Concept of the Corporation
Encyclopedia
Concept of the Corporation (1946) is a book by management professor and sociologist Peter Drucker
. It is widely held to be the first book of its kind.
as a large social institution involved in business activities. It describes what management is, how managers are selected, how they act, and how a corporation is organized into management units at different scales (e.g. divisions, sections, etc.). It also seeks to explain the role and position of large corporations in modern society.
In writing and researching the book, Drucker was given access to General Motors resources, paid a full salary, accompanied CEO Alfred P. Sloan
to meetings, and he was given free run of the company.
Druckers' focus was the insider view of the company. He focused, in contrast to his contemporaries, on what happened inside a company and how this related to the company's success or failure. Fascinated by this question, he studied management to find out what really made a business tick.
Until then, management was seen as a no-brainer: the CEO would simply give the orders and the others would follow. But Drucker was interested in the human interactions within a company, and more specifically on how power structures, political environments, information flows, decision making and managerial autonomy contributed to success. By shifting his focus, he was able to explain why General Motors was such a success.
Peter Drucker
Peter Ferdinand Drucker was an influential writer, management consultant, and self-described “social ecologist.”-Introduction:...
. It is widely held to be the first book of its kind.
Overview
The book studies and analyses General MotorsGeneral Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
as a large social institution involved in business activities. It describes what management is, how managers are selected, how they act, and how a corporation is organized into management units at different scales (e.g. divisions, sections, etc.). It also seeks to explain the role and position of large corporations in modern society.
In writing and researching the book, Drucker was given access to General Motors resources, paid a full salary, accompanied CEO Alfred P. Sloan
Alfred P. Sloan
Alfred Pritchard Sloan, Jr. was an American business executive in the automotive industry. He was a long-time president, chairman, and CEO of General Motors Corporation...
to meetings, and he was given free run of the company.
Druckers' focus was the insider view of the company. He focused, in contrast to his contemporaries, on what happened inside a company and how this related to the company's success or failure. Fascinated by this question, he studied management to find out what really made a business tick.
Until then, management was seen as a no-brainer: the CEO would simply give the orders and the others would follow. But Drucker was interested in the human interactions within a company, and more specifically on how power structures, political environments, information flows, decision making and managerial autonomy contributed to success. By shifting his focus, he was able to explain why General Motors was such a success.
General Motors' reaction
GM was very pleased with Druckers' work, until Drucker published his book, "Concept of the Corporation." The book strongly praises General Motors for developing management techniques, programs, and infrastructure. But GM interpreted the suggestions that Drucker made—to decentralise the company in order to even become more successful—as betrayal. Their reaction was so strong against his view of the work, that it would lead to Alfred Sloan later treating his memoir, My Years with General Motors, largely as the organization's rebuttal to Drucker's criticisms, and as a curricularCurriculum
See also Syllabus.In formal education, a curriculum is the set of courses, and their content, offered at a school or university. As an idea, curriculum stems from the Latin word for race course, referring to the course of deeds and experiences through which children grow to become mature adults...
counterbalance to his book's seminal influence in the field of management education (which was blossoming as a field of postgraduate study at the time).
For Drucker this was completely unexpected: He found GM a great company, which he had even compared with the U.S. government. Drucker used the term "federal decentralization" to describe it, as he felt that a company should be organized in a number of autonomous businesses. Much like the way the U.S Government gave power to the states, GM should give its divisions more autonomy. It would take GM several decades to listen. By then, Drucker had helped the Japanese, who embraced his intentions and the hybrid organization form, leap in front of many American companies.
External links
- Article about Concept of the Corporation by Financial TimesFinancial TimesThe Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
columnist John KayJohn Kay (economist)John Kay is a leading British business economist of centrist persuasion.Kay was educated at the Royal High School, Edinburgh University, and Nuffield College, Oxford...