Journal of Economic Perspectives: Vol. 6 No. 3 (Summer 1992)


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Organizational Capabilities and the Economic History of the Industrial Enterprise

Article Citation

Chandler, Alfred D. 1992. "Organizational Capabilities and the Economic History of the Industrial Enterprise." Journal of Economic Perspectives, 6(3): 79-100.

DOI: 10.1257/jep.6.3.79


In my book Scale and Scope (1990), I focused on the history of the modern industrial firm from the 1880s, when such firms first appeared, through World War II. I did so by comparing the fortunes of more than 600 enterprises—the 200 largest industrial firms at three points in time (World War I, 1929, and World War II) in each of the three major industrial economies (those of the United States, Britain, and Germany). In this paper, I first describe the similarities in the historical beginnings and continuing evolution of these enterprises and then outline my explanation for these similarities. Next, I relate my explanation of these "empirical regularities" to four major economic theories relating to the firm: the neoclassical, the principal-agent, the transaction cost, and the evolutionary. Finally, I suggest the value of the transactions cost and evolutionary theories to historians and economists who are attempting to explain the beginnings and growth of modern industrial enterprises.

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Chandler, Alfred D. (Harvard U)

JEL Classifications

N01: Development of the Discipline: Historiographical; Sources and Methods
D23: Organizational Behavior; Transaction Costs; Property Rights
N62: Economic History: Manufacturing and Construction: U.S.; Canada: 1913-
N64: Economic History: Manufacturing and Construction: Europe: 1913-


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