Concept Of The Corporation
Peter F. Drucker, 1946
Off the Shelf highlights the books of Peter F. Drucker. This week, we look at “Concept of the Corporation.” First published in 1946, Drucker’s third book is a deep dive into the inner workings of General Motors, the crown jewel of 20th-century American industry.
In preparation for writing, Drucker spent 18 months embedded with the company, meeting with leaders and workers across the U.S. and learning about the company’s structure, principles, and operations.
Drucker believed that GM played a role in American society that went well beyond sheer economic impact. Indeed, in highly industrialized economies, Drucker says that large corporations are the “representative” social institutions due to the influence they have on society as a whole, even more so than universities or government agencies.
The book considers the attributes that help GM grow into a massive entity that manufactured everything from cars, to aircraft, to refrigerators. It also suggests ways that the company needed to evolve to maintain its dominant position, including rethinking the traditional divisions that existed between workers and management.
Although GM executives largely ignored — or sometimes attacked — the book, Drucker’s insights provided inspiration to others, including university presidents, American military leaders, and executives in Japan’s rapidly growing automobile industry.
“Unless the power of the corporation can be organized on an accepted principle of legitimacy, it will be taken over by a Central government.”
Book Synopsis
Concept of the Corporation was the first study ever of the constitution, structure, and internal dynamics of a major business enterprise. Basing his work on a two-year analysis of the company done during the closing years of World War II, Drucker looks at the General Motors managerial organization from within. He tries to understand what makes the company work so effectively, what its core principles are, and how they contribute to its successes. The themes this volume addresses go far beyond the business corporation, into a consideration of the dynamics of the so-called corporate state itself.
When the book initially appeared, General Motors managers rejected it as unfairly critical and antibusiness. Yet, the GM concept of the corporation and its principles of organization later became models for organizations worldwide. Not only businesses, but also government agencies, research laboratories, hospitals, and universities have found in Concept of the Corporation a basis for effective organization and management.
Because it offers a fundamental theory of corporate goals, this book is a valuable resource for business professionals and organization analysts. It will also be of interest to students and professionals in economics, public administration, and political science. Professional and technical readers who admire Peter Drucker's work will want to be certain this volume is in their personal library. At a time when everything from the size to the structure of corporations is being questioned, this classic should prove a valuable guide.
