Alfred Chandler and knowledge management within the firm

Abstract

This essay examines the role of knowledge management, defined as the management of processes affecting the creation, communication, distribution, and exploitation of knowledge concerning corporate strategy, markets, product and process technologies, and management practices within the corporation, in Alfred D. Chandler’s work on the modern corporation. Along with efforts to avoid transaction-cost problems, the management of firm-specific information and knowledge was central to the 19th-century transformation of US corporate structure that Chandler examined in The Visible Hand. Knowledge management also played a key role in the creation of intrafirm organizations for managing the creation of knowledge, management of innovation, and acquisition of technologies from external sources. Industrial R&D and the product diversification that emerged from the in-house R&D facilities of many of these firms contributed to the development of the so-called “M-form” corporation (examined by Chandler in Strategy and Structure), in which corporate management and strategy formulation were organizationally differentiated and separated from functional management. Finally, Chandler’s last work on the success and failure of United States, Japanese, and Western European firms in the modern electronics, pharmaceuticals, and chemicals industries emphasized the role of the “integrated learning base” within these firms and the varying degrees of success with which established firms were able to sustain these “learning bases” and/or apply them to new markets and technologies.