¹ Rostow, Walt Whitman, The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge, 1960).Google Scholar

² Fogel, Robert William, The Union Pacific Railroad: A Case in Premature Enterprise (Baltimore, 1960).Google Scholar

³ Sass, Steven A., Entrepreneurial Historians and History: Leadership and Rationality in American Economic Historiography, 1940–1960 (New York, 1986).Google Scholar

⁴ Barnard, Chester I., The Functions of the Executive (Cambridge, Mass., 1938). In the thirtieth-year-edition—the 20th printing—Kenneth R. Andrews described the volume as “the most thought-provoking book on organization and management ever written by a practicing executive” (p. xxi).Google Scholar

⁵ In her Guide to Business History: Materials for the Study of American Business History and Suggestions for Their Use (Cambridge, Mass., 1948), Henrietta M. Larson noted, “It is significant that there is no business history of any great integrated concern” (p. 166). Between 1948 and 1960 several historians published studies of large integrated firms, but that area of work was just beginning to take shape in the early sixties.Google Scholar

⁶ Especially important were Hidy, Ralph W. and Hidy, Muriel E., Pioneering in Big Business, 1882–1911: History of Standard Oil Company (New Jersey) (New York, 1955);Google ScholarGibb, George Sweet and Knowlton, Evelyn H., The Resurgent Years, 1911–1927: History of Standard Oil Company (New Jersey) (New York, 1956);Google ScholarLarson, Henrietta M. and Porter, Kenneth Wiggins, History of Humble Oil & Refining Company: A Study in Industrial Growth (New York, 1959);Google Scholar and Williamson, Harold F. and Daum, Arnold R., The American Petroleum Industry: The Age of Illumination, 1859–1899 (Evanston, 1959).Google ScholarNevins, Allan had also published a number of studies that dealt with corporate enterprise, including (with Frank Ernest Hill), Ford: The Times, The Man, The Company (New York, 1954);Google Scholar and Ford: Expansion and Challenge, 1915–1933 (New York, 1957), with Frank Ernest Hill as co-author.Google Scholar

⁷ See Kirkland, Edward C., “The Robber Barons Revisited,” American Historical Review, 66 (10 1960), pp. 68–73;CrossRefGoogle Scholar and Kolko, Gabriel, “The Premises of Business Revisionism,” Business History Review, 33 (Autumn 1959), pp. 330–44.CrossRefGoogle Scholar

⁸ See, for example, Burns, Arthur R., The Decline of Competition (New York, 1936);Google ScholarStocking, George W. and Watkins, Myron W., Monopoly and Free Enterprise (New York, 1951);Google ScholarBain, J. S., Barriers to New Competition (Cambridge, Mass., 1956);CrossRefGoogle ScholarWhitney, Simon N., Antitrust Policies, 2 vols. (New York: The Twentieth Century Fund, 1958);Google ScholarLindahl, Martin L. and Carter, William A., Corporate Concentration and Public Policy (Englewood Cliffs, 1959);Google ScholarLoescher, Samuel M., Imperfect Collusion in the Cement Industry (Cambridge, Mass., 1959);CrossRefGoogle ScholarKaysen, Carl and Turner, D. F., Antitrust Policy (Cambridge, Mass., 1959);CrossRefGoogle ScholarMason, Edward S., ed., The Corporation in Modern Society (Cambridge, Mass., 1959).CrossRefGoogle Scholar

⁹ Stocking, George W. and Watkins, Myron W., Cartels or Competition? The Economics of International Controls by Business and Government (New York, 1948).Google Scholar

¹⁰ Burns, The Decline of Competition, pp. 329–71.Google Scholar

¹¹ Bain, Barriers to New Competition, pp. 145, 148, 151–56, 169–71.Google Scholar

¹² Ibid., pp. 144, 148–56, 266–73; Burns, The Decline of Competition, pp. 11–17.

