management; Alfred Chandler
Explain what Alfred Chandler meant by “scale”, “scope” and “managerial capitalism”? Discuss the implications of these concepts for the digital economy.
You should define the key terms of the topic (“scale”, “scope”, “managerial capitalism”, “digital economy”) by using relevant academic literature. The quality of these definitions is crucial.
You should use relevant academic literature (e.g. peer reviewed academic journals) to warrant all your claims. Use at least 15 sources. References should be cited using the Harvard referencing system. Please include a complete list of all references.
You can illustrate your arguments by using relevant real-world examples, backed up by literature and evidence.
The logic of the argument is very important. The quality of the writing will be assessed: grammatical errors will lower your grade.
Take an analytical approach, a critical stance: you should evaluate, be critical, show that you are able to interrogate your findings. Avoid “journalism”/grandstanding type of writing.
Your work must be analytical and demonstrate well researched data, sound reasoning, convincing use of evidence and argument in reaching conclusions. Accuracy, clarity, and quality of arguments, referencing within the text and richness of sources will be assessed.
In the introduction: set the context, state your essay topic.
In the conclusion: don’t introduce a new concept/idea, don’t repeat everything you said, state the key takeaways of the essay.
A description of the content covered in the course’s lecture:
This lecture looks at the growth of large firms in historical context and examines the major explanations for the growth of firms, specifically technological indivisibility and market failure. It specifically examines the work of Chandler. It describes the separation of ownership and control and introduces the agency problem. It introduces the ‘varieties of capitalism’ debate and covers the varieties of institutional arrangements for firm governance that have emerged in advanced economies.
Some key concepts covered in the lecture that might be relevant to the essay topic:
• The rise of modern business enterprise in the United States brought with it managerial capitalism
• Alfred Chandler wrote about the scale and the management structures of modern corporations
• Alfred Chandler has 8 general propositions to demonstrate how and why the visible hand of management replaced what Adam Smith referred to as the invisible hand of market forces.
• Chandler claims that “the visible hand of management replaced what Adam Smith referred to as the invisible hand of market forces where and when new technology and expanded markets permitted an historically unprecedented high volume and speed of materials through the processes of production and distribution”
• According to Chandler, certain types of industry come to be dominated by a small number of very large firms (e.g. railroads). In the 19th century, large firms began to emerge in sectors where scale and capital are of central importance (e.g. in rail transport, distribution, and manufacturing industries)
• The modern business enterprise
• Minimum efficient scale (MES)
• Economies of scale in production and distribution (indivisibilities, specialisation and the division of labour, fixed overhead allocations, power laws, ability to spread risk and inventory costs)
• Economies of scope (economies of joint production and distribution)
• Transaction cost (internal versus external transaction costs): theories of Ronald Coase, theories of Oliver Williamson
• Managerial capitalism
• Varieties of capitalism: competitive managerial capitalism in the US, coordinated managerial capitalism in Germany, personal capitalism in Great Britain
• Agency problem: problems caused by the separation of ownership & control
• ‘Traditional’ retailers/companies are feeling the threat of digital companies, therefore, they are developing digital strategies
• Digital records/digital communication/email have revolutionised the way business is done: to what extent has the informality of digital communication undermined the formality of bureaucratic organisations?
• Flat structures: implications for scale and scope?
