FREE THE VISIBLE HAND: THE MANAGERIAL REVOLUTION IN AMERICAN BUSINESS PDF Alfred DuPont Chandler | 624 pages | 01 Jan 1993 | HARVARD UNIVERSITY PRESS | 9780674940529 | English | Cambridge, Mass., United States The Visible Hand — Alfred D. Chandler, Jr. | Harvard University Press Alfred D. Chandler, Jr. Cambridge, MA: Harvard Belknap, Alfred Chandler is the world master of institutional business history. He began his career as scholar and researcher innocently enough, with a doctoral monograph on the life and career of Henry Varnum Poor, railway pundit of the nineteenth century. But then he went on to work in the business and personal archives of the du Ponts of Delaware, to whom he was related by family and friendship, and the result was a first-class company and entrepreneurial history, written with the aid and collaboration of Stephen Salsbury: Pierre S. As the title indicates, he was already interested in the larger question of the structures and evolution of corporate enterprise. Then, in the mid s, he brought out the first of a series of major works on this subject, his Visible Handwhich won the Pulitzer and Bancroft prizes in The title reference is to deliberate organizational arrangements designed to make big business work. Chandler was not the first to write on this. As his introductory text and references make clear, the topic is one that has interested economists and essayists going back at least to Adam Smith, that incredible seer into past, present, and future. But all of these dealt with the problem as part of larger agendas. It was Chandler who, focusing on the theme, rewrote in effect the course of American economic history and laid the basis for comparative international explorations. The book lays out the task and theme by stating a number of propositions: 1. Modern business enterprise came in when administrative coordination did better than market mechanisms in enhancing productivity and lowering costs. The advantages of coordinating multiple units within a single enterprise could not be realized without a managerial hierarchy. It was the growing volume of economic The Visible Hand: The Managerial Revolution in American Business that made administrative coordination more efficient than market coordination. Once a managerial hierarchy does its job, it becomes its own source of permanence, power, and continued growth. Such hierarchies tend to become increasingly technical and professional. The Visible Hand: The Managerial Revolution in American Business time, such professional structures become separate from ownership. Professionals prefer long-term stability and growth to short-term gains. Big businesses grew to dominate branches and sectors of the economy, and so doing, altered their structure and that of the economy as a whole. So much for the United States. Much of the book is a historical review of these processes, beginning with the colonial era and the early decades of independence. In those days, business structures were not so different from what they had been several centuries earlier, in Renaissance Italy or, later, in the Low Countries and England. Chandler offers here an overview exceptional for its coverage through time and space, its attention to the variety of economic activity and commercial specialization. One of the most striking features of this presentation is his attention to the precocity of American development: a colonial, frontier area, low in density, handicapped in matters of inland transport, yet rich in human capital and opportunity. One silent evidence of this modernity: the large number of watch and clock dealers and repairers. The economy and its business units were not yet big enough. Here for the first time one had large enterprises dispersed in space, requiring heavy investment and maintenance in road, rails, tunnels, and bridges, tight organization of rolling stock, and all kinds of passenger and freight arrangements including timely service, The Visible Hand: The Managerial Revolution in American Business of capital and handling of money income and outlays — in short a world of its own. Chandler noted here the critical contribution of men trained in the military academies, for armies were even earlier enterprises of vast scale, though more improvisational and transitory in character, and with destructive-predatory rather than constructive objectives. The only comparable commercial enterprises to the railroads were the canals, but for topographical reasons, these were less important in the United States than in Europe. The one The Visible Hand: The Managerial Revolution in American Business was Erie, but even there the waterway was soon lined with railroads. In that same decade, over 6, rail miles were completed, making the national total 9, Time counted, and railroads were faster and more efficient. The introduction of such managerial and organizational techniques into industry waited on gains in scale of enterprise. The traditional manufacturing firm, for example, was a personal or familial operation, assisted by outside supply and demand facilities and initiatives