¹³ Chamberlin, Edward, The Theory of Monopolistic Competition: A Re-orientation of the Theory of Value (Cambridge, Mass., 1933);Google Scholar and Robinson, Joan, The Economics of Imperfect Competition (London, 1933).Google Scholar

¹⁴ As Solow, Robert A. comments, “Theorists have followed [J. R.] Hicks' advice. They have dealt with the problem by disregarding it.” “Neoclassical Economics in Perspective” in Samuels, Warren J., ed., The Chicago School of Political Economy (East Lansing, 1976), p. 47.Google Scholar

¹⁵ Edwards, Richard, “Stages in Corporate Stability and the Risks of Corporate Failure,” this JOURNAL, 35 (06 1975), pp. 428–57.Google Scholar

¹⁶ Scherer, Frederick M., Industrial Market Structure and Economic Performance (Boston, 1980), pp. 45–50, carefully reviews the evidence and concludes (p. 49) that “the long-run trend has clearly been one of increasing aggregate concentration…”Google Scholar

¹⁷ My reference is to the Gary dinners, at which steel industry executives attempted to fix prices (with some success) without violating the antitrust laws (with no success).Google Scholar

¹⁸ For an introduction to the general conclusion suggested by this literature, see Galiman's, Robert chapter, “The Pace and Pattern of Amencan Economic Growth,” in Davis, Lance E. et al. , American Economic Growth: An Economists' History of the United States (New York, 1972), pp. 15–60;Google Scholar and Abramovitz, Moses and David, Paul A., “Reinterpreting Economic Growth: Parables and Realities,” American Economic Review, 63 (05 1973), pp. 428–39.Google Scholar See also, Kendrick, John W., Productivity Trends in the United States (Princeton, 1961);Google ScholarKuznets, Simon S., Modern Economic Growth: Rate, Structure and Spread (New Haven, 1966);Google ScholarDenison, Edward F., Accounting for United States Economic Growth, 1929–1969 (Washington, D.C., 1974).Google Scholar

¹⁹ Kuznets, Simon, “Notes on the Pattern of U.S. Economic Growth,” in Edwards, Edgar O., ed., The Nation's Economic Objectives (Chicago: University of Chicago Press, 1964), pp. 15–35.Google ScholarSolow, Robert M., “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, 39 (08 1957), pp. 312–20.CrossRefGoogle Scholar

²⁰ Chandler, Alfred D. Jr, Strategy and Structure: Chapters in the History of the Industrial Enterprise (Cambridge, Mass., 1962).Google ScholarMcCraw, Thomas discusses Chandler's work in “The Challenge of Alfred D. Chandler, Jr.: Retrospect and Prospect,” Reviews in American History, 15 (03 1987), pp. 160–78.CrossRefGoogle Scholar The best guide to the work done in this school can be found in the citations in Chandler, Alfred D. Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977).Google Scholar

²¹ Chandler, Strategy and Structure, pp. 11–12.Google Scholar

²² This theme is introduced in Strategy and Structure, developed more fully and forcefully in The Visible Hand, and pressed very close to its limit in the chapters the author graciously allowed me to read from his forthcoming Scale and Scope: The Dynamics of Industrial Enterprise, A History, 1880s–1940 (Cambridge, Harvard University Press).Google Scholar

²³ See Marns, Robin and Mueller, Dennis C., “The Corporation, Competition, and the Invisible Hand,” Journal of Economic Literature, 18 (03 1980), pp. 32–63;Google ScholarWilliamson, Oliver E., “The Modem Corporation: Origins, Evolution, and Attributes,” Journal of Economic Literature, 19 (12 1981), pp. 1537–68;Google ScholarWilliamson, Oliver E., Markets and Hierarchies: Analysis and Antitrust Implications: A Study in the Economics of Internal Organization (New York, 1975).Google Scholar Especially important was Coase, Ronald H., “The Nature of the Firm” Economica, n.s., 4 (1937), pp. 386–405;CrossRefGoogle Scholar reprinted in Stigler, George J. and Boulding, Kenneth E., Readings in Price Theory (Homewood, 1952), pp. 331–51Google Scholar

