What Is Chandler'S Thesis

The term “personal capitalism” refers to the fact that British companies to a much larger extent than their American and Ger­man counterparts were “personally managed”, both in terms of having smaller managerial hierar­chies and being managed in a “personal” style; the British senior managers directly supervised middle and lower level managers, and therefore did not need the elaborate or­ganizational structures and artifacts of the American and German corporations.The entrepreneurs and their heirs played retained their power; the salaried manager never got to have the final say about corporate strategy.The hierarchical organization was set up along functional line; produc­tion and marketing came first, then purchasing, R & D and finance.

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The corporate office let go of day-to-day operational responsibilities, instead focusing on performance monitoring of the divisions, planning and implementation of long-term cor­porate strategy, and specialist advice through corporate staff to the top and middle management of the divisions.

The staff usually was composed of the old financial department, a corporate personnel office and a central research laboratory.

Managerial capitalism (topic of Chandler’s The Visible Hand) refers to “a new type of capitalism–one in which the deci­sions about current opera­tions, employment, output, and the allocation of resources for future opera­tions were maid by salaried managers who were not owners of the enterprise”.

Scale, Scope and Organizational Capabilities (General theory of why and how industrial enterprises began and evolved).

The owners were more interested in stable income than reinvestment in com­petitive advantage, taking out profit as dividends rather than making the “three-pronged investments”.

Jonathan Edwards Two Dissertations - What Is Chandler'S Thesis

Stabilization in the market was achieved by cooperation between competitors.

The head of the major functional depart­ments, the president and sometimes a full-time chairman of the board was the senior decision-making unit.

First-movers into a market or a technology got com­petitive advantages; in general, challenging the first mover meant taking customers away from him, difficult since the first-mover already had achieved economies of scale and scope compared to the challenger.

In some of these industries the mass retailers came to dominate, with large, efficient purchasing departments that elimi­nated the intermediaries.

The United States: Competitive Managerial Capitalism Key characteristics: Oligopolistic competition between large, integrated companies, primarily in con­sumer goods.