Comparative analysis of Henry Ford and Adolf Hitler as international entrepreneurs

¶ … International Entrepreneurs: Henry Ford and Adolf Hitler

Today, given their impact on the generations that followed, it is reasonable to suggest that two of the most influential individuals of the 20th century were Henry Ford and Adolf Hitler. While they were clearly at diametrically opposite ends of the morality pole, Ford and Hitler both nevertheless managed to epitomize their respective types of entrepreneurialism according to their unique time and place in history. In this regard, Baldwin (2001), reports that, "If a person were summoned from the waiting room into Hitler's private office, he would be somewhat taken aback to see hanging on the wall beside the massive desk a large portrait of Henry Ford -- Why here? And why now, ten years before Hitler assumed the chancellorship" (p. 173). To explain the appearance of Ford's picture in Hitler's office requires an examination of the personal and ideological similarities and differences between these two men, as well as principal entrepreneurial concepts that shared in common. To this end, this study provides a critical analysis of the peer-reviewed and scholarly literature to provide brief biographical backgrounds for these two individuals and to develop the background needed to determine how important international scenarios can serve to influence entrepreneurship in different countries. Following this critical review of the relevant literature, a summary of the research will be provided in the conclusion and a personal reflective statement concerning what was learned from this experience.

Section One. Brief Biographical Backgrounds.

Henry Ford. Remembered primarily as the "Father of the Model T" and an innovator with assembly line technologies, Henry Ford remains a popular figure in American history today. According to a biographer, Ford was an American industrialist and pioneer automobile manufacturer who was born in Dearborn, Michigan in 1863, retired in 1945, and died in 1947 (Ford, 2007). Ford was not content with life on his father's farm and after demonstrating significant mechanical aptitude, he left home in 1879 to work as an apprentice in a Detroit machine shop for a short time; after he returned home for a period, he began experimenting with power-driven vehicles and returned to Detroit in 1890 to work as a machinist and engineer with the Edison Company (Ford, 2007). In this regard, a biographer reports that, "Ford continued working in his spare time as well, and in 1896 he completed his first automobile. Resigning (1899) from the Edison Company he launched the Detroit Automobile Company" (Ford, 2007 p. 2).

Despite Ford's efforts to keep the United States out of World War I, he knew an opportunity to make money when he saw it his company became a leading manufacturer of vehicles used in the war effort, a pattern that he followed during World War II as well (Ford, 2007). In addition, Ford also waged an unsuccessful U.S. senatorial campaign as a Democratic candidate (Ford, 2007). Following a major economic downturn in 1921, Ford's company began manufacturing higher-priced automobiles together with other types of vehicles and established branches in England and in other European countries, including, as discussed further below, Germany (Ford, 2007). Besides his charitable organization, the Ford Foundation, Ford's other philanthropies included $7.5 million for the Henry Ford Hospital in Detroit and $5 million for a museum in Dearborn, where in 1933 he established Greenfield Village, a reproduction of an early American village (Ford, 2007). In collaboration with Samuel Crowther, Ford also wrote several books, including My Life and Work (1923), Today and Tomorrow (1926), Moving Forward (1931), and Edison as I Knew Him (1930) (Ford, 2007).

Adolf Hitler. Historians report that Hitler was born in Braunau in Upper Austria in 1889 and is alleged to have killed himself in the Fuehrer bunker with his new bridge, Eva Braun, in 1945; he was the founder and leader of National Socialism (Nazism) party and the German dictator in the years leading up to and during World War II (Hitler, 2007). According to one of Hitler's numerous biographers:

Adolf Hitler was born at half past six on the evening of 20 April 1889, in... An inn in the small town of Braunau on the River Inn which forms the frontier between Austria and Bavaria. The Europe into which he was born and which he was to destroy gave an unusual impression of stability and permanence at the time of his birth. The Hapsburg Empire, of which his father was a minor official, had survived the storms of the 1860s, the loss of the Italian provinces, defeat by Prussia, even the transformation of the old Empire into the Dual Monarchy of Austria-Hungary. The Hapsburgs, the oldest of the great ruling houses, who had outlived the Turks, the French Revolution, and Napoleon, were a visible guarantee of continuity. The Emperor Franz Joseph had already celebrated the fortieth anniversary of his accession, and had still more than a quarter of a century left to reign. (Bulluck, 1962 p. 23)

The Europe that emerged during Hitler's early adulthood after World War I though, was quite a different matter. Indeed, German citizens during this period in world history were experiencing the enormous economic burdens of reparations payments to the victors of World War I, and their economy and political structure were shaky at best and on the brink of collapse (Hitler, 2007). Furthermore, there were numerous internal and external threats to this post-World War I Germany, and Hitler emerged as from the pack the "man of the hour" who possessed the vision and charisma needed to lead the German people out of this shameful morass into a global leadership position with his "thousand-year Reich" (Hitler, 2007).

