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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