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Recent Developments in American Business Administration and their Conceptualization

Published online by Cambridge University Press:  24 July 2012

Alfred D. Chandler Jr.  and
Fritz Redlich
Alfred D. Chandler Jr.
Affiliation:
Associate Professor of History atMassachusetts Institute of Technology
Fritz Redlich
Affiliation:
At Harvard University
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Abstract

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The following article appeared in the March, 1961, issue of the Weltwirt-Schaftliche Archiv, published since 1913 by the Institut für Weltwirt-Schaft an der Universität Kiel. Because of the pertinence and broad interest of the study, publication in America seemed highly desirable. Reproduction rights were graciously extended by Dr. Anton Zottmann, editor of the Archiv, and by the authors. The article is printed here directly from galley proof supplied by the Archiv. Commentaries by American scholars will be published in a subsequent issue of the Business History Review.

Information

Type
Research Article
Information
Business History Review , Volume 35 , Issue 1 , Spring 1961 , pp. 1 - 27
Copyright
Copyright © The President and Fellows of Harvard College 1961

References

1 Harbison, Frederick, “Entrepreneurial Organization as a Factor in Economic Development,” The Quarterly Journal of Economics, vol. LXX (Cambridge, Mass., 1956), pp. 364 ff.Google Scholar

2 Ibid., p. 365.

3 Redlich, Fritz, “Unternehmungs- und Unternehmergeschichte,” in: Handwörterbuch der Sozialwissenschaften, Lfg. 26 (Stuttgart, Tübingen and Göttingen, 1959), p. 540Google Scholar.

4 The following section is based on a historical analysis of the changing corporate structure and strategy in the United States. It includes case studies of organizational innovations made by du Pont, General Motors, Jersey Standard, and Sears, Roebuck; and also a broader investigation of the experience of more than seventy of the largest industrial and transportation companies in the United States. Preliminary results of this investigation can be found in Chandler, Alfred D. Jr., “Management Decentralization: An Historical Analysis,” Business History Review, vol. XXX (Boston, Mass., 1956), pp. 111Google Scholar ff. Chandler, “The Beginnings of ‘Big Business’ in American Industry,” ibid., vol. XXXIII (1959), pp. 1 ff. Chandler, , “Development, Diversification and Decentralization,” in: Postwar Economic Trends in the United States, ed. by Freeman, Ralph E., American Project Series, Center of International Studies, Massachusetts Institute of Technology (New York, 1960), pp. 235Google Scholar ff.

5 The term multi-product firm will be used in this paper to refer to one making quite different product lines, each with its own set of by-products, for quite different markets. An example of such a multi-product firm would be a large chemical company which has such different lines as plastics, film, textile fibers, polychemicals, explosives, paints, pigments, rubber products, electro-chemicals, and photographic products.

6 Cochran, Thomas C., The Railroad Leaders, 1845–1890: the Business Mind in Action (Cambridge, Mass., 1953)Google Scholar, chaps. 5–9. Chandler, Alfred D. Jr., Henry Varnum Poor — Business Editor, Analyst, and Reformer (Cambridge, Mass., 1956)CrossRefGoogle Scholar, chap. 7.

7 Morris, Ray, Railroad Administration, Appleton's Railway Series (New York and London, 1910)Google Scholar, chaps. 2–3.

8 Ibid., chap. 4. The following is based on a survey of the annual and other reports of the Pennsylvania Railroad and the New York Central system.

9 This same type of organization was developed by the single-line firm, particularly large oil companies, whose activities had become world-wide — or multi-regional — in scope. The head of each regional unit usually managed the several functions of the business and operated quite autonomously within the framework set by the central office.

10 Twenty-ninth Annual Report of General Motors Corporation, Year Ended December 31, 1937, Prepared for Presentation to the Stockholders at the Annual Meeting to Be Held in Wilmington, Delaware, Tuesday, April 26, 1938, p. 37.

11 Chandler, Henry Varnum Poor, pp. 147 ff. Pennsylvania Railroad Company, Organization for Conducting the Business of the Road, Adopted December 26, 1857 (Philadelphia, 1858)Google Scholar.

12 “Minutes of the Meeting of the ‘Board’, Appointed by the Resolution of the Illinois Central Board of Directors, May 15, 1889, Held at the General Offices in Chicago, Friday, June 21, 1889, 11 A.M.,” from the Illinois Central Railroad Company's files.

13 Chandler, Henry Varnum Poor, pp. 137 ff., 145 ff.

14 Particularly valuable in this connection is the Annual Report of the Louisville and Nashville Railroad for the Year Ending June 30, 1874, written by Albert Fink.

15 Ray Morris, Railroad Administration, has a chapter entitled “Control Through Statistics.”

16 Some of the large companies which had systematically worked out their structures before World War I included United States Rubber Company, International Harvester, American Smelting and Refining, Westinghouse, Allis Chalmers, General Electric, and Bethlehem Steel.

17 A brief examination of the first volumes of the journal, Management and Administration (New York)Google Scholar, which began publication in 1921 is useful in this connection. So also is Marshall, Leon Carroll, Business Administration (Chicago, Ill., 1921)Google Scholar, one of the best anthologies of business literature. Two of the best early books on structure are Robb, Russell, Lectures on Organization (privately printed [Boston?], 1911)Google Scholar, and Kimball, Dexter S., Principles of Industrial Organization (New York, 1913), p. 22Google Scholar.

18 Report of the Commissioner of Corporations on the Beef Industry (Washington, D.C., 1905), p. 21Google Scholar.

19 Donaldson Brown, “Pricing Policy in Relation to Financial Control,” a series of articles appearing in Management and Administration in the spring of 1924. Also C. S. Mott, “Organizing a Great Industrial,” ibid., pp. 527 ff.; Bradley, Albert, “Setting Up a Forecasting Program,” American Management Association, Annual Convention Series No. 41 (March, 1926)Google Scholar; and Donaldson Brown, “Decentralized Responsibilities With Centralized Coordination,” ibid., No. 57 (Feb., 1927).

20 Again the articles in the early numbers of Management and Administration are particularly revealing.

21 For the origin and history of this phrase see Thomas, Henry T., Dictionary of Latin Quotations (London, 1859), p. 209Google Scholar.

22 The following is a schematic somewhat oversimplified sketch.

23 Redlich, Fritz, “Innovation in Business,” The American Journal of Economics and Sociology, vol. X (New York, 1950/1951), pp. 285Google Scholar ff.

24 Jenks, Leland, “Some Early Phases of the Management Movement,” Administrative Management Quarterly, vol. V (Ithaca, New York, 1960/1961), p. 424Google Scholar.

25 Ralph, W. and Hidy, Muriel E., History of Standard Oil Company (New Jersey), vol. I, Pioneering in Big Business 1882–1911 (New York, 1955), p. 62Google Scholar.

26 Evans, G. Heberton Jr., “Business Entrepreneurs, Their Major Functions and Related Tenets,” The Journal of Economic History, vol. XIX (New York, 1959), pp. 250Google Scholar ff.

27 Hartmann, Heinz, “Managers and Entrepreneurs: A Useful Distinction?”, Administrative Science Quarterly, vol. III (Ithaca, New York, 1958/1959), pp. 429Google Scholar ff.