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∙ Markets are too small. The U.S. market, the world's biggest, is more than six times as large as that of any one European country. With that base for mass production and sales, U.S. corporations dwarf most of their European competitors. With few exceptions, European companies are still chopped up into national units. Despite the Common Market, their managers have so far been unable to overcome disparate systems of law and taxation to merge into multinational European companies—such as a scarcely dreamed-of Fiat-Volkswagen-Citroën combine.
∙ Europe is too stingy about research and development. The U.S. spends about ten times more per capita on R. & D. and four times as much altogether as Europe ($23.3 billion last year). While European regimes give research only modest financial support, the U.S. Government last year poured $16 billion into such efforts. Most of that went into defense, aerospace, aircraft and electronics. From these fields, U.S. firms are learning to master staggering complexities on technology's frontiers, and to apply the techniques in other areas. With their vast capital and huge home market, U.S. companies routinely risk fortunes beyond Europe's visions to launch promising ventures. RCA gambled $130 million on color television before it began to pay off. Europe is still split over whether to use the French or West German color TV system—and the two are electronically incompatible.
Rather than risk $140 million on a product that might not warrant it, the Dutch electronics giant Philips decided last fall to give up developing big computers, concentrate instead on little ones. Battling to survive against U.S. competitors, British producers have been forced to sacrifice innovation to cut costs. In bringing out its 1900-series computer three years ago, International Computers & Tabulators kept the development bill down to a mere $20 million by using such existing innards as transistors and printed circuits instead of the more sophisticated integrated microcircuits offered by its U.S. rival. Even so, the effort almost wiped out I.C.T. profits for more than a year. When European firms are willing or able to invest heavily in research, they often get excellent results. But risk capital is lacking in Europe. "In 40 years," says Sir John Baker, head of Cambridge University's engineering department, "I have never been approached by a British banker interested in discovering new technological ideas. When I'm in America, the bankers corner me and try to find out what's happening."
∙ Managerial skills are lacking. "Here we have brilliant individuals and almost never brilliant organizations," says Italian Physicist Massimo Bernardini. U.S.-style teamwork between research, production and financial men remains the exception—and Europeans still have a lot to learn about advertising and marketing too. Anthony Wedgwood Benn, Britain's Minister of Technology, lists "seven new deadly sins" afflicting the British economy, among them "industrial amateurism" and "status hunting." Habitually, corporations pick top managers and directors not for ambition, skill or diligence but for their social qualifications. This sin of amateurism is certainly not confined to Britain.