²⁴ The older theory of the firm assumed that all competitors would respond to market signals immediately and without friction; the new theory assumed that some actors would have a better grasp of the relevant universe than others and that the “rationality” of all of the decision-makers would be bounded—“limited” —in ways that would make cooperation among functionally specialized units efficient. Information would be “impacted,” that is, held by one of the parties to a contract and not available to others; impacted or idiosyncratic information has place- and time-related aspects and can thus be known by one organization or individual and not by others. Opportunism has been defined as self-interest with a touch of guile, and it helps explain why economic actors do not all respond to market signals in the same way; it also explains why organizations need leadership in order to achieve coordinated action.Google Scholar

²⁵ In brief, the new version of the theory explained why the transactions costs between the separate firms were likely to be higher than the costs of performing the same functions within an integrated firm. A single firm could, for instance, use its knowledge of the entire production/distribution process to keep inventories at an optimal level. Functional specialization within the firm—an aspect of bounded rationality—would also contribute to greater efficiency. Markets would, then, be less efficient than a hierarchy.Google Scholar

²⁶ The Chicago School's critique of the antitrust studies can be seen as a defense of horizontal combination comparable in some regards to Williamson's establishment of a rationale for vertical integration. But what the Chicago School developed was a critique, not a new theory or rationale for the large corporation. Weston, J. Fred and Ornstein, Stanley I., eds., The Impact of Large Firms on the U.S. Economy (Lexington, 1973);Google ScholarBrozen, Yale, ed., The Competitive Economy: Selected Readings (Morristown, 1975).Google Scholar See also the comment by Martin, David Dale, “Industrial Organization and Reorganization,” in Samuels, Warren J., ed., The Chicago School, pp. 295–310. In my judgment this debate merely confirmed the conclusion suggested by the New Business History: over the long term the negative allocative effects of concentration and market control (whatever they were) have been less significant to the economy than the operational efficiencies achieved by large corporations.Google Scholar

²⁷ These themes are developed at greater length in Galambos, Louis and Pratt, Joseph, The Rise of the Corporate Commonwealth: U.S. Business and Public Policy in the Twentieth Century (New York, 1988). The best evidence that the results have, on balance, been favorable is provided by the growth and productively studies previously cited.Google Scholar

²⁸ Cheape, Charles W., Family Firm to Modern Multinational: Norton Company, a New England Enterprise (Cambridge, Mass., 1985). The total factor productivity of the industry group in which abrasives was included increased faster than the average for all manufacturing between 1899 and 1953;Google ScholarKendrick, Productivity Trends in the United States, p. 152.Google Scholar As Brozen's figures show, the abrasives industry group's profit rate between 1936 and 1940 was the highest (24.9 percent of book net worth) among the highly concentrated industries; Brozen, Yale, “Concentration and Profits: Does Concentration Matter?” in Weston, and Orenstein, , eds., The Impact of Large Firms on the U.S. Economy, pp. 63–64.Google Scholar

²⁹ Graham, Margaret B. W., RCA and the VideoDisc: The Business of Research (New York, 1986).Google Scholar

³⁰ Schumpeter, Joseph A., Capitalism, Socialism, and Democracy (New York, 1942), pp. 87–106;Google ScholarGalbraith, John Kenneth, American Capitalism: The Concept of Countervailing Power (Boston, 1952), p. 91.Google Scholar

³¹ Schumpeter, Joseph A., The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle (New York, 1961);Google Scholar see also Sass, Steven A., Entrepreneurial Historians and History.Google Scholar

³² Reich, Leonard S., The Making of American Industrial Research: Science and Business at GE and Bell, 1876–1926 (New York, 1985).Google Scholar

³³ Rosenberg, Nathan, Inside the Black Box: Technology and Economics (New York, 1982), p. 56.Google Scholar

³⁴ Ibid., pp. 55–80; Hollander, Samuel, The Sources of Increased Efficiency: A Study of DuPont Rayon Plants (Cambridge, Mass., 1965). Here too there were trade-offs.Google Scholar For discussions of explicit trade-offs between market control and innovation, see Cheape, Family Firm to Modern Multinational;Google Scholar and Reich, Leonard S., “Industrial Research and the Pursuit of Corporate Security: The Early Years of Bell Labs,” Business History Review, 54 (Winter 1980), pp. 504–29.CrossRefGoogle Scholar

