Abstract
Efficiency accounts of the firm arghe that the multidivisional governance structure (M-form) arose and succeeded because it reduced costs by creating a clear distinction between strategic and tactical planning. Examining new evidence in the paradigmatic case of General Motors (GM), this article shows that such approaches are poorly equipped to explain changes in the M-form. For most of its history, GM intentionally violated the axioms of efficient organization to create managerial consent. The GM case suggests that the textbook M-form may actually undermine order within the firm, thus leading to organizational decline.
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