Works
- Strategy and Structure: Chapters in the History of the Industrial Enterprise, MIT Press, Cambridge, MA (xiv and 463 pages), 1962
- The functions of the HQ unit in the multibusiness firm, Strategic Management Journal 12(S2), 31 to 50, 1991
In Organizational Structures
Known for
Strategy and structure, and the history of the multidivisional firm
Ideas
Structure follows strategy. Growth by volume, geographic dispersion, new functions, and new products each brought a new structure, and diversification into new product lines or continued national or international growth brought the multidivisional structure with a general office over autonomous divisions; unless structure follows strategy, inefficiency results. Caveat: Four firms; the direction of causation is disputed: Hall and Saias (1980) argued that structure can also shape strategy, and Galan and Sanchez-Bueno (2009) found it runs both ways.
The multidivisional structure as an organizational innovation. du Pont, General Motors, Standard Oil (New Jersey), and Sears, Roebuck each arrived at autonomous, multidepartmental divisions under a general office of staff specialists and general executives, freeing the top from operating duties for strategic decisions. Caveat: Freeland (1996) argued that General Motors for most of its history deliberately did not separate strategic from operating decisions.
The holding company as a federation. Before the 1920s the nearest approach to the multidivisional structure was the large holding company that stayed administratively a federation, whose small top offices lacked the information and defined channels needed to run it, as at General Motors under Durant.
The functions of headquarters. The headquarters of a multibusiness firm has entrepreneurial (value-creating) and administrative (loss-preventing) functions, shaped by its industries, and its ability to perform them has set both the paths and the limits of the firm's growth.