Organizing Control: August Thyssen and the Construction of German Corporate Management (review)

Jeffrey R. Fear, Associate Professor at Harvard Business School since 2001, has been studying the history of the Germany company Thyssen for many years. The comprehensive study discussed here is based on Fear's dissertation, which he defended at Stanford University in 1993.

In his study, Fear questions earlier conclusions relating to the development of the German economy and the major corporations that define it. In the major focus of his criticism, Fear maintains that most corporate histories are devoted to isolated aspects of a company's history or outstanding entrepreneurial personalities, although internal company processes of decision making are generally given short shrift. He overturns the dominant understanding of German management as "backward" relative to other countries, casts doubts on the existence of a "special path" of economic development in Germany (as some scholars have argued), and questions the assumption that American organizational models were the inspiration for German enterprises.

To support his assertions, Fear focuses in his nearly 1,000-page work on the development, practice, and dynamics of managerial organization at Thyssen. He analyzes the company's internal structures and systems as well as the decision-making process at Thyssen & Co. (part I, 1871–1914), the Thyssen-Konzern (part II, 1890–1926), and the Vereinigte Stahlwerke (part III, 1926–1936). The author is interested primarily in the control instruments used by management—above all, by August Thyssen, the Andrew Carnegie of Germany—to push the Thyssen & Co. rolling mill to expand into a vertically integrated complex of firms.

Fear pursues four main themes in his analysis. First, he argues that Thyssen—although constrained by the limited equity base typical of a family enterprise—implemented a policy of successive decentralization in an attempt to meet the challenge posed by the rapid growth of heavy industry in the late nineteenth century. Thyssen set up a centralized control structure to monitor the individual facilities and companies and cooperation among them. At the same time, the managers of the individual companies were given responsibility not only for technical operations but also for commercial administration. Thyssen thus established modern structures relatively early while maintaining entrepreneurial independence. Second, he calls into question both the idea that major U.S. corporations were more advanced than their contemporaries and the notion that German business became Americanized after 1945. In this context, Fear moves on to his third argument, questioning the applicability of Chandler's model of entrepreneurial organization to the Thyssen concern. Here he argues that the company had its own model of business management and control that was "oriented to issues of organizational design, financial liquidity, and efficient use of investment capital" (p. 8). Fourth, Fear critiques Max Weber's view of the enterprise as a bureaucratic entity. In his view, the concepts and methods that are appropriate for a business organization do not evolve solely on the basis of rational decisions and formal procedures. Fear argues that the human factor needs to be taken into account in the study of business history.

A valuable contribution to the scholarship of modern German business history, Fear's book overturns or at least calls into question earlier findings. The impact of some of his conclusions extends far beyond Thyssen, offering insights that apply to much of German industry. With its critical approach to the existing literature, this thought-provoking study leaves its readers eager to learn more. If only the author had given his readers a bibliography!