The Visible Hand: The Managerial Revolution in American Business the shop writ large. Past a certain threshold, however, ways had to be found to pull the parts together, to oversee, coordinate, and control. In the United States, it was the chemical and even more the automobile manufactures that led the way. Chandler is particularly well informed here because of his earlier work on Du Pont, with its subsequent ownership of a controlling share of General Motors. GM itself tells a fascinating story of transition from personal to corporate enterprise. It started with William C. Durant, a kind of freebooter who pulled together a number of independent manufacturers — Buick, Oldsmobile, Cadillac, Chevrolet et al. It then fell into the hands of the bankers and moneymen: J. Morgan and Company and Pierre du Pont rich from wartime earnings. And with the aid of manager Alfred Sloan, Jr. Ford was just the opposite of the Chandler prescription: all manner of organizational improvisation in the face of arbitrary whimsy. What the costs to Ford, no one will ever know: this was a company that estimated income and The Visible Hand: The Managerial Revolution in American Business by the height of piles of paper and had only an approximate idea of its debts and credits. When in money trouble, it taxed its dealers. The move to a rational managerial system was bound to encourage professionalization. Here again, his later comparative work filled out the American story along lines already explored by European scholars: the creation and transformation of professional schools to meet the needs of state bureaucracies; the differences in national achievement; the implications for the larger process of economic growth and development. Again, each industry had its own requirements and opportunities, just as each The Visible Hand: The Managerial Revolution in American Business had its own areas of preference. The British, who had accomplished much on the basis of apprenticeship and bench learning, were slow to adopt formal class and lab instruction. The Continental countries, especially the Germans, French, and Scandinavians, strained to catch up and learned not only to transform the older branches but to advance in new areas of production. The growing reliance on professionally trained managers entailed an assault on the structures and habits of personal and familial enterprise. This was particularly true of technologically complex branches of production, which found it easier to hire good people than to tame them. Inevitably, the people who ran the show nursed aspirations that contradicted family control, the more so as such experts often were remunerated by share options that gave them a piece of ownership. Growth, moreover, entailed mobilization of funds, whether via bank loans or public sales of ownership shares, and this too often countered family interests. By the same token, the success and resources of managerial corporations have made them the arch seducers of the business world. This is a new, major aspect of the shift away from family control: how can a family firm say no to such generous offers, often exceeding the prospect of immediate The Visible Hand: The Managerial Revolution in American Business The recent sale of Seagram by the Bronfman interests to the French conglomerate Vivendi is an excellent example of money trumping blood, marriage, and personal aspirations. The chairman and chief executive of LVMH, Bernard Arnault, is known for sparing no expense to gain dominance in luxury brands as diverse as champagne and handbags. They know that to build up a luxury brand you need time and money. The world of enterprise is full of variants, of diverse responses to the tensions and conflicts implicit in entrepreneurial strategy and in the personal circumstances and histories of business endeavor. The family firm has not disappeared and will not. New ones are created all the time. There is even an international fraternity of family firms that go back more than two hundred years, Les Henokiens, named after the biblical patriarch Enoch. And there are enterprises that somehow seem to blend the personal and managerial with such art that one is hard pressed to classify. A small library has appeared on this subject, and one has only to read the book Chandler edited with Herman Daems, Managerial Hierarchies: Comparative Perspectives on the Rise of Modern Industrial Enterprise Cambridge, MA: Harvard University Press,to appreciate the quality and versatility of the collaborators, Leslie Hannah, Jurgen Kocka, Maurice Levy-Leboyer, Morton Keller, Oliver Williamsonthe range of the scholarship, and the opportunities for thought and reconsideration. The Chandlerian model is a monument to present and future scholarship, and the Visible Hand an example and encouragement to scholars everywhere. David S. Please read our Copyright Information page for important copyright information. Send email to admin eh. Newsletters To join the newsletters or submit a posting go to click here. Author s : Chandler, Alfred D. Reviewer s : Landes, David S. Review Essay by David S.