CHANDLER'S MODEL

Modern Business in Comparative Perspective

Modern Business in Comparative Perspective

Introduction

In this paper, we will discuss the aspects of modern business as influenced by the views of Chandler's Model about the scale and the management structures of modern corporations. Alfred DuPont Chandler was an economist and historian of U.S. corporations. The work of Chandler provides us the opportunity to draw an overview of the impact he has assumed in his work. In this paper, firstly, we discuss the main issues proposed in scale and scope, understanding that perhaps it is not as important to summarize the work, but understand the concepts and generalizations that are at its base. Secondly, we offer some reflections on the debate that has arisen in academia and, thirdly, we will examine the possibilities of the Chandler model to analyze economies with different characteristics than those used in this work.

With a decidedly narrative, Chandler started his work with the analysis of the internal dynamics of the modern industrial enterprise, born around the eighties of the nineteenth century. The reason for this context differs from earlier times is justified by the advent of modern transportation and communication, the railroad and the telegraph, and the emergence of a new form of capitalism, managerial capitalism. It is that which gave rise to a new type of company, whose centerpiece is the introduction of organizational capabilities. Before that, the companies were managed directly by the owners assisted by some, few, managers hired. The management and ownership were thus united in one person.

The complexity of the transactions that occurred after the construction of new transportation and communication led to a gradual separation between management and ownership. The company became managed by teams of managers hired with little or no action by the company. In addition, new forms of transportation and communication led, in turn, marketing and mass production, which forced also to recruit salaried management teams specialized in these various economic fields.

All this new set of economic circumstances, the construction and operation of transportation and communication systems and new forms of production and mass marketing, resulted in the emergence of a new economic institution: the management company and a new subspecies of economic man, the manager to pay. The company management represented a dynamic factor for a continuous process of growth and economic transformation. The new production conditions assumed benefits of economies of scale and scope. For these economies, employers should carry out three interrelated types of investments: investment in infrastructure, investment in technical sales and distribution and investment management.

The first involved the possibility of producing larger quantities of product in best quality. The second place that allowed production increasingly more distant markets, remember that the initial thrust of this new type of company is in the expansion of the railroad and the telegraph, and the third investment was to provide the manpower capable of managing large staff structures qualified. Without this triple initial investment, the birth of the modern industrial enterprise had not taken place, and the truth is that the first ...