The spread of the multidivisional form among large firms, 1919–1979

The multidivisional form is the favored form of organization for the large firms that dominate the American economy. This study takes up the causes of the dissemination of that form among large firms from 1919 to 1979. Five theories are initially proposed as possible explanations for the changes observed and these theories are operationalized and tested. The model that seems most consistent with the data emphasizes the ability of key actors to alter structure under three circumstances: when the firm has a product-related or -unrelated strategy (which is consistent with Chandler's, 1962 theorizing); when the corporate presidents have a background in sales or finance; and when other firms in the industry alter their structures. The implications of these results for theories of organizational change are discussed with special reference to the importance of conceiving how actors operate with varying rationalities in this process.