From an entrepreneurial perspective, then, Hitler obviously possessed the inherent ability to know what people wanted to hear, and had been mentored on how best to project these messages to his eager listeners; moreover, even when he lost during these early years, he managed to turn adversity into opportunity by continually manipulating others to his will. In this regard, following his acquisition of German citizenship through the state of Brunswick, Hitler became a candidate in the presidential elections of 1932, but lost to the more popular war hero, Paul von Hindenburg; however, even here, Hitler managed to strengthen his position by falsely promising to support Chancellor Franz von Papen who subsequently lifted the ban on the outlawed storm trooper in June 1932 (Hitler, 2007). Following the elections of the Nazis as the largest party in the Reichstag in July, 1932, the president offered Hitler a lesser position as a chancellor in his cabinet but Hitler wanted more power than this position provided and refused; the chancellorship went another candidate that resigned on January 28, 1933 and, "Amid collapsing parliamentary government and pitched battles between Nazis and Communists, Hindenburg, on the urging of von Papen, called Hitler to be chancellor of a coalition cabinet, refusing him extraordinary powers. Supported by Alfred Hugenberg, Hitler took office on January 30 [1932]" (Hitler, 2007 p. 3).

In their book, History of the Holocaust, Edelheit and Edelheit (1994) report that the Nazi political victory was just what Hitler's followers had been waiting for, and this event represented a clear demarcation between what had been and what was going to be. According to these authors, "With the Nazi victory came an almost immediate effort to recast Germany in the framework of Hitler's ideology. Initially, street battles with the Communists continued. Now, however, that the police openly supported the rightist elements, the Nazis rapidly won control of the streets. On the night of February 27-28, 1933, a mysterious fire in the Reichstag gave Hitler a further opportunity to extend his control over all of Germany" (p. 32). Although the fire was blamed on the Communists, these historians emphasize that it has since become clear that the Nazis intentionally staged the fire; in fact, the Reichstag fire provided the Nazis with the justification they needed to ban the Communist party in Germay altogether and to severely restrict the activities of other like-minded organizations (Edelheit & Edelheit, 1994).

On March 20, 1933, the first official concentration camp was opened at Dachau with a capacity of 5,000 inmates; over time, more concentration camps were added to this system and estimates indicate that, by July 31, 1933, the Nazi system already contained appropriately 30,000 inmates (Edelheit & Edelheit, 1994). When the Reichstag convened again on March 23, 1933, Hitler demanded that they approve his use of the "Enabling Law" (Erm chtigungsgesetz), which was approved. According to these authors, the impact of this decree was that the Reichstag was, "in effect abdicating its constitutional powers and providing Hitler and the Nazis with virtually unlimited powers; his prediction that he could use the Weimar constitution to subvert democracy had indeed come true" (Edelheit & Edelheit, 1994).

Section Two: Critical Analysis of Entrepreneurial Characteristics, Behavior and Competencies.

Henry Ford. There were some early connections between Ford and Nazi Germany that appear to have being influential in how Ford managed his entire business. At the beginning of 1937, the board of directors of Ford AG, then chaired by the Dr. Heinrich F. Albert and publicly praised by the propaganda office of the Reich Ministry of Economics, approved an enlargement of the Cologne plant as well as the construction of an assembly factory in Berlin-Johannisthal for trucks and passenger cars (Baldwin, 2001). Thereafter, in June 1938, as a direct signal of approval that Ford cars sold in Germany were finally being made entirely in Germany, the Nazi government placed an order for 3,150 custom-designed, three-ton V-8 trucks based on an assurance from Ford's headquarters that the vehicles were not being intended for military use (Baldwin, 2001). According to this author, "There was no danger of war on the horizon; besides, if the German consumer market did not warm overwhelmingly to the four-cylinder Ford 'Eifel' sedan, then the company needed to go with the demand for other vehicles" (Baldwin, 2001 p. 283). This rationalization of the economic benefits to be gained from doing business with the up-and-coming Nazi regime was regarded as a major breakthrough for Ford; moreover, the Ford board of directors also encouraged the Dearborn and Dagenham factories to purchase tractor parts, transmissions, and axles manufactured in Germany, as a further indication of good will and tacit approval of what Germany was doing to stimulate future German export activities (Baldwin, 2001). In this regard, Baldwin emphasizes that, "Stockholders were pleased to see Ford AG foreign sales triple. In 1938, for the first time in its history, Ford AG paid a dividend. A year later, the company changed its official name to Ford-Werke, AG, 'as a symbol of its wholly German identity'" (2001 p. 283).

