Chandler, 1990, the coming of Managerial Capitalism

Chandler, 1990, the coming of Managerial Capitalism
November 16, 2008 · No Comments
http://www.caslon.com.au/biographies/chandler.htm

Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge: Harvard Uni Press 1990)—a continuation of Strategy & Structure

Author
Chandler, Alfred D. (Alfred Dupont), 1918-2007.

Title
Scale and scope : the dynamics of industrial capitalism / Alfred D. Chandler, Jr. with the assistance of Takashi Hikino.

Published
Cambridge, Mass. : Belknap Press, 1990.


page 1:

In the last half of the nineteenth century a new form of capitalism appeared in the United States and Europe.
Before the coming of modern transportation and communication — this is , before the railroad and the telegraph, the steamship and the cable — the processes of production, distribution, transportation, and communication in capitalistic economies had been carried on by enterprises personally managed by their owners.
The managers of salaried managers in these enterprises was tiny. And those few managers worked closely with their owners.

the building and operating of the rail and telegraph system called for the creation of a new type of business enterprise.
The massive investment required to construct those systems and the complexities of their operations brought the separation of ownership from management.
The enlarged enterprise came to be operated by teams of salaried managers who had little or no equity in the firm.
The owners, numerous and scattered, were investors with neither the experience, the information, nor the time to make the myriad decisions needed to maintain a constant flow of goods , passengers, and messages.
Thousands of shareholders could not possibly operate a railroad or a telegraph system.



The new forms of transportation and communication, in turn, permitted the rise of modern mass marketing and modern mass production.
The unprecedented increase in the volume of production and in the number of transactions led the entrepreneurs who established the new mass-producting and mass-distributing enterprises — like the railroad men before them — to recruit teams of salaried managers.
As these enterprise expanded their activities and moved into new markets, the shareholdings of the founding entrepreneurs and their families were dispersed and operating decisions became concentrated in the hands of the managers.

page 2:

Thus came into being a new economic institution, the managerial business enterprise, and a new subspecies of economic man, the salaried manager.
With their coming, the world received a new type of capitalism – one in which the decisions about current operations, employment, output, and the allocation of resources for future operations were made by salaried managers who were not owners of the enterprise.
Once modern transportation and communication systems were in place, the new institution and the new type of economic man provided a central dynamic for continuing economic growth and transformation.



ref:

Author
Berle, Adolf Augustus, 1895-1971.

Title
Modern corporation and private property, by Adolf A. Berle and Gardner C. Means.

Published
New York, Chicago, Commerce Clearing House, Loose leaf service division of the Corporation Trust Company, 1932.