April 1, 1990
Ten years in the making, Scale and Scope is Alfred Chandler’s first major book since his Pulitzer Prize-winning The Visible Hand. This long-awaited volume carries forward the theme of that keystone work in the continuing evolution of a new institution – the managerial business system, where decisions are made by salaried managers, not owners – that was central to the growth of modern industrial capitalism.
Scale and Scope concentrates on patterns of industrial growth and competitiveness in three leading industrial nations – the United States, Germany, and Great Britain. Chandler shows how large industrial firms developed at the end of the nineteenth century through exploiting economies of scale and scope, which required certain sets of investments: in production facilities large enough to secure cost advantages, in a national and international marketing and distribution network, and in a management organization capable of administering the new enterprises. The first companies to make these investments and create such an organization dominated their industries for decades, capturing market shares from competitors, diversifying, and expanding into markets abroad. The author chronicles the competitive success of many enterprises, including such American firms as General Electric, Goodyear, Dupont, and Borden, such British firms as Lever and Courtaulds, and such German companies as Bayer and Siemens, which were responsible for the swift ascent of Germany as Europe’s most powerful industrial nation in the years before World War I. They played a critical part, too, in making American industry the world’s most productive in the interwar years. By the same rules, he makes clear, the failure of British entrepreneurs and enterprises to make investments and create the capabilities necessary to compete at home and abroad was a major reason for the rapid decline of the world’s first industrial nation.
Alfred Chandler brings masterful insight to the history of multinational enterprises, including such key factors as diversification, oligopolistic competition, the relationship between owners and managers, capital markets, government regulation, and the effect of the educational systems on industrial strength and competitiveness. His matchless comparative analysis of the dynamic forces of industrial capitalism that drove economic growth and transformed national economies will reorient business and economic history for years to come.
Alfred D. Chandler, Jr., is Isidor Strauss Professor of Business History, Emeritus, at Harvard Business School and winner of both the Bancroft Prize and the Pulitzer Prize in History for The Visible Hand: the Managerial Revolution in American Business (Harvard).