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Corporate Strategy, Structure and Control Methods in the United States During the Twentieth Century

  • Alfred D. ChandlerJr

Abstract

My assignment is to review the United States’ experience in terms of organizational forms, strategies and control methods. Such organizational forms, strategies and control methods were responses to specific business challenges. As the papers that follow emphasize, responses to these challenges differed from nation to nation, reflecting different national business, economic, political and cultural environments.

Keywords

Organizational Form Business Unit Industrial Enterprise Organizational Capability Corporate Financial Performance 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. 1.
    Quoted in Alfred D. Chandler, Jr (1977) The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA: Belknap Press/Harvard University Press), p. 16.Google Scholar
  2. 2.
    Alfred D. Chandler, Jr (1965) The Railroads: The Nation’s First Big Business (New York: Harcourt, Brace & World), especially Parts II, III, and V. Thomas C. Cochran (1953) Railroad Leaders: The Business Mind in Action (Cambridge, MA: Harvard University Press), especially Chap. 6 ‘The Foundations of Management’, and Chap 9 ‘The Strategy of Railroad Expansion.’Google Scholar
  3. 4.
    Alfred D. Chandler, Jr (1990). Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, MA: Belknap Press/Harvard University Press), p. 24.Google Scholar
  4. 9.
    Chandler. The Visible Hand, pp. 110–12, 445; William Z. Ripley (1915) Railroads: Finance and Organization (New York: Longmans, Green), pp. 612–15; Thomas Johnson and Robert S. Kaplan (1987) Relevance Lost: The Rise and Fall of Management Accounting (Boston. MA: Harvard Business School Press), pp. 8. 37, 90.Google Scholar
  5. 14.
    Alfred D. Chandler Jr. (1962) Strategy and Structure: Chapters in the History of the Industrial Enterprise (Cambridge, MA: MIT Press), Chap. 2.Google Scholar
  6. 15.
    JoAnne Yates (1989) Control Through Communication: The Rise of System in American Management (Baltimore, MD: John Hopkins University Press, pp. 266–7.Google Scholar
  7. 16.
    Bruce R. Scott (1973) ‘The Industrial State: Old Myths and New Realities’. Harvard Business Review, (March–April), pp. 133–45.Google Scholar
  8. 17.
    David A. Hounshell and John K. Smith (1988) Science and Corporate Strategy: Du Pont R&D. 1902–1980 (New York: Cambridge University Press), p. 586.Google Scholar
  9. 18.
    H. D. Fast (1977), The Rise and Fall of New Corporate Venture Divisions (Ann Arbor, MI: MI Research Press. Hounshell and Smith, Science and Corporate Strategy, (Chap. 22. Davis Dyer and David R. Sicilia (1990) Labors of a Modern Hercules: Evolution of a Chemical Company (Boston, MA: Harvard Business School Press), pp. 363–72. At GE the CEO. Reginald Jones, referred in 1975 to the ‘venture mess’, and ‘the venture problems’, quoted in Alfred D. Chandler, Jr, and Richard S. Tedlow (1985) The Coming of Managerial Capitalism: A Casebook on the History of American Economic Institutions (Homewood, IL: Richard Irwin), p. 785.Google Scholar
  10. 19.
    Neil Fligstein (1990) The Transformation of Corporate Control (Cambridge, MA: Harvard University Press), chap. 6 provides an excellent review of the impact of antitrust policies on corporate strategy after the Second World War.Google Scholar
  11. 20.
    Neil H. Jacoby (1969) ‘The Corporate Conglomerate Corporation’, The Center Magazine (Spring), reprinted in Chandler and Tedlow, The Coming of Managerial Capitalism, p. 739. The next few paragraphs follow closely pages in my ‘The Competitive Performance of U.S. Industrial Enterprises since the Second World War’, Business History Review (Spring 1994) pp. 16–23.Google Scholar
  12. 21.
    David. J. Ravenscroft and F. M. Scherer (1989) Mergers, Sell-offs, and Economic Efficiency (Washington, DC: Brookings Institution), chap. 6.Google Scholar
  13. 23.
    Francis. J. Aguilar and Richard Hamermesh, ‘General Electric, Strategic Position — 1981’, in Chandler and Tediow, The Coming of Managerial Capitalism, p. 777Google Scholar
  14. 24.
    I analyze these changes and systematizing and bureaucratizing of the strategic planning process in my ‘The Functions of the HQ Unit in the Multibusiness Firm’, Strategic Management Journal (1992).Google Scholar
  15. 25.
    Johnson and Kaplan. Relevance Lost, pp. 163–5. Robert N. Anthony, (1989) ‘Reminiscences About Management Accounting’, Journal of Management Accounting Research, 1:7–9 (Fall).Google Scholar
  16. 26.
    Michael E. Porter (1992), Capital Choices: Changing the Way America Invests in Industry (Washington, DC: Council on Competitiveness) pp. 60–2, 107. According to James M. Poterba and Lawrence H. Summers the average hurdle rate for US firms was 11.6 per cent for manufacturing firms and 12.2 per cent for all firms in their sample. Japanese hurdle rates were below 10 per cent.Google Scholar
  17. 27.
    Carliss Y. Baldwin and Kim B. Clark (1994), ‘Capital Budgeting Systems and Capabilities Investments in US Companies after the Second World War’. Business History Review (Spring), pp. 73–109.Google Scholar
  18. 28.
    W. T. Grimm & Co. (1988) Mergerstat Review, 1988 (Chicago, IL: Grimm & Co.), pp. 103–104.Google Scholar
  19. 29.
    New York Stock Exchange Fact Book, 1987 (1988) (New York, NY: New York Stock Exchange), p. 71.Google Scholar
  20. 30.
    I review the negative impact of such transaction-oriented mergers and acquisitions in my ‘Competitive Performance of U.S. Industrial Enterprises’ in Porter, op. cit.Google Scholar
  21. 31.
    Sanjai Bhagat, Andrei Schleifer and Robert W. Vishney (1990) ‘Hostile Takeovers in the 1980s: The Return to Corporate Specialization’, Brookings Papers on Economic Activity: Microeconomics (Washington, DC: The Brookings Institution), p. 55.Google Scholar
  22. 32.
    The differences in the basic nature of competition in these three categories (high, low and stable tech industries) and the relative success and failure in restructuring in each of these categories is spelled out in my ‘Competitive Performance of U.S. Industrial Enterprises’, in Porter, op. cit.Google Scholar
  23. 33.
    The recent reorganizations at Du Pont and GE are described in my ‘The Functions of the HQ Unit in the Multibusiness Firm’. For adjusting control methods to meet new needs and structures see Johnson and Kaplan. Relevance Lost, chaps. 9–11; Robert S. Kaplan (1988) ‘One Cost System Isn’t Enough’, Harvard Business Review (January–February); and Robin Cooper and Robert S. Kaplan (1991) ‘Activity Based Usage Models’, Harvard Business School working paper, 25 July. The new information-based manufacturing technologies include computer-aided-design and engineering (CAD/CAE), computer integrated manufacturing (CIM), and flexible manufacturing systems (FMS). For changes in capital budgeting, see Baldwin and Clark, ‘Strategic Capital Budgeting’, Porter, op. cit.Google Scholar

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© Associazione di Storia e Studi sull’Impressa 1996

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  • Alfred D. ChandlerJr

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