Tuesday, May 15, 2007

Alfred Chandler Jr., Visible Hand, Valuable Legacy

Busiess and economics Historian Alfred Chandler died last week on May 9th. Unlike classical economist Adam Smith's view of market as "invisible hand" to allocate scarce resources, Chandler's ideas of "visible hand" pushed our thoughts further and deepened our insights into the internal structure of the modern firms.

The book The Visible Hand: The Managerial Revolution in American Business is sometimes understood ala Berle and Means's The Modern Corporation and Private Property as a challenge to the idea of the invisible hand and "market capitalism."He is the father of modern business history. His work often brought together history, economics, and business management in fresh ways. The book Strategy and Structure is among one of them.

In 1932, Ronald Coase, a later Nobel winning economist, raised the basic question "If markets are perfect, why do we need firms?" and an explanation based on transaction cost was given. Since then, the black box of the firm was opened up. Unlike Coase and Williamson's transaction economics view, Chandler put more emphasis on how new technologies for handling information (telephone, telegraph, record keeping) gave rise to new organizational structures in business (the M-form). Critical to Chandler, however, was that the new organizational structures were necessary to fully exploit the new technologies and they came about neither automatically nor without great experimentation, evolution and slow transformation.

Chandler taught at Harvard Business School for many years and wrote seminal papers and books in busiess and economic history there; for decades he was the center of the business history group. Through HBS's Working Knowledge, you can read his discussions on some business issues: New Learning at American Home Products, Historically Speaking: A Roundtable at HBS, Alfred Chandler on the Electronic Century, etc.

Here are some related Links:
Alfred D. Chandler, Jr.
Short Bio
Obituary at Harvard Business School
Alfred Chandler Jr.: 1918 - 2007
Noted Economic Historian Alfred Chandler Jr., 88
Alfred Chandler: Big Business' Big Loss
Alfred D. Chandler Jr., a Business Historian, Dies at 88

(Some contents come from Marginal Revolution)

1 comment:

Magnolia said...

Good for people to know.