Politics or efficiency? three questions on the Ford Motor Company and Alfred D. Chandler’s managerial revolution

Abstract

Alfred D. Chandler’s theory of the managerial revolution culminates with the triumph of General Motors over the Ford Motor Company in the American automobile market of the 1920s. In Chandler’s view, the relative decline of Ford vis-à-vis General Motors was a direct consequence of the modernization of management under Alfred Sloan’s leadership in the face of Ford’s outdated managerial methods. Based on previously unexploited material from the Ford Motor Company Archives, and on Chandler’s research papers located at Harvard’s Baker Library, the paper revsits this pivotal episode of American business history. It makes three points. First, it suggests that Chandler’s account resembles an idealtypical Weberian modernization narrative. Second, it argues that Ford did not simply fail to modernize; rather, he advocated an illiberal business model very much at odds with the American corporate mainstream of the 1920s and 1930s. Finally, the paper traces the influence of Chandler’s collaboration on Sloan’s memoir, My Years With General Motors (1964), on his thinking about the GM/Ford episode in particular, and the managerial revolution at large. The paper ends by suggesting that politics, not managerial efficiency, played a larger role in the making of industrial strategy and structure than Chandler appreciated.