------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (January 2007)
Alfred D. Chandler, _Shaping the Industrial Century: The Remarkable
Story of the Evolution of the Modern Chemical and Pharmaceutical
Industries_. Cambridge, MA: Harvard University Press, 2005. viii +
366 pp. $30 (cloth), ISBN: 0-674-01720-X.
Reviewed for EH.NET by Kyle Bruce, Economics and Strategy Group,
Aston Business School.
As with much if not of all his earlier work (including the companion
volume _Inventing the Electronic Century_ concerning consumer
electronics and the PC industry) in this volume, business history
doyen Chandler utilizes his stock concepts of "strategy and
structure" and "scale and scope" to "record" (a phrase about which I
will say more below) the inception and evolution of high-tech
chemical and pharmaceutical industries and the enduring legacy of key
players therein, from the end of the nineteenth century to the end of
the twentieth century. In essence, the relative success or failure of
American and European companies in these respective industries is
explained with reference to three central and interrelated themes:
"barriers to entry," "strategic boundaries," and "limits to growth."
Successful firms followed definite "paths of learning" whereby first
movers and close followers created entry barriers to would-be rivals
by building "integrated learning bases" (or what he has earlier
referred to as organizational capabilities) which enabled them to
develop, produce, distribute, and sell in local and then global
markets. A related key to this ongoing success is that of the
"virtuous strategy" of reinvestment of retained earnings and growth
via related diversification, particularly to utilize "dynamic" scale
and scope economies relating to new learning in launching "next
generation" products. This is how those firms with staying power more
or less simultaneously defined their "strategic boundaries" and
overcome "limits to growth."
The volume is divided into eleven chapters, with chapters 3-6
reviewing the evolution of the chemical industries (with extensive
discussion of DuPont, Dow Chemicals, Monsanto, American Cyanamid,
Union Carbide, and Allied as well as European chemical producers,
such as Bayer, Farben, and ICI), and chapter 7-10 those in
pharmaceuticals (with the focus on Merck, Pfizer, Eli Lilly,
SmithKline, Upjohn, and Glaxo). The first chapter provides a useful
overview of the distinctly Chandlerian analytical frameworks
mentioned above, and lays out his familiar methodology, while chapter
2 provides a summary history of the key players in both the chemical
and pharmaceutical industries. The final chapter is an excellent
summary of the key arguments, as well as a comparison of the
industrial, informational and biotech "revolutions" driving change
not only in chemicals and pharmaceuticals, but also in consumer
electronics and computers, thereby linking up the companion volumes.
Notwithstanding some typographical and spelling errors, if one
subscribes to Chandler's view that the job of the historian is "to
record when, where, and by who", then there are no significant
problems with this volume. If, however, one's view of history is more
diverse and critical, then the major shortcoming of the volume is one
that similarly afflicted his prior work: the lack of
socio-institutional context at various levels. For instance,
insufficient detail is given to wider socio-economic forces shaping
the respective industries, and also to the significance of the
context in which companies engage in the types of strategies
chronicled, not only as regards politico-legal issues of government
regulation and/or financial support (particularly relevant to
pharmaceuticals), but also pertaining to organizational-sociological
issues. In this context, and as per earlier critiques of Chandler,
the possibility that firms' strategies (and ultimate success) are
more about mimetic isomorphism and gaining legitimacy than they are
about long-term growth, is never really explored, but given
Chandler's analytical lenses are decidedly economics-rather than
sociology-centric, then this is not at all surprising.
It is also tempting to dismiss Chandler's analysis as "old wine in
new bottles," as both the frame of reference, and terms and tools,
seem all too familiar to readers of his earlier work, yet this would
be myopic and overlook the fact that much of the analysis is
complementary and builds on his existing ideas. There is much of
interest to both old and new Chandler readers; the book would be of
foremost interest to business historians (in general and those
particularly interested in chemicals, pharma, and biotech in
particular), strategy scholars and teachers (particularly as regards
what makes "good" corporate parents and the primacy of strategy over
structure) and economists (as regards the enduring utility of their
box of analytical tools). The other attractive feature of the book is
its organization in that it can just as easily be read in stand-alone
sections or chapters depending on one's interest without loss of
meaning; chapter 10 on biotech and chapter 11 comparing and
contrasting the industrial, informational and biotech "revolutions,"
are cases in point. Above all else, despite its shortcomings, it is
typically ambitious, broad-brush history, but with a strong and
sustained thesis that one comes to associate with someone who has
justifiably been anointed the dean of business history.
Kyle Bruce is a Lecturer in Strategy at Aston Business School whose
broad research interests traverse institutional theory in the social
sciences, U.S. business history, and the history of American
management and economic thought. His most recent paper, concerning
the contribution to labor economics of workaday, managerial
practices, is forthcoming in _History of Political Economy_.
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Published by EH.Net (January 2007). All EH.Net reviews are archived
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