User:Gscott2844/Alfred D. Chandler Jr.

The Visible Hand

Chandler's most highly regarded work was The Visible Hand: The Managerial Revolution in American Business (1977). At this point in time, the American business world was under the assumption that the economy followed a laissez-faire model, meaning the market was controlled by larger economic forces and did not require governmental intervention but that businesses and consumers would operate out of self-interest. Whenever there was a need, Adam Smith believed that an entrepreneur would not only identify this need but would seek to fulfill it at a price that the consumer deemed as reasonable. While some business professionals interpreted Smith's logic to understand the economy from a wholistic point of view, many others understood it quite literally as they saw it as a need for several entrepreneurs to create businesses of their own in order to fulfill different needs presented by the market. This ultimately prompted the beginning of the small business era which consisted of a multitude of "mom-and-pop" shops opening up nationwide, each meeting a different need presented by society.

Instead of replacing this economic methodology, Chandler sought to extend it by arguing that managerial firms evolved in order to take advantage of productive techniques available after the rail network was in place. As a result of the 2nd Industrial Revolution, technology was causing business processes to increase in efficiency which allowed firms to expand its operations into several functional areas at a time. For example, railroad companies used to primarily fulfill the need of transportation by laying down tracks in specific regions of the country. Once inventions such as the assembly line, steam power, and the telegraph emerged, the supply for railroads finally met its demand and the industry boomed financially as operations were optimized. This led to a surge in both horizontal and vertical integration as railroad companies were granted the ability to expand both on a financial and operational level. Instead of a need that revolved around goods and services from the consumer's end, there was a massive need for coordination and systemization from the corporation's end now that the complexity of these larger firms began to increase. The firms created the "managerial class" in America because they needed to coordinate the increasingly complex and interdependent system. According to Steven Usselman, this ability to achieve efficiency through coordination explained the high levels of concentration in modern American industry. In a similar fashion to laissez-faire, businesses saw a need and sought to fulfill it, thus creating the modern corporation. While this ended up driving many "mom-and-pop" storefronts to bankruptcy, it ultimately grew the economy of the United States by creating greater wealth and opportunity for millions of Americans today. Chandler has never argued that the management evolution brought the storm of multifunctional corporations to existence (that was technology); however, it did open the floodgates as it optimized the integrations that were necessary in order for America to grow.

Influence

Alfred Chandler has drawn many raving fans over the past century due to his accomplished work that eventually led to the genesis of the topic of business history. Along the thousands of business historians that would not exist without his work, there are several critics who seek to extend Chandler's arguments rather than replace it. Much like Chandler himself, historians such as Wallace Williams and Milorad Novicevic are noticing another case of evolution that is taking place in modern business America, one that is founded upon a need for systemization that results in globalization. Due to recent technological advances such as the internet and cloud networking, corporations have the capacity to expand even further into regions and areas unknown, thus concentrating the economy more than before. As a result of Chandler's findings, we are now in a much better situation now that we possess the knowledge and documentation of what used to be in the business realm, in order to discover what is yet to come.

In sociology, prior to Chandler's research, some 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 influenced organizational sociologists' work since the late 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.

Bibliography

• Chandler, Alfred D. "The beginnings of 'big business' in American industry" Business History Review 33#1 (1959): 1-31.
• Chandler, Alfred D. Jr., 1962/1998, Strategy and Structure: Chapters in the History of the American Industrial Enterprise (MIT Press).
• Chandler, Alfred D. Jr. ed. 1964, Giant Enterprise: Ford, General Motors, and the Automobile Industry. Sources and Readings (Harcourt, Brace & World).
• Chandler, Alfred D. "The railroads: pioneers in modern corporate management" Business History Review 39#1 (1965): 16-40. in JSTOR

References

13. McKiernan, Peter, 1997, Strategy past; strategy futures, Long Range Planning, vol. 30, no. 5, p. 792

14. Neil Fligstein, "Chandler and the Sociology of Organizations," Business History Review, Summer 2008, Vol. 82 Issue 2, pp 241-250

15. Novicevic, M. M., Buckley, M. R., Clayton, R. W., Moeller, M., & Williams, W. A. (2009). Commemorating chandler through the lens of his revisionists. Journal of Management History, 15(3), 313-322. doi:https://doi.org/10.1108/17511340910964162

16. Mathews, D. (2000). The Visible Hand? Economics of Alfred Chandler. Essays in Economic and Business History, Coastal Georgia Community College. https://doi.org/2000

17. F. A. (n.d.). Alfred Chandler's Second Industrial Revolution. The American Interest. Retrieved August 1, 2015, from https://www.the-american-interest.com/2015/08/01/alfred-chandlers-second-industrial-revolution/