In light of these developments, Henry Ford was delighted when, upon the occasion of his seventy-fifth birthday, July 30, 1938, he became the first American recipient of the Verdienstkreuz Deutscher Adler -- the Grand Service Cross of the Supreme Order of the German Eagle (see Figure 1 below). Despite what some of the popular media had reported at the time, the presentation of the award, created by Hitler in 1937 "as the highest honor given by Germany to distinguished foreigners," to Ford, was not a surprise, having been announced previously at Ford's birthday dinner before an invited audience of more than 1,500 prominent Detroit citizens (Baldwin, 2001).

Figure 1. Henry Ford receives the Grand Cross of the German Eagle on his seventy-fifth birthday, July 30, 1938.

Source: Baldwin, 2001 p. 284.

Notwithstanding his achievements, his later years - like Hitler's - were characterized by the type of mismanagement and the sort of poor judgment that seems to affect those with such seemingly unlimited power. Ford's reliance on others was not misplaced early on, but it would seem that his judgment became flawed and he simply lost touch with what people wanted. More importantly, he also lost the ability to even keep track of how much money he was making. According to one biographer, because Ford's international reputation attracted much attention from journalists, and Ford's libel suit against the Chicago Tribune in 1919 led to an investigation by the lawyer for the newspaper that highlighted Ford's lack of education; moreover, anti-Semitic articles in Ford's publication, the Dearborn Independent, resulted in still more legal controversy and he was compelled to apologize for the articles (Ford, 2007).

More importantly, at least from an entrepreneurial perspective, Ford appears to have lost his edge over the years as complacency and Ford's own sense of infallibility seem to have caught up with him. In this regard, "Ford was also a poor manager who failed to capitalize on his company's early success. In the 1920s he failed to respond to consumer tastes by introducing new models and the company fell far behind General Motors. By the time of his retirement, the company's accounting procedures were so primitive that Ford's managers were unable to accurately tell how much it cost to manufacture a car and the company was losing $9.5 million a month" (Ford, 2007 p. 3).

Adolf Hitler. During the mid-1930s, Hitler followed principles that were similar to views espoused by John Maynard Keynes, the preeminent economist of the day, who proposed deficit financing and public works employment for military and civil projects, with a prime example of such capital generation techniques resulting in the Autobahn (Redlich, 1999). According to this author, "In 1934, 4% of the gross national product in Germany went to armament; in 1939, this rose to 50%. For Hitler, this was not fast enough" (Redlich, 1999 p. 101). It was not long, though, before Hitler recognized that there were other ways to generate capital as well. In this regard, on January 2, 1937, Newsweek reported that Hitler was at his retreat at Berchtesgaden contemplating the future of Europe and how he would manage it, and speculated whether he would take the actions that would result "in the long-feared second world war," thereby making the "world hold its breath" (quoted in Zalampas, 1989 at p. 102). Another influential media source, the New Republic, reported on January 6, 1937 that Hitler was "sitting alone at his mountain retreat at Berchtesgaden deciding the issue of war or peace for almost the entire world" and the Paris Stock Exchange declared that it would remain closed on future Saturdays because of "Hitler's unsettling habit of hurling political bombs on weekends" (quoted in Zalampas, 1989 at p. 102).

It was recognized by the European community as well as international observers at this point that any new military initiatives by Hitler would clearly involve the violation of the territory of a neighboring state and possibly result in war (Zalampas, 1989). In the United States, Representative Samuel Dickstein of New York responded to these trends abroad by objecting to the increased presence of Nazi leaders and sympathizers at home. Dickstein charged that the leader of the American Nazi party was no less a personage that one of Henry Ford's own employees: "Nazi rats, spies and agents' were recruiting and drilling armed units in New York, Pennsylvania, Ohio, Illinois, and Michigan. He asserted '2,500 Hitlerites' drilled each Sunday at Camp Upton on Long Island. Dickstein identified Fritz Kuhn, a chemist for the Ford Motor Company, as the leader of American Nazis" (Zalampas, 1989 p. 108).

Furthermore, a number of successful entrepreneurs appear to possess the same sort of charisma that is characteristic of many effective leaders today. According to House, Spangler and Woycke (1991), "In an age of complexity, change, large enterprises, and nation states, leaders are more important than ever. However, their effectiveness depends on their personality and charisma and not solely on their control over bureaucratic structures" (p. 364). This was clearly the case during Hitler's era as well. For example, one biographer emphasizes that:

From the first days of Hitler's 'Third Reich' political opponents were murdered or incarcerated, and some Nazis, were themselves purged. Jews, Socialists, Communists, and others were hounded, arrested, or assassinated. Government, law, and education became appendages of National Socialism. After Hindenburg's death in 1934 the chancellorship and presidency were united in the person of the Fuhrer [leader]. Heil Hitler! became the obligatory form of greeting, and a cult of Fuhrer worship was propagated. (Hitler, 2007 p. 3)

Section Three: Critical Analysis and Discussion of the Entrepreneurial Role and Achievements. a. Comparative and Contrasting Aspects of Ford and Hitler.

