"Can the theories that Alfred D. Chandler developed in his book 'Scale and Scope: The dynamics of industrial capitalism' be applied to patterns of economic growth in the second half of the 20th century?"
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TABLE OF CONTENTS 1. Introduction 1 2. Chandler's theory 1 3. Methodology and selection of study objects 3 4. Description of developments 4 Country level 4 Industry level 5 Firm level 6 5. Compare these patterns to Chandler's predictions 6 Country level 6 Industry and firm level 8 6. Future growth industries 9 7. Conclusion 10 Reference List 11 Appendix A - 900 largest German firms 12 Appendix B - Growth industries in the USA 16 Appendix C - selected GDPs in 1950 17 1. INTRODUCTION "Scale and Scope: The dynamics of industrial capitalism" (henceforth Scale and Scope) by Alfred D. Chandler (1990) is one of the central books in economic history. Like only few books, it explains many economic developments in the period from the 1880s until deep into the 20th century. By focusing on this period, the period of the so-called second industrial revolution, Chandler investigates a period with immense changes in business and economic environment. Therefore, even though the period is time wise relatively narrow, it still provides enough evidence to develop strong theories. The book develops theories that have a strong explanatory power for the period under review. Because the book does not scrutinize events and developments that occurred in the times that followed, one might naturally wonder in how far the ideas developed by Chandler can be transferred into our post-modern time and in how far they are able to explain more recent developments. This is exactly what this paper will aim at. The question it is trying to answer it thus: "Can the theories that Alfred D. Chandler developed in his book 'Scale and Scope: The dynamics of industrial capitalism' be applied to patterns of economic growth in the second half of the 20th century?" In studying this question, this paper will use a methodology that is very similar to the one employed by Chandler himself. First of all, the main ideas of Chandler will be summarized to provide a benchmark against which the further findings of the paper can be evaluated.
The second fact, namely the rise of some nations in South-East Asia needs some closer consideration. From 1950 until today, the Japanese per capita GDP increased almost 15-fold and the South Korean more than 21-fold.(www.nationmaster.com) Compared to that, European growth looks insignificant, as for example the one of Germany that could increase its per capita GDP about 6-fold. While this sheer explosion of economic power has puzzled many, one convincing explanation can be drawn from Chandler's theories. The nations of Western Europe and North America owe their unique economic position to a large extend to the investments made in the second industrial revolution. However, after World War Two, the economic environment started to change once again. New technologies were developed that allowed significant increases in productivity. The large industrial firms that had emerged in the Western nations however, were slow to react to this and thus, Asian firms were able to fill the gap and grasp the benefits. Especially Japanese firms developed a number of management innovations that strengthened the resources of organizational capabilities with concepts like the famous Just in Time (JIT) production lead to an advantages over many Western companies that still tried to manage with methods form the past (Mehtabdin, R.K.,1986.). The story of the rise of Japan and the tiger states can thus be seen as confirming Chandler's idea that organizational capabilities are crucial for firms and thus for economic growth. A final point that has to be mentioned when one compares the analysis of Chandler to the world as it evolved in the last half century and that has especially been discussed in the light of the rise of the Japanese economy relative to the established industrialized countries is the role of research and development. Many (e.g. Mehtabdin, R.K.,1986) saw as a reason for the failing of the Americans to keep the Japanese out of 'their' industries that they failed to invest in research and development because of their short-term orientation.
7,116.00 CC-Bank AG Mönchengladbach 6,981.00 Philip Morris GmbH München 6,968.00 LBS Norddeutsche Landesbausparkasse Hannover 6,948.00 Kreissparkasse Heilbronn Heilbronn 6,929.00 Stadt- und Kreissparkasse Leipzig Leipzig 6,887.00 Sparkasse Krefeld Krefeld 6,878.00 Vodafone D2 GmbH Düsseldorf 6,837.00 AKA Ausfuhrkredit- Gesellschaft mbH Frankfurt am Main 6,724.00 R + V Versicherung AG Wiesbaden 6,700.00 RWE Dea AG Hamburg 6,592.00 Sparda-Bank Baden-Württemberg eG Stuttgart 6,581.00 HeidelbergCement AG Heidelberg 6,570.00 MAN Nutzfahrzeuge AG München 6,564.00 adidas-Salomon AG Herzogenaurach 6,523.00 SPAR Handels-AG Schenefeld 6,509.00 Karstadt Warenhaus Aktiengesellschaft Essen 6,422.00 AXA Konzern AG Köln 6,418.00 HERAEUS HOLDING GmbH Hanau 6,416.00 Kreissparkasse Waiblingen Waiblingen 6,361.00 ThyssenKrupp Automotive AG Bochum 6,337.00 BSH Bosch und Siemens Hausgeräte GmbH München 6,289.00 Shell & DEA Direct GmbH Hamburg 6,274.00 APPENDIX B - GROWTH INDUSTRIES IN THE USA Source: http://www.bls.gov/news.release/ecopro.t03.htm The 10 industries with the fastest employment growth, 1996-2006 Numbers in thousands of jobs Industry description Employment Change, 1996-2006 1996 2006 Number Percent Computer and data processing services 1,208 2,509 1,301 108 Health services, nec. 1,172 1,968 796 68 Management and public relations 873 1,400 527 60 Miscellaneous transportation services 204 327 123 60 Residential care 672 1,070 398 59 Personnel supply services 2,646 4,039 1,393 53 Water and sanitation 231 349 118 51 Individual and miscellaneous social services 846 1,266 420 50 Offices of health practitioners 2,751 4,046 1,295 47 Amusement and recreation services, nec. 1,109 1,565 457 41 APPENDIX C - SELECTED GDPS IN 1950 Country GDP 1 United States $9,573 2 Switzerland $8,939 3 New Zealand $8,495 4 Venezuela $7,424 5 Australia $7,218 6 Canada $7,047 7 United Kingdom $6,847 8 Sweden $6,738 9 Denmark $6,683 10 Netherlands $5,850 11 Belgium $5,346 12 France $5,221 13 Argentina $4,987 14 Norway $4,969 15 Germany $4,281 16 Finland $4,131 17 Chile $3,827 18 Austria $3,731 19 Ireland $3,518 20 Italy $3,425 21 Hungary $2,480 22 Poland $2,447 23 Spain $2,397 24 Peru $2,263 25 South Africa $2,251 Moving "Scale and Scope" to today - can it still explain growth? - 0 -
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