The Managerial Enterprise
In my opinion, the model of the large-scale ‘managerial enterprise’ as put forward by the famous business historian Alfred Chandler has not been followed completely by all of the world’s leading economies. This essay will therefore be structured as follows: first I will briefly explain Chandler’s theory of the large-scale managerial enterprise, putting it into context of time and place and pointing out the major flaws of his theory. Then, I will attempt to justify my opinion by using the Japanese enterprise system, paying attention to the role of external influences such as the government and the availability of finance, as well as the role of business networks. Then, I will try to explain that Chandler’s theories of ‘personal capitalism’ and entrepreneurship are not inherently British features, but are also displayed in businesses in countries such as America. I will also use business examples to demonstrate that businesses which display such features are not doomed for competitive disadvantage. Finally, using the steel industry as an example, I will show how large-scale managerial enterprises are no longer competitive in modern business.
Alfred Chandler (1990) defines the managerial enterprise as, “Large industrial concerns in which operating and investment decisions are made by a hierarchy of salaried managers governed by a board of directors.” (Chandler, 1990: 132).
Chandler argued that the large managerial enterprise was the driving force of economic growth and transformation in any country. These large-scale managerial enterprises were formed in the United States and Germany before the First World War, in Britain in the 1920s and 1930s and in France after the Second World War (Abe, 2009). Advances in technology and communication enabled capital intensive firms to engage in mass production (Helper and Sako, 2010). Mass production subsequently led to economies of scale and firms could therefore produce more at much lower costs per unit, provided that
Alfred Chandler (1990) defines the managerial enterprise as, “Large industrial concerns in which operating and investment decisions are made by a hierarchy of salaried managers governed by a board of directors.” (Chandler, 1990: 132).
Chandler argued that the large managerial enterprise was the driving force of economic growth and transformation in any country. These large-scale managerial enterprises were formed in the United States and Germany before the First World War, in Britain in the 1920s and 1930s and in France after the Second World War (Abe, 2009). Advances in technology and communication enabled capital intensive firms to engage in mass production (Helper and Sako, 2010). Mass production subsequently led to economies of scale and firms could therefore produce more at much lower costs per unit, provided that
References: * Abe, E. & Fitzgerald, R. (1995) The Origins of Japanese Industrial Power London: Frank Cass & Co. Ltd. * Abe, E. (2009). ‘Alfred Chandler’s Model of Business Enterprise Structure and the Japanese-Style Enterprise System: Are They Compatible?’ * Audretsch, D * Casson, M. & Godley, A. (2007). ‘Revisiting the Emergence of the Modern Business Enterprise: Entrepreneurship and the Singer Global Distribution System’ Journal of Management Studies, 44 (7) :1064-1077 * Chandler, A * Coopey, R. & Lyth, P. (2009). Business in Britain in the Twentieth Century :Oxford University Press. * Fruin, W. M. (1992). The Japanese Enterprise System: Competitive Strategies and Corporate Structures Oxford: Clarendon * Helper, S * Herrigel, G. (2010). Manufacturing Possibilites: creative action and industrial recomposition in the United States, Germany and Japan. Oxford: Oxford University Press. * Hutton, W. (1996). The State We’re In London: Vintage. * Ciravegna, L. (2011). Porter, Chandler and Transnational Corporations [lecture slides].