Many American companies also have joined in cooperative research and development activities. Traditionally, companies conducted cooperative research mainly through trade organizations -- and only then to meet environmental and health regulations. But as American companies observed foreign manufacturers cooperating in product development and manufacturing, they concluded that they could not afford the time and money to do all the research themselves. Some major research consortiums include Semiconductor Research Corporation and Software Productivity Consortium.
A spectacular example of cooperation among fierce competitors occurred in 1991 when International Business Machines, which was the world's largest computer company, agreed to work with Apple Computer, the pioneer of personal computers, to create a new computer software operating system that could be used by a variety of computers. A similar proposed software operating system arrangement between IBM and Microsoft had fallen apart in the mid-1980s, and Microsoft then moved ahead with its own market-dominating Windows system. By 1999, IBM also agreed to develop new computer technologies jointly with Dell Computer, a strong new entry into that market.
Just as the merger wave of the 1960s and 1970s led to series of corporate reorganizations and divestitures, the most recent round of mergers also was accompanied by corporate efforts to restructure their operations. Indeed, heightened global competition led American companies to launch major efforts to become leaner and more efficient. Many companies dropped product lines they deemed unpromising, spun off subsidiaries or other units, and consolidated or closed numerous factories, warehouses, and retail outlets. In the midst of this downsizing wave, many companies -- including such giants as Boeing, AT&T, and General Motors -- released numerous managers and lower-level employees.
Despite employment reductions among many manufacturing companies, the economy was resilient enough during the boom of the 1990s to keep unemployment low. Indeed, employers had to scramble to find qualified high-technology workers, and growing service sector employment absorbed labor resources freed by rising manufacturing productivity. Employment at Fortune magazine's top 500 U.S. industrial companies fell from 13.4 million workers in 1986 to 11.6 million in 1994. But when Fortune changed its analysis to focus on the largest 500 corporations of any kind, cranking in service firms, the 1994 figure became 20.2 million -- and it rose to 22.3 million in 1999.
Thanks to the economy's prolonged vigor and all of the mergers and other consolidations that occurred in American business, the size of the average company increased between 1988 and 1996, going from 17,730 employees to 18,654 employees. This was true despite layoffs following mergers and restructurings, as well as the sizable growth in the number and employment of small firms.
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This article is adapted from the book "Outline of the U.S. Economy" by Conte and Carr and has been adapted with permission from the U.S. Department of State.