³⁵ Lawrence, Paul R. and Dyer, Davis, Renewing American Industry: Organizing for Efficiency and Innovation (New York, 1983), esp. pp. 1–16, 238–90.Google Scholar

³⁶ Hounshell, David A. and Smith, John K., Science and Corporate Strategy: DuPont R&D, 1902–1980 (Cambridge University Press, forthcoming).Google Scholar

³⁷ Richard S. Rosenbloom and Michael A. Cusumano emphasize “strategic consistency,” organizational stability, and leadership by “senior executives with high levels of theoretical understanding …,” in accounting for the success many Japanese firms have achieved in managing innovation; “Technological Pioneering and Competitive Advantage: The Birth of the VCR Industry,” Calfornia Management Review, 29 (Summer 1987), pp. 51–76.Google Scholar The best introductions the internal politics of innovation in a large corporation are Wise, George, Whitney, Willis R., General Electric, and the Origins of U.S. Industrial Research (New York, 1985);Google ScholarReich, The Making of American Industrial Research; and Graham, RCA and the VideoDisc.Google Scholar

³⁸ The portfolio managerial style left the traditional concept of innovation out of the entrepreneurial function, much as Chandler had when he transformed the Schumpeterian theory. For a popular critique of portfolio management, see Peters, Thomas J. and Waterman, Robert H. Jr, In Search of Excellence: Lessons from America's Best-Run Companies (New York, 1982).Google Scholar

³⁹ See, for example, Ouchi, William G., Z, Theory: How American Business Can Meet the Japanese Challenge (Reading, 1981);Google ScholarSato, Kazuo and Hoshino, Yasuo, eds., The Anatomy of Japanese Business (Armonk, 1984), esp. pp. 246–74, on “Productivity and Quality Control: Case Studies”;Google ScholarThurow, Lester C., The Management Challenge: Japanese Views (Cambridge, Mass., 1985), pp. 18–28.Google Scholar

⁴⁰ See, for instance, Lawrence and Dyer, Renewing American Industry, esp. pp. 40–51, 82, 270–74.Google Scholarlacocca, Lee (with William Novak), lacocca: An Autobiography (New York, 1984), pp. 175–76, 236–38, 303–13, 321–22.Google Scholar

⁴¹ See, for example, Kolko, Gabriel, The Triumph of Conservatism: A Reinterpretation of American History, 1900–1916 (New York, 1963);Google Scholar and Railroads and Regulation, 1877–1916 (Princeton, 1965).Google Scholar

⁴² See, for example, Caves, Richard E., Air Transport and its Regulators: An Industry Study (Cambridge, Mass., 1962);Google ScholarNoll, Roger G., Peck, Merton J., and McGowan, John J., Economic Aspects of Television Regulation (Washington, D.C., 1973);Google ScholarBreyer, Stephen, Regulation and Its Reform (Cambridge, Mass., 1982);Google ScholarNoll, Roger G. and Owen, Bruce M. et al. , The Political Economy of Deregulation: Interest Groups in the Regulatory Process (Washington, D.C., 1983).Google Scholar The literature is reviewed, briefly, in Derthick, Martha and Quirk, Paul J., The Politics of Deregulation (Washington, D.C., 1985), pp. 8–13, 19–27, 35–39.Google Scholar

⁴³ See, for instance, Brock, Gerald W., The Telecommunications Industry: The Dynamics of Market Structure (Cambridge, Mass., 1981), esp. pp. 12, 20;Google ScholarMacAvoy, Paul W., The Economic Effects of Regulation: The Trunkline Railroad Cartels and the Interstate Commerce Commission before 1900 (Cambridge, Mass., 1965), pp. v, 201, 204;Google ScholarBreyer, Regulation and Its Reform, p. 10.Google Scholar