Background
Born in 1918, Chandler was a US economic historian and Straus Professor of Business History at Harvard University. He drew many of his conclusions from his studies of large US corporations between 1850 and 1920, a important period in the moulding and development of capitalism.
Thinking
Chandler's main contribution to management thought has been the explanation of the link between strategy and structure. In his 1962 book 'Strategy and Structure', Chandler explained how strategy and structure are strongly linked in organisations. He defined strategy as the identification of long-term goals and objectives, and included the action and resources required to achieve them. Structure was defined as the form the organisation assumed to achieve its strategy. This included the hierarchy, control and management mechanisms, Chandler's famous phrase was that 'structure follows strategy' ie that the of organisation should be defined with the aim of achieving the organisational strategy.
Chandler believed that the managerial hierarchy was a keystone of business success and saw the important role of middle managers. 'The visible hand' of management, he explained in Managerial Hierarchies, replaced Adam Smith's "invisible hand" of market forces by arranging the flow of goods from producers to customers with more efficiency and profitability than was achievable when left to market forces.
Chandler was the first management thinker to identify the importance of decentralisation to large organisations. This was to become the basis of many organisational restructures for the following 3 decades.
Chandler advocated centralised and co-ordinated planning linked to decentralised operational responsibilities in a time when such a way of organising and planning could still attain success.
In his studies of four large US organisations (General Motors, Sears Roebuck, Du Pont and Standard Oil), Chandler assessed how the companies responded to pressures in their environment. The alternative responses ranged from a defensive response that saw companies trying to protect their markets through strategies such as vertical integration to aggressive responses for example in diversifications of products and markets. Chandler concluded that Standard Oil, failed to appreciate that strategy came from strategy and was thus slow to decentralise. Chandler championed this type of study saying 'only by comparing the evolution of large-scale multi-unit enterprises in different economies can organizational imperatives be identified and the impact of the cultural attitudes and values, ideologies, political systems, and social structures that affect these imperatives be understood'.
Chandler saw his contribution being the restructuring of large US corporations into large, decentralised divisions trading many products in many markets.
Further research
Chandler, A D (1962) Strategy and Structure, Massachusetts
Chandler, A D (1977) The Visible Hand: The Managerial Revolution in American Business, Cambridge, USA
Chandler, A D and Deams, H (1980) Managerial Hierarchies: Comparative Perspectives on the Rise of Modem Industrial Enterprises, Cambridge, USA
Chandler A D and Tedlow, R S (1985) The Coming of Managerial Capitalism, Toronto
