Strategy and structure: Chapters in the history of the American industrial enterprise

Citation: Alfred D. Chandler (1962) Strategy and structure: Chapters in the history of the American industrial enterprise.
Internet Archive Scholar (search for fulltext): Strategy and structure: Chapters in the history of the American industrial enterprise
Tagged: History "History" is not in the list (Anthropology, Arts and Literarure, Astronomy, Biology, Business, Chemistry, Clinical Research, Computer Science, Economics, Education, ...) of allowed values for the "Subject" property. (RSS) sociology (RSS), organization theory (RSS), business (RSS)

Summary

Chandler is a historian of business and strategy and structure is framed around four historical case studies and additional context that are designed to argue for a model of organizational structure following organizational strategy. The book focuses on the examples of du Pont, General Motors, Standard Oil of New Jersey, and Sears.

Chandler's core argument is that a large number of companies adopted a multi-divisional form (M-Form) as the form of organizations independently of each other and without coordination because they had become to adopt an business strategy that required that organizational form.

Chandler defines strategy as the determination of the basic long term goals and objectives and the adoption of courses of action and the allocation of resources necessary for carrying out goals. He defines structure as the design of the organization through which the business is administered including the lines of authority and communication and the data that flows through these lines.

Chandler argues that every group in his study had, often driven by pressures of others, followed through a set of steps independently of each other:

• Gathered resources from employees and resources through growth or acquisition.
• Established new structures in order to increase efficiency.
• Adopted a growth strategy that involved diversification into new markets with new products in order to overcome limits in the initial market.
• Created the (at that point new) form to management that was the M-Form in order to manage the new new large diversified companies in a manner that was more efficient than a simple holding company.

The results were set of a structure which were different in details but fundamentally similar as well. Chandler suggested that these changes and the needs for this process (and the similar outcome) was driven by a series of technological and market changes that included the growth of transportation and communication networks that made increased coordination possible (and profitable) and necessary to compete.

In a way of supporting his basic structure follows strategy argument, he argued that the forms themselves were a product of a particular strategic context of management.

Theoretical and Practical Relevance

Consulting and management scholars have made frequent use of Chandler. They argue that firms should choose a basic design for an organization and modify the design to fit changing strategic situations.

Although Chandler has not been hugely influential with historials, he has been wildly influential in both business school and sociology departments. He continues to be a core citation in organizational theory more broadly and perhaps the core citation in strategy, although the very influential work by Michael Porter has taken taht field in a different direction.

• Proven Models business strategy description of Chandler