family runned.