IDEAS home Printed from https://ideas.repec.org/a/spr/jorgde/v8y2019i1d10.1186_s41469-019-0059-4.html
   My bibliography  Save this article

Setting the stage for corporate headquarters: a technological explanation for the rise of modern industrial corporations

Author

Listed:
  • Carliss Y. Baldwin

    (Harvard Business School)

Abstract

This paper combines theories of organizational design with theories of production to provide a novel perspective, which helps explain the technological forces that led to the rise of vertically integrated “modern” corporations in the late nineteenth and early twentieth centuries. I describe the technology of a flow process with bottlenecks and show how this technology rewards unified governance, a hierarchical organization structure, and the use of direct authority. These properties in turn became the organizational hallmarks of “modern” industrial corporations with central corporate headquarters.

Suggested Citation

  • Carliss Y. Baldwin, 2019. "Setting the stage for corporate headquarters: a technological explanation for the rise of modern industrial corporations," Journal of Organization Design, Springer;Organizational Design Community, vol. 8(1), pages 1-16, December.
    • Handle: RePEc:spr:jorgde:v:8:y:2019:i:1:d:10.1186_s41469-019-0059-4
    DOI: 10.1186/s41469-019-0059-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s41469-019-0059-4
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s41469-019-0059-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    2. Michael C. Jensen, 2010. "Active Investors, LBOs, and the Privatization of Bankruptcy," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 77-85, January.
    3. Timothy J. Sturgeon, 2002. "Modular production networks: a new American model of industrial organization," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(3), pages 451-496, June.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. Claude Ménard & Elodie Bertrand, 2016. "The Elgar Companion to Ronald H. Coase," Post-Print hal-01315549, HAL.
    6. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    7. Nelson, Daniel, 1974. "Scientific Management, Systematic Management, and Labor, 1880–1915," Business History Review, Cambridge University Press, vol. 48(4), pages 479-500, December.
    8. Navin, Thomas R. & Sears, Marian V., 1955. "The Rise of a Market for Industrial Securities, 1887-1902," Business History Review, Cambridge University Press, vol. 29(2), pages 105-138, June.
    9. Landes,David S., 2003. "The Unbound Prometheus," Cambridge Books, Cambridge University Press, number 9780521826662, September.
    10. Landes, David S., 1986. "What Do Bosses Really Do?," The Journal of Economic History, Cambridge University Press, vol. 46(3), pages 585-623, September.
    11. Michael G. Jacobides & Carmelo Cennamo & Annabelle Gawer, 2018. "Towards a theory of ecosystems," Strategic Management Journal, Wiley Blackwell, vol. 39(8), pages 2255-2276, August.
    12. Landes,David S., 2003. "The Unbound Prometheus," Cambridge Books, Cambridge University Press, number 9780521534024, September.
    13. Litterer, Joseph A., 1963. "Systematic Management: Design for Organizational Recoupling in American Manufacturing Firms," Business History Review, Cambridge University Press, vol. 37(4), pages 369-391, January.
    14. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
    15. Baker, George & Gibbons, Robert & Murphy, Kevin J, 1999. "Informal Authority in Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 56-73, April.
    16. Claude Ménard & Elodie Bertrand (ed.), 2016. "The Elgar Companion to Ronald H. Coase," Books, Edward Elgar Publishing, number 15461.
    17. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    18. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-528, June.
    19. Navin, Thomas R., 1970. "The 500 Largest American Industrials in 1917," Business History Review, Cambridge University Press, vol. 44(03), pages 360-386, September.
    20. Masten, Scott E, 1988. "A Legal Basis for the Firm," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 181-198, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Frank Martela, 2023. "Managers matter less than we think: how can organizations function without any middle management?," Journal of Organization Design, Springer;Organizational Design Community, vol. 12(1), pages 19-25, June.