In reality, both Ford and Hitler were entrepreneurs if a strictly legal definition is taken into account. For example, according to Black's Law Dictionary (1990), an entrepreneur is "one who, on his own, initiates and assumes the risks of a new enterprise and who undertakes its management" (p. 532). Ford was clearly of this ilk, and while modern observers may not consider Hitler from an organizational perspective, he was clearly a good manager as well, at least during his early years. Furthermore, both Hitler and Ford were authors of well-known - and in some cases - popular books that remain the focus of a consideration amount of research today. Both of these individuals changed the world, but they did it for different reasons using different sources of income, an issue that is discussed further below.

B. Principal Areas of Capital Generation.

Henry Ford. All entrepreneurs need money, of course, but Ford made money "the old-fashioned way." Following a disagreement with his business partners, Ford launched the Ford Motor Company in 1903 in partnership with Alexander Malcomson, James Couzens (who was responsible for developing and administering the company's successful early business and accounting procedures), the Dodge brothers, and others (Ford, 2007). In 1907, Ford bought most of the outstanding stock and the Ford family retained control of the company for a significant period of time. Because of this vested interest in the business, Ford was keen to identify opportunities for improving production techniques and eliminating waste.

According to one biographer, "By cutting the costs of production, by adapting the conveyor belt and assembly line to automobile production, and by featuring an inexpensive, standardized car, Ford was soon able to outdistance all his competitors and become the largest automobile producer in the world. He came to be regarded as the apostle of mass production" (Ford, 2007). Ford also collaborated with his chief engineer Harold Wills in the design of the Model T. In 1908 and almost 17 million of these models were manufactured around the world before the vehicle was discontinued in 1928 (Ford, 2007). Thereafter, a more innovative design called the Model a was introduced to satisfy the needs of consumers who were facing with an increasing number of choices (Ford, 2007).

In response to the growing efforts of unions throughout the country, Ford managed to resist labor organizations by paying more than the industry standard (he was able to keep unions out of his factories until the 1940s in fact (Ford, 2007). In 1914, Ford began paying his employees the unprecedented rate of $5.00 for an 8-hour day, an initiative that cost the company around an extra $30 million a year (Ford, 2007). Early on, Ford recognized the need to minimize waste while maximizing effort as well as the intricacies of supply chain management techniques and how best to integrate potential competitors as strategic allies. According to Mccarthy (2001):

Waste reduction and recycling were by-products of the Ford Motor Company's experience with mass production.... Ford crossed this threshold at Highland Park with mass production of the Model T. Waste disposal there was a major headache for the company. But when the quantities of waste produced were either large or valuable, Ford also had an opportunity to recover some of the cost of production either by reducing the amount of waste or by recycling the residual materials for reuse or sale. Such opportunities were not lost on the company's plant managers and engineers: 'Even a microscopic saving,' as one Ford publication put it, 'assumes impressive proportions when multiplied by a million or two.' (Mccarthy, 2001 p. 53)

In 1916, Ford implemented a formal waste-reduction and salvage initiative at his Highland Park manufacturing facilities; however, at his Rouge facilities that were built primarily during the period between 1917 and 1937, Ford was able to identify even more opportunities for waste reduction and elimination and the company realized its most substantial savings on manufacturing and design production processes with waste reduction and reuse in mind (Mccarthy, 2001). Despite these marketing and cost-saving techniques, though, Ford's fundamental approach to business was insufficient to carry him through to the end of his career, and these issues are discussed further below following an assessment's of Hitler's principal areas of capital generation.

Adolf Hitler. Like Ford, Hitler was good at selecting people that could do the job the way he wanted it done, and many of these were loyal to a fault. While the organization that Hitler built was a political party rather than a manufacturing empire, both of these individuals shared some pragmatic realities in terms of output compared to revenue generation. Hitler's war machine may have failed in the long-term, but his ability to coordinate the Third Reich's resources into prosecuting the Holocaust are proof positive that Hitler was also an excellent supply chain manager, or at least possessed the capacity to delegate the job to those with such abilities.

While Ford was busy swallowing up his competitors and the vendors that supplied his factories to enhance his capital generation, Hitler was busy swallowing up neighboring nations and seizing their resources. The West's inaction early on provided Hitler with the opportunity to "swallow Austria (1936) and then occupy the Sudetenland of Czechoslovakia under the pretext of unifying the German people, and then annex it all in 1938 when France and Britain failed to oppose him" (Devine, Hensen, Poole & Wilde, 1999 p. 50). Hitler was also ensuring that he had the right people in place to accomplish what he needed in order to gain these valuable resources: