Skip to main content
SpringerLink
Log in

Industrial organization, corporate strategy and structure

  • Chapter
Readings in Accounting for Management Control

Abstract

Let us start with a sketch of the relationships to be surveyed in this paper. The large firm sells1 in product markets having structural features that constrain its behaviour and define its options. ‘Market structure’ refers to certain stable attributes of the market that influence the firm’s conduct in the marketplace. Significant elements of market structure include the number and size distribution of sellers and buyers, height of barriers to entry and exit, extent and character of product differentiation, extent and character of international competition (if the market is defined no more broadly than the nation), and certain parameters of demand (elasticity, growth rate). The firm holds tangible or intangible semi-fixed assets or skills. The top managers’ perceptions of the market structure and the firm’s strengths and weaknesses jointly determine their choice of corporate strategy (its long-run plan for profit maximization) and organizational structure (the internal allocation of tasks, decision rules, and procedures for appraisal and reward, selected for the best pursuit of that strategy). Both corporate strategy and organizational structure influence the economic performance of the firm and the market in which it sells.2

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Abell, Derek F. Defining the business: The starting point of strategic planning. Englewood Cliffs, N.J.: Prentice-Hall, forthcoming.

    Google Scholar 

  • Aharoni, Yair. The foreign investment decision process. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1966.

    Google Scholar 

  • Alchian, Armen A. and Demsetz, Harold. ‘Production, Information Costs, and Economic Organization,’ Amer. Econ. Rev., Dec. 1972, 62(5), pp. 777–95.

    Google Scholar 

  • Aldrich, Howard E. ‘Technology and Organizational Structure: A Reexamination of the Findings of the Aston Group,’ Admin. Science Q., March 1972, 17(1), pp. 26–43.

    Article  Google Scholar 

  • Alford, Bernard W.E. ‘The Chandler Thesis — Some General Observations,’ in Hannah, Leslie, ed. (1976), pp. 52-70.

    Google Scholar 

  • Allen, Michael Patrick. ‘The Structure of Interorganizational Elite Cooptation: Interlocking Corporate Directorates,’ Amer. Soc. Rev., June 1974, 39(3), pp. 393–406.

    Article  Google Scholar 

  • Allen, Stephen A. ‘Organizational Choices and General Management Influence Networks in Divisionalized Companies,’ Acad. Management J., Sept. 1978, 21(3), pp. 341–65.

    Article  Google Scholar 

  • Andrews, Kenneth R. The concept of corporate strategy. Homewood, Ill.: Dow Jones-Irwin, 1971.

    Google Scholar 

  • Ansoff, H. Igor. Corporate strategy: An analytic approach to business policy for growth and expansion. New York: McGraw-Hill, 1965.

    Google Scholar 

  • Armour, Henry Ogden and Teece, David J. ‘Organizational Structure and Economic Performance: A Test of the Multidivisional Hypothesis,’ Bell J. Econ., Spring 1978, 9(1), pp. 106–22.

    Article  Google Scholar 

  • Blau, Peter M., et al. ‘Technology and Organization in Manufacturing,’ Admin. Science Quart, March 1976, 21(1), pp. 20–40.

    Article  Google Scholar 

  • Bower, Joseph L. Managing the resource allocation process: A study of corporate planning and investment. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1970[a].

    Google Scholar 

  • —. ‘Planning within the Firm,’ Amer. Econ. Rev., May 1970[b], 60(2), pp. 186–94.

    Google Scholar 

  • Buckley, Peter J. and Casson, Mark. The future of the multinational enterprise. New York: Holmes and Meier, 1976.

    Google Scholar 

  • Burns, Tom and Stalker, G.M. The management of innovation. London: Tavistock, 1961.

    Google Scholar 

  • Calvo, Guillermo A. and Wellisz, Stanislaw. ‘Supervision, Loss of Control, and the Optimum Size of the Firm’, J. Polit. Econ., Oct. 1978, 86(5), pp. 943–52.

    Article  Google Scholar 

  • Caves, Richard E.; Porter, Michael E. and Spence, Michael. Competition in the open economy: A model applied to Canada. Cambridge: Harvard University Press, 1980.

    Google Scholar 

  • Chandler, Alfred D., Jr. Strategy and structure: Chapters in the history of the industrial enterprise. Cambridge: M.I.T. Press, 1962.

    Google Scholar 

  • —. The visible hand: The managerial revolution in American business. Cambridge: Harvard University Press, Belknap Press, 1977.

    Google Scholar 

  • Channon, Derek F. The strategy and structure of British enterprise. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1973.

    Google Scholar 

  • Child, John. ‘Organization Structure and Strategies of Control: A Replication of the Aston Study,’ Admin. Science Quart., June 1972, 72(2), pp. 163–77.

    Article  Google Scholar 

  • Cyert, Richard M. and March, James G. A behavioural theory of the firm. Englewood Cliffs, NJ.: Prentice-Hall, 1963.

    Google Scholar 

  • Davis, Stanley M. and Lawrence, Paul R. Matrix. Reading, Mass.: Addison-Wesley, 1977.

    Google Scholar 

  • Dill, William R. ‘Environment as an Influence on Managerial Autonomy,’ Admin. Science Quart., 1958, 2, pp. 409–43.

    Article  Google Scholar 

  • Downey, W. Kirk, Hellriegel, Don and Slocum, John W., Jr. ‘Environmental Uncertainty: The Construct and Its Applications,’ Admin. Science Quart., Dec. 1975, 20(4), pp. 613–29.

    Article  Google Scholar 

  • DuBick, Michael A. ‘The Organizational Structure of Newspapers in Relation to Their Metropolitan Environments,’ Admin. Sciencxe Quart., Sept. 1978, 23(3), pp. 418–33.

    Article  Google Scholar 

  • Dyas, Gareth P. The strategy and structure of French industrial enterprise. Unpublished D.B.A. thesis, Graduate School of Business Administration, Harvard University, 1972.

    Google Scholar 

  • —— and Thanheiser, Heinz T. The emerging European enterprise: Strategy and structure in French and German industry. London: Macmillan, 1976.

    Google Scholar 

  • Edström, Anders and Galbraith, Jay R. ‘Transfer of Managers as a Coordination and Control Strategy in Multinational Organizations,’ Admin. Science Quart., June 1977, 22(2), pp. 248–63.

    Article  Google Scholar 

  • Franko, Lawrence G. Joint venture survival in multinational corporations. New York: Praeger, 1971.

    Google Scholar 

  • —. The European multinationals: A renewed challenge to American and British big business. Stamford, Conn.: Greylock, 1976.

    Google Scholar 

  • Galbraith, John Kenneth. The new industrial state. Second edition. Boston: Houghton Mifflin, [1967] 1971.

    Google Scholar 

  • Grabowski, Henry G. and Mueller, Dennis C. ‘Life-Cycle Effects on Corporate Returns on Retentions,’ Rev. Econ. Statist., Nov. 1975, 57(4), pp. 400–409.

    Article  Google Scholar 

  • Hannah, Leslie, ed. Management strategy and business development: An historical and comparative study. London: Macmillan, 1976.

    Google Scholar 

  • Harvey, Edward. ‘Technology and the Structure of Organizations,’ Amer. Soc. Rev., April 1968, 33(2), pp. 247–59.

    Article  Google Scholar 

  • Horst, Thomas. At home abroad: A study of the domestic and foreign operations of the American food-processing industry. Cambridge, Mass: Ballinger, 1974.

    Google Scholar 

  • Hunt, Michael S. Competition in the major home appliance industry, 1960–1970. Unpublished Ph.D. dissertation, Harvard University, 1972.

    Google Scholar 

  • Imai, Ken’ichi. ‘Japan’s Industrial Organization,’ Japanese Econ. Studies, Spring-Summer 1978, 6(3–4), pp. 3–67.

    Google Scholar 

  • Inkson, J.H.K., et al. ‘A Comparison of Organization Structure and Managerial Roles: Ohio, U.S.A., and the Midlands, England,’ J. Management Stud., Oct. 1970, 7(3), pp. 347–63.

    Article  Google Scholar 

  • Keller, Robert T.; Slocum, John W., Jr. and Susman, Gerald I. ‘Uncertainty and Type of Management System in Continuous Process Organizations,’ Acad. Management J., March 1974, 17(1), pp. 56–68.

    Article  Google Scholar 

  • Khandwalla, Pradip N. ‘Effect of Competition on the Structure of Top Management Control,’ Acad. Management J., June 1973[a], 16(2), pp. 285–95.

    Article  Google Scholar 

  • —. ‘Viable and Effective Organizational Designs of Firms,’ Acad. Management J., Sept. 1973[b], 16(3), pp. 481–95.

    Article  Google Scholar 

  • Kimberly, John R. ‘Organizational Size and the Structuralist Perspective: A Review, Critique and Proposal,’ Admin. Science Quart., Dec. 1976, 21(4), pp. 571–97.

    Article  Google Scholar 

  • Kynaston Reeves, Tom and Turner, Barry A. ‘A Theory of Organization and Behavior in Batch Production Factories,’ Admin. Science Quart., March 1972, 17(1), pp. 81–98.

    Article  Google Scholar 

  • Lawrence, Paul R. and Lorsch, Jay W. Organization and environment: Managing differentiation and integration. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1967.

