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The Emergence of Managerial Capitalism

Published online by Cambridge University Press:  11 June 2012

Alfred D. Chandler Jr.
Affiliation:
Isidor Straus Professor of Business History at Harvard Business School.

Abstract

In this article, Professor Chandler compares and contrasts the emergence of managerial capitalism in the United States, Great Britain, Germany, and Japan. Though he observes that large firms tended to evolve according to a common pattern, he is equally impressed by international differences in the pace, timing, and character of change.

Type
Articles
Copyright
Copyright © The President and Fellows of Harvard College 1984

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References

1 de Roover, Raymond, The Rise and Decline of the Medici Bank, 1397–1494 (Cambridge, 1963), 87, 91.Google Scholar The earlier Peruzzi bank had branches managed by employees (fattore). “However, all branches of major importancewere managed by partners” (80).

2 Chandler, Alfred D. Jr, The Visible Hand (Cambridge, 1977)Google Scholar, chaps. 3–6 for the coming of such hierarchies to manage railroad and telegraph systems, and chap. 7 for their use in the management of mass distribution. Pages 231–32 describe the organization of Sears Roebuck.

3 Details and documentation are given in a case by Chandler, Alfred D. Jr, “The Standard Oil Company—Combination, Consolidation and Integration,” in The Coming of Managerial Capitalism: A Casebook on the History of American Economic Institutions, eds. Chandler, Alfred D. Jr, and Tedlow, Richard S. (Homewood, Ill., 1985)Google Scholar.

4 Alford, B.W. E., W.D. & H.O. Wills and the Development of the U.K. Tobacco industry (London, 1973), 143–49.Google Scholar Also Chandler, Visible Hand, 249–58.

5 Kahu, Sachio, “The Development and Structure of the German Coal-Tar Dyestuffs Firms,” in Development and Diffusion of Technology, ed. Okochi, Akio and Uchida, Hoshimi (Tokyo, 1979), 78.Google Scholar

6 This statement is based on a review of histories of and internal reports and pamphlets by the leading rubber companies.

7 Livesay, Harold, Andrew Carnegie and the Rise of Big Business (Boston, 1975), 102–6, 155.Google Scholar When in 1873 Carnegie opened the first works directed entirely to producing rails by the Bessemer process, he reduced cost to $56.64 a ton. By 1895, with increase in sales, the costs fell to $25 a ton.

8 Haber, L. F., The Chemical Industry during the Nineteenth Century (Oxford, 1958), 92.Google Scholar

9 Chandler, Visible Hand, 302–14.

10 Nevins, Allan, Ford: The Times, the Man, the Company (New York, 1954), chaps. 18–20(esp. 473, 489, 511)Google Scholar; Chandler, Alfred D. Jr, Giant Enterprise: Ford, General Motors and the Automobile Industry (New York, 1980), 26.Google Scholar

11 Moss, Scott J., An Economic Theory of Business Strategy (New York, 1981), 110–11.Google Scholar

12 Chandler, Visible Hand, 299–302, 391–402.

13 Standard Oil only began to make an extensive investment in distribution after the formation of the Trust and the resulting rationalization of production and with it the great increase in throughput. Williamson, Harold F. and Daum, Arnold R., The American Petroleum Industry, The Age of Illumination, 1859–1899 (Evanston, Ill., 1959), 687–96.Google Scholar For investment in gasoline pumps and service stations see Williamson, Harold F. et. al. The American Petroleum Industry: The Age of Energy, 1899–1959 (Evanston, Ill., 1963), 217–30, 466–87, 675–86.Google Scholar

14 Chandler, Visible Hand, 402–11.

15 The analysis of these differences is based on detailed research by the author of available histories, company and government reports, business journals, and internal company documents dealing with these many enterprises.

16 W. S. and Woytinsky, E. S., World Population and Production (New York, 1953), 383–85.Google Scholar

17 Chandler, Visible; Hand, Chap. 10.

18 Byatt, I. C. R., The British Electrical Industry, 1875–1914 (Oxford, 1979), 150.Google Scholar

19 For Nobel, see Reader, W. J., Imperial Chemical Industries: A History, (London, 1970), 1: 388–94Google Scholar; for Lever Brothers, see Wilson, Charles H., History of Unilever (London, 1954), 2:302, 345.Google Scholar