Strategy and Structure: Chapters in the History of the American Industrial Enterprise

by Alfred D. Chandler Jr.

This book shows how the seventy largest corporations in America have dealt with a single economic the effective administration of an expanding business. The author summarizes the history of the expansion of the nation's largest industries during the past hundred years and then examines in depth the modern decentralized corporate structure as it was developed independently by four companies—du Pont, General Motors, Standard Oil (New Jersey), and Sears, Roebuck. This 1990 reprint includes a new introduction by the author.

Genres: Business, Management, History, Economics, Nonfiction, American History

Paperback

First published January 1, 1962

About the author

Alfred DuPont Chandler, Jr. was a professor of business history at Harvard Business School and Johns Hopkins University. Called "the Herodotus of business history," he wrote extensively about the scale and the management structures of modern corporations. His works redefined business and economic history of industrialization.

Reviews

[Rickard Björnemalm · Rating 4 out of 5]

What can you say about Alfred Chandlers classic study of American Industrial enterprise that hasn't already been said?

A detailed historical investigation into how strategy determined structure, how great industrialist are not necessarily the greatest administrators, the importance of clear lines of communcation and accountability in any administrative structure, the importance of separation between operational, tactical decisions and entrepreneurial, long range strategic decisions.

Chandler's thesis is essentially that the history of American industrial enterprise is the history of the development of scientific and rational management of resources. Through attaining more resources, rationalizing, expanding, and then rationalizing again, American industrial enterprise came to adopt first the centralized U-form and then the divisonalised M-form structure. In this way, the strategy of growth and, subsequently, diversification drove the changes to structure. In some firms, through a systematic and rational organizational change process and in others a more informal, trial and error, organizational change process. Point being, that strategy necessitated changes to structure.

The one issue one can have with Chandler's thesis is its deterministic tone. There is a kind of "end of history"- style in many of the arguments he puts forward. That the M-form is the natural consequence of the emergence of scientific management and that it could be no other way in the future. While not necessarily explicitly, it is clear that this thinking underlies his reasoning. Ultimately, what we know now, as Richard Langois has argued, is that the rapid adoption of the M-from was particular for that point in time. Later developments include a movement away from that form, probably because the insitutional context that made the M-form the preferred structure has changed drastically.

This point notwithstanding, it is still a classic and worth reading for people who are interested in business history or business administration.

[Haotian Xu · Rating 3 out of 5]

The short and sweet: I didn't like this book. But I think if I had grown up in a different generation that didn't just witness the largest global financial meltdown in history, I might have actually enjoyed what it had to say.

[Eric · Rating 4 out of 5]

Chandler again champions the professional manager, arguing that empire building entrepreneurs lacked the "talents and temperament" to create the structure necessary for the empire to thrive. He also dismisses stockholders and the board of directors as generally uninterested in and able to exercise only negative influence on corporate strategy and structure.

These professionals managers, Chandler writes, "did not control or even own large blocks of stock in the company that they managed"—yet, "their companies became their careers, their callings, and their lives." Economists writing long after this text instigated a revolution in the former, causing CEOs to become among the largest individual shareholders in their companies. This and other influences have encouraged managers to view the firm not as a calling or a life (though those promoted up the ranks naturally still do), but as a vehicle for the interests of diversified shareholders.

Managerial entrenchment undoubtedly breeds inefficient investments, but Chandler's histories always raise the question whether American industry could have been built with modern corporate governance. "A self-generating force for the growth of the industrial enterprise within a market economy like the United States has been the drive to keep resources effectively employed." Today, do the stock market and the market for corporate control over-discipline managers and scare them away from relentlessly employing—rather than returning—the firm's resources?

[Will Bell · Rating 3 out of 5]

That was quite a tedious slog. However it was moderately useful. It could have been half as long and still retained all the insight.

[John]

He says it concisely, “structure follows strategy".

[Maurice Halton · Rating 3 out of 5]

'Strategy followed Structure' - or was it the other way round?

[Kyle]

Kyle