    Google Scholar 

  • Leibenstein, Harvey. Beyond economic man: A new foundation for microeconomics. Cambridge: Harvard University Press, 1976.

    Google Scholar 

  • Lorsch, Jay W. and Allen, Stephen A., III. Managing diversity and interdependence: An organizational study of multidivisional firms. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1973.

    Google Scholar 

  • Markham, Jesse W. Conglomerate enterprise and public policy. Boston: Division of Research, Graduate School of Business Administration. Harvard University, 1973.

    Google Scholar 

  • Marschak, Jakob and Radner, Roy. Economic theory of teams. Cowles Foundation Monograph No. 22. New Haven: Yale University Press, 1972.

    Google Scholar 

  • McArthur, John H. and Scott, Bruce R. Industrial planning in France. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1969.

    Google Scholar 

  • McMillan, Charles J., et al. ‘The Structure of Work Organization across Societies,’ Acad Management J., Dec. 1973, 16(4), pp. 555–69.

    Article  Google Scholar 

  • Mirrlees, James A. ‘The Optimal Structure of Incentives and Authority within an Organization,’ Bell J. Econ., Spring 1976, 7(1), pp. 105–31.

    Article  Google Scholar 

  • Mueller, Dennis C. ‘A Life Cycle Theory of the Firm,’ J. Ind. Econ., July 1972, 20(3), pp. 199–219.

    Article  Google Scholar 

  • Murthy, K.R. Srinivasa. Corporate strategy and top executive compensation. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1974.

    Google Scholar 

  • Negandhi, Anant R. and Reimann, Bernard C. ‘Correlates of Decentralization: Closed and Open Systems Perspective,’ Acad. Management J., Dec. 1973, 16(4), pp. 570–82.

    Article  Google Scholar 

  • Newman, Howard H. ‘Strategic Groups and the Structure-Performance Relationship,’ Rev. Econ. Statist., August 1978, 60(3), pp. 417–27.

    Article  Google Scholar 

  • Ouchi, William G. ‘The Relationship between Organizational Structure and Organizational Control,’ Admin. Science Quart., March 1977, 22(1), pp. 95–113.

    Article  Google Scholar 

  • —. ‘The Transmission of Control through Organizational Hierarchy,’ Acad. Management J., June 1978, 21(2), pp. 173–92.

    Article  Google Scholar 

  • Pavan, Robert J. The strategy and structure of Italian enterprise. Unpublished D.B.A. thesis, Graduate School of Business Administration, Harvard University, 1972.

    Google Scholar 

  • Pennings, Johannes M. ‘The Relevance of the Structural-Contingency Model for Organizational Effectiveness,’ Admin. Science Quart., Sept. 1975, 20(3), pp. 393–410.

    Article  Google Scholar 

  • —. ‘Dimensions of Organizational Influence and Their Effectiveness Correlates.’ Admin. Science Quart., Dec. 1976, 21(4), pp. 688–99.

    Article  Google Scholar 

  • —. ‘Structural Correlates of the Environment,’ in Strategy + structure = performance: The strategic planning imperative. Edited by Hans B. Thorelli. Bloomington: University of Indiana Press, 1977, pp. 260–76.

    Google Scholar 

  • Penrose, Edith T. The theory of the growth of the firm. Oxford: Basil Blackwell, 1959.

    Google Scholar 

  • Pfeffer, Jeffrey. ‘Size and Composition of Corporate Boards of Directors: The Organization and Its Environment,’ Admin. Science Quart., June 1972, 17(2), pp. 218–28.

    Article  Google Scholar 

  • —— and Leblebici, Huseyin. ‘The Effect of Competition on Some Dimensions of Organizational Structure,’ Social Forces, Dec. 1973, 52(2), pp. 268–79.

    Google Scholar 

  • —— and Salancik, Gerald R. The external control of organizations: A resource dependence perspective. New York: Harper & Row, 1978.

    Google Scholar 

  • Porter, Michael E. ‘The Structure within Industries and Companies’ Performance,’ Rev. Econ. Statist., May 1979, 61(2), pp. 214–27.

    Article  Google Scholar 

  • Proctor, Michael S. ‘Production, Investment, and Idle Capacity,’ Southern Econ. J., July 1976, 43(1), pp. 855–63.

    Article  Google Scholar 

  • Pugh, D.S., et al. ‘The Context of Organization Structures,’ Admin. Science Quart., March 1969, 14(1), pp. 91–114.

    Article  Google Scholar 

  • Rubin, Paul H. ‘The Expansion of Firms,’ J. Polit. Econ., July–August 1973, 81(4), pp. 936–49.

    Article  Google Scholar 

  • Rumelt, Richard P. Strategy, structure, and economic performance. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1974.

