Alfred Chandler

1918-Present
Who On Earth Is This Guy?
 Educator
 Author
 Historian
 Family History
 Father - Alfred DuPont Chandler
 Mother - Carol Ramsay
 Born 1918 - Guyencourt, Delaware
 1944 - Married Fay Martin
 Had Four Children
 Education
 1940 - Graduated from Harvard College
 1940-1945 - Navy - Lt. Commander
 1947 - Masters from Harvard
 1952 - Ph.D. Harvard
 Bunch of Honorary Degrees
 Educator
 1950-1951 Research Associate, MIT
 1951-1964 Instructor - Professor, MIT
 1963-1971 Professor, Johns Hopkins
 1966-1970 Dept. Chair, Johns Hopkins
 1964-1971 Director, Center for Study of
Recent American History
 1971-1989 Straus Professor of Business
History, Harvard
 1989- Emeritus
 Author
 1956, Henry Varnum Poor
 1962, Strategy and Structure (Newcomen Award, 1964)
 1965, The Railroads
 1971, Pierre S. duPont (with Stephen Salsbury)
 1978, The Visible Hand (Pulitzer & Bancroft Prizes)
 1980, Managerial Hierarchies (with Richard Tedlow)
 1985, The Coming of Managerial Capitalism
 1988, The Essential Alfred Chandler
 Historian
 Economic History Association (President 1971-1972)
 Organization for American Historians
 Society for the History of Technology
 Historical Association
 American Antiquarian Society
 American Historians
 Massachusetts Historical Society
 American Academy of Arts and Sciences
 American Philosophical Society
His Basis
 Business Week
 Historical Perspective
 Strategy and Structure
 “Structure in big business enterprises
follows strategy”
 What is Strategy?
 What Drives Changes in Strategy?
 Multi-Purpose Divisional Structure
 Role of Business Leaders
 Key Impact on Large Industry
Perspective
The Visible Hand
 Adam Smith
 Business: Two Phases
 Modern Business Is
The Visible Hand
 Fundamental Changes
– Production
– Distribution
– Markets
 Integration
 Human Aspect
The Visible Hand - Progression
Ownership
Founders
(Diffused)

Middle Top
Managers Mgmt.

Middle
Managers
 Business Development
 Second Industrial Revolution
 Old Industries Transformed
 New Industries Developed
 Economic Growth and Development
 International Expansion
 Capital-Intensive Markets
 Organizational Capabilities
 First Movers
 Market Share Changes - Non-Econ!
 Theories of the Firm
– Neoclassical Theory
– Principal-agent Theory
– Transactions Cost Theory
– Evolutionary Theory
 Organizational Capabilities
 International Competition
– Held Back by World Events
– Reality in 1960’s
 Core Competence
– Diversification
– Divestiture
 Profit Growth
 Short-Term
 Long-Term
– Geographic
– Product
 Criticisms
 Strategy and Structure
– Tom Peters
– Mintzberg
 The Visible Hand
– Nothing noted about newer techniques
– Nothing said of behavior sciences
– Importance of the human element
– Failure to provide evidence
– Evaluation of social costs and benefits
 Summary
 Historian
 Studied Large Industrial Business History
 Conclusions:
– Structure Follows Strategy
– Decentralized, Multi-Purpose Divisional Structure is
Optimum
– The ‘Visible Hand’ of Management has Taken the
Place of Adam Smith’s ‘Invisible Hand’ of Market
Forces (Market Economy vs. Managerial Capitalism)
– Management has not basically changed since WWI
 Summary
 Conclusions:
– Market Share Driven by Functional and Strategic
Competition, Not by Price Competition
– Firms (Physical and Human Assets) Are the Basic
Unit of Historical Economic Analysis
– Firms Should Stick to Their Core Competencies
– Long-Term Profit Growth is Gained from Expansion
into New Geographic or Product Markets