To what extent can Chandlers model of large-scale, integrated Essay

To what extent can Chandlers model of large-scale, integrated managerial enterprise explain the long-term competitiveness of leading economies - Essay Example Expressing my opinion, this model has not been followed entirely by all the leading economies in the world. To be discussed in the essay is a brief explanation of Chandler’s theory of large scale managerial enterprise its applications and bottlenecks. I will provide justification of my opinion by using the enterprise system in Japan and China with a focus on the role externalities such as the availability of funds, role of the government as well as business networks and groups. With these, examples this paper will explain the theories of capitalism and entrepreneurship and how they have enabled those using the system gain competitive advantage. Chandler’s concept of the visible hand premises the origin of the firm and its growth prospects. He argues that the existence of the firm is fundamentally to achieve coordination in an effective manner than the market in order to enjoy productivity gains. When the gains are easily realized, economies of scale set in. The model has specific problems associated with it. First, a managerially controlled firm is non-maximiser and thus high profit rates are not as objective and thus cannot be used to measure competitive advantage. Second, the firm though being an efficient cost minimiser, the benefits are not observable since they are being absorbed by high executive salaries and managerial perquisites. According to Chandler (1997, p14) managerial enterprise is defined as the modern enterprise with numerous operating units carrying out specific functions of production and distribution. It can also be termed as governance structure where investment decisions for current and future activities are made following management hierarchy with expertise and knowledge. All the managers are charged with the responsibility of efficient management of the organizations and they are salaried managers answerable to the board of governors. The large scale