Alfred D. Chandler, Jr.

Alfred DuPont Chandler, Jr. (September 15, 1918 – May 9, 2007) was a professor of business history at Harvard Business School and Johns Hopkins University, who wrote extensively about the scale and the management structures of modern corporations.

Quotes

• Strategy can be defined as the determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals
  • Chandler (1962) Strategy and Structure. p. 13.

The Visible Hand (1977)

Alfred D. Chandler, Jr. (1977), The Visible Hand, Cambridge, Mass: The Belknap Press of Harvard University Press.

• The market remained the generator of demand for goods and services, but modern business enterprise took over the functions of coordinating flows of goods and services through existing processes of production and distribution, and of allocating funds and personnel for future production and distribution. As modern business enterprise acquired functions hitherto carried out by the market, it became the most powerful institution in the American economy and its managers the most influential group of economic decision makers. The rise of modern business enterprise in the United States, therefore, brought with it managerial capitalism.
  • p. 1.

• Multi-unit business enterprise replaced small traditional enterprise when administrative coordination permitted greater productivity, lower costs, and higher profits than coordination by market mechanisms.
  • p. 6.

• Complete accountability is established and enforced throughout; and if there there is any error committed, it will be discovered on a comparison with the books and can be traced to its source.
  • p. 74; Cited in: Michael H. Best (1990) The New Competition: Institutions of Industrial Restructuring. p. 36.

• Modern factory management (but not it must be stressed the management of large modern multi-unit enterprises) had the genesis in the United States in the Springfield Armory.
  • p. 75; Cited in: Best (1990, p. 32).

• The systems and controls developed at the armory were as critical to the development of what became known as the 'American System of Manufacturing' as the new metalworking machinery and machine tools.
  • p. 75.

• The swift victory of the railway over the waterway resulted from organizational as well as technological innovation. Technology made possible fast, all-weather transportation; but safe, regular, reliable movement of goods and passengers, as well as the continuing maintenance and repair of locomotives, rolling stock, and track, roadbed, stations, roundhouses and other equipment, required the creation of a sizable administrative organization. It meant the employment of an administrative command of middle and top executives to monitor, evaluate, and coordinate the work of managers responsible for the day-to-day operations. It meant, too, the formulation of brand new types of internal administrative procedures and accounting and statistical controls. Hence, the operational requirements of the railroads demanded the creation of the first administrative hierarchies in American business.
  • p. 87.

• Men's mind and abilities grow and expand with use of responsibilities.
  • p. 181; Cited in: Best (1990, p. 61).

• In the 1850s and 18605 the modern commodity dealer who purchased directly from the farmer and sold directly to the processor took over the marketing and distribution of agricultural products. In the same years the full-line, full-service wholesaler began to market most standardized consumer goods. Then in the 1 870s and 188os the modern mass retailer — the department store, the mail-order house, and the chain store — started to make inroads on the wholesaler's markets.
  • p. 209.

• To maintain and continue a high volume of flow demanded organizational innovation. It would be achieved only by creating an administrative hierarchy operated by many full-time salaried managers.
  • p. 236; Cited in: Best (1990, p. 48).

• In most British enterprises senior executives worked closely in the same office building, located in or near the largest plant, having almost daily personal contact with, and thus directly supervising middle and often lower-level managers. Such enterprises had no need for the detailed organization charts and manuals that had come into common use in large American and German firms before 1914. In these British companies, selection to senior positions and to the board depended as much on personal ties as on managerial competence. The founders and their heirs continued to have a significant influence on top-level decision-making even after their holdings in the enterprise were diminished.
  • p. 242.

• Effective coordination of throughput required the placing of vigorous management controls over these despots.
  • p. 266; Cited in: Best (1990, p. 56).

• The minutest details of cost of materials and labor in every department appeared from day to day and week to week in the accounts; and soon every man about the place was made to realize it. The men felt and often remarked that the eye of the company were on them through the books.
  • Bridge (1903, p. 85), cited on p. 268; Cited in: Best (1990, p. 63).

• Increase on productivity and decrease in unit costs (often identified with economies of scale) resulted far more from the increases in the volume and velocity of throughput then from a growth in the size of the factory and plant.
  • p. 281; Cited in: Best (1990, p. 48).

Quotes about Alfred D. Chandler, Jr.

• There are very few scholars who can legitimately say that they founded a discipline. Al Chandler is one of them. Prior to Chandler, business history tended to be the study of individual businesses or entrepreneurs with little theoretical importance. To paraphrase one criticism of history as "damn fact after another," business history tended to be "damn business after another." Histories came out in conjunction with anniversaries of companies: They were highly celebratory, sometimes informative, but not very useful to practitioners. Studies of entrepreneurs were just hagiographies.

  Chandler developed for business history a coherent theoretical framework built around his "3-pronged investment" in manufacturing, marketing, and management, and the notion of "organizational capabilities." The firm was something much more than a network of individual contracts or the vision of its entrepreneur. The people inside firms learned, developed effective routines, and innovated. While we have sophisticated theories of competition in economics, the cooperative teamwork inside firms is just as important. Chandler stressed the importance of organizational capabilities, technological innovation through R&D, problem solving, knowledge, and continuous learning—investment in human capital and technology that only firms could generate. Chandler placed the issue of managerial coordination squarely in the center of understanding economic life.

  • Jeffrey Fear in: Sean Silverthorne (ed.) "Remembering Alfred Chandler." Research and Ideas. 15 June 2007.