Publisher's Synopsis
Empirical studies of the multidivisional form of the modern corporation have, for the most part, provided ambiguous implications for its theoretical basis. The main debate in this book focuses on the work of two specialists: 1. Williamson, who asserts that size determines organizational form, and 2. Chandler, who argues that firms change from the functional organizational form to the multidivisional form as a way to better manage growth into diversified markets. Ollinger proposes that single product firms are efficiently organized in a functional framework, but after diversification the efficiency decreases and the firms subsequently change to the multidivisional form in order to lower the costs of operating the heterogeneous product and geographic markets. Ollinger supports his hypothesis with historical evidence and empirical tests that evaluate short run operating profitability, long run profitability, managerial efficiency, and change of sales in diversified markets.
