Alfred D. Chandler Jr.

Alfred D. Chandler, Jr.
Born	(1918-09-15)September 15, 1918 Guyencourt, Delaware, United States
Died	May 9, 2007(2007-05-09) (aged 88) Massachusetts, United States
Occupation(s)	Academics - Business History and Management

Alfred DuPont Chandler, Jr. (September 15, 1918 – May 9, 2007) was a professor of business history at Harvard Business School and Johns Hopkins University, who wrote extensively about the scale and the management structures of modern corporations. Chandler graduated from Harvard College in 1940. After wartime service in the navy he returned to Harvard to get his Ph.D. in History. He taught at M.I.T. and Johns Hopkins University before arriving at Harvard Business School in 1970. He received a Pulitzer Prize for his work, The Visible Hand: The Managerial Revolution in American Business (1977).

Publications

Chandler used the papers of his ancestor Henry Varnum Poor, a leading analyst of the railway industry and a founder of Standard & Poor's, as a basis for his PhD thesis.

Chandler began looking at large-scale enterprise in the early 1960s. His Strategy and Structure: Chapters in the History of the Industrial Enterprise (1962) examined the organization of E.I. du Pont de Nemours and Company, Standard Oil of New Jersey, General Motors, and Sears, Roebuck and Co. He found that managerial organization developed in response to the corporation's business strategy.

This emphasis on the importance of a cadre of managers to organize and run large-scale corporations was expanded into a "managerial revolution" in The Visible Hand: The Managerial Revolution in American Business (1977) for which he received a Pulitzer Prize. He pursued that book's themes further in Scale and Scope: The Dynamics of Industrial Capitalism, (1990) and co-edited an anthology on the same themes, with Franco Amatori and Takashi Hikino, Big Business and the Wealth of Nations (1997).

Visible Hand

Chandler's masterwork was The Visible Hand: The Managerial Revolution in American Business (1977). His first two chapters looked at traditional owner-operated small business operations in commerce and production, including the largest among them, the slave plantations in the South. Chapters 3-5 summarize the history of railroad management, with stress on innovations not just in technology but also in accounting, finance and statistics. He then turned to the new business operations made possible by the rail system in mass distribution, such as jobbers, department stores and mail order. A quick survey (ch 8) review mass innovation in mass production.The integration of mass distribution and mass production (ch 9-11) led to many mergers and the emergence of giant industrial corporations by 1900. Management for Chandler was much more than the CEO, it was the whole system of techniques and included middle management (ch 11) as well as the corporate structure of the biggest firms, Standard Oil, General Electric, US Steel, and DuPont (ch 13-14). Chandler argued that modern large-scale firms arose to take advantage of the national markets and productive techniques available after the rail network was in place. He found that they prospered because they had higher productivity, lower costs, and higher profits. The firms created the "managerial class" in America because they needed to coordinate the increasingly complex and interdependent system. This ability to achieve efficiency through coordination, not some anti-competitive monopolistic greed by robber barons, explained the high levels of concentration in modern American industry.

Organizational synthesis

The thesis of each of these works is this: during the 19th century the development of new systems based on steam power and electricity created a Second Industrial Revolution, which resulted in much more capital-intensive industries than had the industrial revolution of the previous century. The mobilization of the capital necessary to exploit these new systems required a larger number of workers and managers, and larger physical plants than ever before. More particularly, the thesis of The Visible Hand is that, counter to popular dogma regarding how capitalism functions, administrative structure and managerial coordination replaced Adam Smith's "invisible hand" (market forces) as the core developmental and structuring impetus of modern business.

In the wake of this increase of industrial scale, three successful models of capitalism emerged, which Chandler associated with the three leading countries of the period: Great Britain ("personal capitalism"), the United States ("competitive capitalism") and Germany ("cooperative capitalism.")

Despite the important differences in these three models, the common thread in the successfully developed nations is that the large industrial firm has been the engine of growth in three ways. Its role has been first, to provide focal points for capital and labor on large scales; second, to become the educator whereby a nation learns the pertinent technology and develops managerial skills; third, to serve as the core around which grow medium and small firms that supply and serve it.

Influence

Along with economist Oliver Williamson and historians Louis Galambos, Robert H. Wiebe, and Thomas C. Cochran, Chandler was a leading historian of the organizational synthesis.

Chandler's work was somewhat ignored in history departments, but proved influential in business, economics, and sociology. In sociology, for example, prior to Chandler's research, sociologists assumed there were no differences between governmental, corporate, and nonprofit organizations. Chandler's focus on corporations clearly demonstrated that there were differences, and this thesis has guided organizational sociologists' work since the 1970s. It also motivated sociologists to investigate and critique Chandler's work more closely, turning up instances in which Chandler assumed American corporations acted for reasons of efficiency when they actually operated in a context of politics or conflict.

See also

• Business history
• Second Industrial Revolution

Bibliography

• Chandler, Alfred D., Jr. 1977, The Visible Hand, Cambridge, Mass. and London, England: The Belknap Press of Harvard University Press
• Chandler, Alfred D., Jr. 1962/1998, Strategy and Structure: Chapters in the History of the American Industrial Enterprise. Cambridge, MA: MIT Press
• Chandler, Alfred D., Jr. 1980, Managerial Hierarchies. Harvard University Press
• Chandler, Alfred D., Jr. 1990, Scale and Scope. Cambridge, MA. The Belknap Press of Harvard University Press
• Chandler, Alfred D., Jr. 2005, Inventing the Electronic Century. Harvard University Press
• Chandler, Alfred D., Jr. 2005, Shaping the Industrial Century. Harvard University Press