    2. Sven Kunisch & Markus Menz & David Collis, 2020. "Corporate headquarters in the twenty-first century: an organization design perspective," Journal of Organization Design, Springer;Organizational Design Community, vol. 9(1), pages 1-32, December.
    3. Navya Pandit & Constantin Prox & Carliss Y. Baldwin, 2022. "Studying modular design: an interview with Carliss Y. Baldwin," Journal of Organization Design, Springer;Organizational Design Community, vol. 11(2), pages 77-85, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guidi, Marco G.D. & Hillier, Joe & Tarbert, Heather, 2010. "Successfully reshaping the ownership relationship by reducing ‘moral debt’ and justly distributing residual claims: The cases from Scott Bader Commonwealth and the John Lewis Partnership," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 21(4), pages 318-328.
    2. Bernard Baudry & Bruno Tinel, 2003. "Une analyse théorique des fondements et du fonctionnement de la relation d'autorité intrafirme," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270902, HAL.
    3. Kaouthar Lajili, 2015. "Embedding human capital into governance design: a conceptual framework," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(4), pages 741-762, November.
    4. Patrick Legros & Andrew F. Newman, 2014. "Contracts, Ownership, and Industrial Organization: Past and Future," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(suppl_1), pages 82-117.
    5. Nicolai Foss, 2002. "'Coase vs Hayek': Economic Organization and the Knowledge Economy," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 9-35.
    6. Virgile Chassagnon, 2008. "Qu'est-ce qu'une firme (-réseau) ?," Post-Print halshs-00374758, HAL.
    7. Adam Leaver & Keir Martin, 2021. "‘Dams and flows’: boundary formation and dislocation in the financialised firm," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 403-429, December.
    8. Bernard Paulré, 2001. "Enjeux et dilemmes de l'économie cognitive," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00135486, HAL.
    9. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    10. Aghion, Philippe & Dewatripont, Mathias & Legros, Patrick & Zingales, Luigi (ed.), 2016. "The Impact of Incomplete Contracts on Economics," OUP Catalogue, Oxford University Press, number 9780199826216.
    11. Bernard Paulré, 2001. "Enjeux et dilemmes de l'économie cognitive," Working Papers halshs-00135486, HAL.
    12. Raghuram Rajan, 2012. "The Corporation in Finance," NBER Working Papers 17760, National Bureau of Economic Research, Inc.
    13. José G. Vargas Hernández & Mohammad Reza Noruzi, 2010. "The Study of Three Organizational Enigmas; Organizational Economy, Organizational Business and Organizational Skills," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 1(1), pages 68-87, March.
    14. Gibbons, Robert, 2005. "Four forma(lizable) theories of the firm?," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 200-245, October.
    15. Baldwin, Carliss Y. & Bogers, Marcel L.A.M. & Kapoor, Rahul & West, Joel, 2024. "Focusing the ecosystem lens on innovation studies," Research Policy, Elsevier, vol. 53(3).
    16. Laura Alfaro & Nick Bloom & Paola Conconi & Harald Fadinger & Patrick Legros & Andrew F Newman & Raffaella Sadun & John Van Reenen, 2024. "Come Together: Firm Boundaries and Delegation," Journal of the European Economic Association, European Economic Association, vol. 22(1), pages 34-72.
    17. Matthias Kiefer & Edward Jones & Andrew Adams, 2016. "Principals, Agents and Incomplete Contracts: Are Surrender of Control and Renegotiation the Solution?," CFI Discussion Papers 1603, Centre for Finance and Investment, Heriot Watt University.
    18. Gilles Hilary & Sterling Huang, 2023. "Trust and Contracting: Evidence from Church Sex Scandals," Journal of Business Ethics, Springer, vol. 182(2), pages 421-442, January.
    19. Raghuram G. Rajan & Luigi Zingales, 1998. "The Governance of the New Enterprise," CRSP working papers 487, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    20. Drewianka, Scott, 2006. "A generalized model of commitment," Mathematical Social Sciences, Elsevier, vol. 52(3), pages 233-251, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jorgde:v:8:y:2019:i:1:d:10.1186_s41469-019-0059-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.