Academic journal article Organization Development Journal

Strategy and Structure: Chicken or Egg? (Reconsideration of Chandler's Paradigm for Economic Success)

Academic journal article Organization Development Journal

Strategy and Structure: Chicken or Egg? (Reconsideration of Chandler's Paradigm for Economic Success)

Article excerpt


This paper incorporates the findings of a recent study that used three longitudinal approaches to examine Chandler's strategy-- structure and fit-performance thesis. It focuses mainly on implications for organization design as a continuous process based on a heuristic approach to situation formulation instead of what has been classically called strategic planning. The crucial underlying concept is that the structure-strategy concept as originally posited by Chandler is in reality a two-way causal relationship and that existing organizational structure has high potential for biasing future situation-formulation in a hypercompetitive environment. This in turn has some serious implications for the field of Organization Development. "Truth is the daughter of time." (A.M. Pettigrew, 1990)


Almost four decades separate us from Chandler's (1962) seminal work. Yet few published works have had such a lasting impact on the management literature as has his Strategy and Structure. Its message continues to be regarded as generally both logical and valid by management practitioners and academics alike. However, while book reviews of Chandler's classic text, such as Rector's (1987) and Paterson's (1988), are conceptually supportive and reverent in their treatment, they fail to assess its ostensibly non-empirical foundations.

More recent studies have addressed the issue of the strategic fit or match between strategy and structure that is germane to Chandler's thesis (Amburgey & Dacin, 1994; Bartlett & Ghoshal, 1993; Bowman & Singh, 1993; Lamont, Williams & Hoffman, 1994; Ross, 1994). With Chandler's overall message still very much alive in the literature, one study is especially significant because it focuses on the empirical base for the strategy -> structure

-> economic success linkage. In that study the authors (Acar, Keating, Aupperle, Hall, & Engdahl, 2000) assess Chandler's thesis concerning the relationships among strategy, structure and economic efficiency within the context of his specific research parameters. Their concern is that Chandler's paradigm for linkage be dissociated of any hint of the Abilene syndrome or the Hawthorne effect, in which an expanding spiral of reinforcement expands an initial misperception into an illusion of sound theory.

The implications of their study are apropos for today's acknowledged hyper-turbulent environment in which the strategic response to change is reformulating the concept of structure itself (Neilson, Pasternack, & Viscio, 2000). However, before launching into that, it is perhaps even more important to say why the Chicken or Egg issue is so important and reveal some implications and conclusions up front.

Rather than "ruining the plot" by exposing the outcome prematurely, an up front preview of conclusions is intended to provide a compass point for charting a course to understand and manage strategic uncertainty (Georgantzas & Acar, 1995) and how Chandler's concepts fit in with today's reality. With the advent of hyper competition (D'Aveni, 1994) management is faced with a major philosophical fork in the road. One approach is to question whether continuous rapid change in the environment has changed the nature of the game; or the question, as raised by the business press, is whether or not companies can afford to take the "long view" (Mandel, 1995). The alternative approach is that of continuous environmental assessment and "organizational learning" (Senge, 1990). The rub comes when such organizational learning is based primarily on past experience. Since the field of Organization development (0.D.) is built primarily on the concept of action research, or more specifically, experiential learning, it is highly subject to the questions and implications raised in this paper. The structure (processes) of OD need a new direction and as DeBono (1983) so succinctly puts it, one can not look in a new direction by looking harder in an old one. …

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