| By him, or by others? The article says "Interestingly, these are the only strategies to create excess profit that Schumpeter’s model allows." The article doesn't mention going into a business with strong network effects and establishing a de-facto monopoly. See Thiel's "Zero to One". Schumpeter was writing in an era when railroads were trying to do that. They hadn't quite succeeded; there were still many small railroads. The big change has been the development of businesses that scale really, really well, along with the management techniques to run them. The former is well known in Silicon Valley. The latter is less widely realized. Big companies used to have a huge administrative problem. There were giant corporate headquarters buildings full of people literally pushing paper. "The World is Run on Tracks of Printed Paper" - Moore Business Forms slogan. Railroads had trouble keeping track of their freight cars. Auto companies had trouble keeping track of where their cars were in transit. Plants had to be self-sufficient and carry big inventories. These problems got worse with scale, for combinatoric reasons. That was the real win of the era of mainframe computing. The problems of bureaucratic scale were gradually overcome. This removed old natural limits on the size of companies. At last, burger chains could be expanded to planetary scale. With the administrative problems out of the way, any industry which had marketing or supply based network effect began to tend towards a very small number of players. It took a while, but now we're there. Today, the US has two major drug store chains, two major hamburger chains, three big banks... Schumpeter didn't have examples that to look at. Railroads have a network effect, but that's because they are a network, and they were regulated, or, in many counties, state-owned. Telephone, telegraph, and electric power companies were recognized as natural monopolies, so they were regulated utilities.
Perhaps the closest example of his era was The Great Atlantic & Pacific Tea Company ("A&P"), once the largest grocery chain. They operated grocery stores from 1863 to 2015. But they were not strongly dominant in Schumpeter's day; that came a few decades later. |