Concept of the Corporation

Concept of the Corporation
Author(s)	Peter Drucker
Country	United States
Language	English
Publisher	John Day
Publication date	1946
Pages	329
ISBN	1560006250 or 978-1560006251
OCLC Number	25370125
Dewey Decimal	338.7/4/0973 20
LC Classification	HD2731 .D7 1993

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.

Overview

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The book studies and analyses General Motors 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.

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.^[1] 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 curricular counterbalance to his book's seminal influence in the field of management education^[1] (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.

Notes

1. ^ ^{a b} Sloan 1990 [1964], foreword, pp. v–vi.

Bibliography

• Sloan, Alfred P. (1964), McDonald, John, ed., My Years with General Motors, Garden City, NY, USA: Doubleday, OCLC 802024, LCCN 64-011306, http://books.google.com/books?id=qHJEAAAAIAAJ. Republished in 1990 with a new introduction by Peter Drucker (ISBN 978-0385042352). 

External links

• Article about Concept of the Corporation by Financial Times columnist John Kay