Beyond the M-form: Toward a managerial theory of the firm

Abstract

Driven by a set of radical changes in their internal and external environments, large global corporations are innovating a new organizational form. Premised on knowledge and expertise rather than capital or scale as the key strategic resource, this new form is fundamentally different from the multidivisional organization that had emerged in the 1920s and had become the dominant corporate model in the post-War years. In this article, we describe this new organization using Asea Brown Boveri (ABB) as an illustration, and highlight its differences from the classic M-form by contrasting its structure, processes and decision-making mechanisms against the models proposed by Chandler (1962), Bower (1970) and Cyert and March (1963). Our conceptualization of this emerging organization is grounded in a managerial perspective that is very different from the disciplinary foundations of existing economic and behavioral theories of the firm. We conclude by arguing for the need to create a 'managerial theory of the firm' that would be more attuned to the premises of the key actors within the firm so as to be able to illuminate the corporate world as seen by managers and encompass the issues that they perceive to be important.