    Google Scholar 

  • —. ‘Diversity and Profitability,’ Paper MGL-51, Managerial Studies Center, Graduate School of Management, University of California, Los Angeles, 1977.

    Google Scholar 

  • Scott, Bruce R. ‘The Industrial State: Old Myths and New Realities,’ Harvard Bus. Rev., March–April 1973, 51(2), pp. 133–48.

    Google Scholar 

  • Simonetti, Jack L. and Boseman, F. Glenn. ‘The Impact of Market Competition on Organization Structure and Effectiveness: A Cross-Cultural Study,’ Acad. Management J., Sept. 1975, 18(3), pp. 631–638.

    Article  Google Scholar 

  • Steer, Peter S. and Cable, John R. ‘Internal Organization and Profit: An Empirical Analysis of Large U.K. Companies,’ J. Ind. Econ., Sept. 1978, 27(1), pp. 13–30.

    Article  Google Scholar 

  • Steiner, Peter O. Mergers: Motives, effects, policies. Ann Arbor: University of Michigan Press, 1975.

    Google Scholar 

  • Stiglitz, Joseph E. ‘Incentives, Risk, and Information: Notes Towards a Theory of Hierarchy,’ Bell J. Econ., Autumn 1975, 6(2), pp. 552–79.

    Article  Google Scholar 

  • Stopford, John M. and Wells, Louis T., Jr. Managing the multinational enterprise: Organization of the firm and ownership of the subsidiaries. New York: Basic Books, 1972.

    Google Scholar 

  • Thanheiser, Heinz T. Strategy and structure of German industrial enterprise. Unpublished D.B.A. thesis, Graduate School of Business Administration, Harvard University, 1972.

    Google Scholar 

  • Thompson, James D. Organizations in action: Social science bases of administrative theory. New York: McGraw-Hill, 1967.

    Google Scholar 

  • Vancil, Richard F. Decentralization: Managerial ambiguity by design. New York: Dow Jones-Irwin, 1979.

    Google Scholar 

  • Wilkins, Mira. The emergence of multinational enterprise: American business abroad from the colonial era to 1914. Cambridge: Harvard University Press, 1970.

    Google Scholar 

  • Williamson, Oliver E. ‘Hierarchical Control and Optimum Firm Size,’ J. Polit. Econ., April 1967, 75(2), pp. 123–38.

    Article  Google Scholar 

  • —. Corporate control and business behavior. Englewood Cliffs, N.J.: Prentice-Hall, 1970.

    Google Scholar 

  • —. Markets and hierarchies. New York: Free Press, 1975.

    Google Scholar 

  • —— and Bhargava, Narottam. ‘Assessing and Classifying the Internal Structure and Control Apparatus of the Modern Corporation’ in Market structure and corporate behaviour. Edited by Keith Cowling. London: Gray-Mills, 1972, pp. 125–49.

    Google Scholar 

  • —— Wächter, Michael L. and Harris, Jeffrey E, ‘Understanding the Employment Relation: The Analysis of Idiosyncratic Exchange,’ Bell J. Econ., Spring 1975, 6(1), pp. 250–78.

    Article  Google Scholar 

  • Woodward, Joan. Industrial organization: Theory and practice. London: Oxford University Press, 1965.

    Google Scholar 

  • Woodward, Joan —, ed. Industrial organization: Behaviour and control. London: Oxford University Press, 1970.

    Google Scholar 

  • Wrigley, Leonard. Divisional autonomy and diversification. Unpublished D.B.A. thesis, Harvard Business School, 1970.

    Google Scholar 

  • —. ‘Conglomerate Growth in Canada,’ brief prepared for Royal Commission on Corporate Concentration. Mimeographed. London, Ontario: School of Business Administration, University of Western Ontario, 1976.

    Google Scholar 

  • Zwerman, William L. New perspectives on organization theory. Contributions in Sociology, No. 1. Westport, Conn.: Greenwood, 1970.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Harvard University, USA

    Richard E. Caves

Authors
  1. Richard E. Caves
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. University of Glasgow, UK

    Clive Emmanuel

  2. University of Lancaster, UK

    David Otley

  3. University of Southern California, USA

    Kenneth Merchant

Rights and permissions

Reprints and permissions

Copyright information

© 1980 Springer Science+Business Media Dordrecht

About this chapter

Cite this chapter

Caves, R.E. (1980). Industrial organization, corporate strategy and structure. In: Emmanuel, C., Otley, D., Merchant, K. (eds) Readings in Accounting for Management Control. Springer, Boston, MA. https://doi.org/10.1007/978-1-4899-7138-8_16

Download citation

  • DOI: https://doi.org/10.1007/978-1-4899-7138-8_16

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-0-412-41490-9

  • Online ISBN: 978-1-4899-7138-8

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation