Testing the Chandler Thesis: Comparing middle management and administrative intensity in Dutch and US industries, 1900-1950

This article tests Alfred Chandler's thesis that the managerial revolution, that is, the building of managerial hierarchies, clustered in a selected set of industries where the need for co-ordination was particularly high. These fast-growing, capital-intensive, and high-volume producing industries are denoted as Chandlerian industries. We compare the latter with the other industries in the Netherlands and the USA using census data covering the first half of the twentieth century. The comparison reveals that administrative intensity, measured by the proportion of administrative employees to production workers (A/P-ratio), was clearly higher than average in the US Chandlerian industries in the sample used only from c. 1920, considerably later than Chandler's account suggests. In the Netherlands, the A/P-ratios of Chandlerian industries were considerably higher in all three reference years, but the more specific middle managers to workers ratio (MM/W-ratio) only in the middle one (1930). We conclude that differences in the need for co-ordination between industries in the Chandlerian sense are relevant for explaining the pattern in administrative intensity, but suggest that - given the high variety in scores on the A/P- and MM/W-ratios within the category of Chandlerian industries - one should take into consideration additional criteria in further exploring the 'logic' of the managerial revolution. Finally, in particular outside the USA, more consistent differences in administrative intensity between Chandlerian and non-Chandlerian industries are perhaps to be found only in the period after World War Two.