Jeffrey R. Fear. Organizing Control: August Thyssen and the Construction of German Corporate Management. Cambridge: Harvard University Press, 2005. x + 956 pp. $95.00 (cloth), ISBN 978-0-674-01492-3.
Reviewed by Sara Ann Sewell (Department of History, Virginia Wesleyan College)
Published on H-German (July, 2006)
Thoroughly Modern under a Paternalistic Guise
This volume is a seminal work in the history of the Thyssen corporation as well as in German business history more generally. Jeffrey Fear narrates the story of the management of the Thyssen-Konzern and Vereinigte Stahlwerke. He recounts the history of the Thyssen company and details its inception in 1871 as Thyssen & Co.; its reorganization as the Thyssen-Konzern in 1924; the establishment of Vereinigte Stahlwerke in 1926; and the union of four major steel companies (including the Thyssen-Konzern) under Vereinigte Stahlwerke in 1936. Fear emphasizes two key innovations of the Thyssen-Konzern's and the Vereinigte Stahlwerke's management. First, he demonstrates how the Thyssen-Konzern relied on modern engineering expertise to drive managerial organization and commercial success. Second, he shows the ways in which the Thyssen-Konzern and Vereinigte Stahlwerke developed modern accounting practices that influenced and often determined corporate organization.
Organizing Control is a history of the Thyssen company's management throughout the company's many incarnations: Thyssen & Co.'s "merchant-entrepreneurial conception of control"; the Thyssen-Konzern's "manufacturing conception of control"; Vereinigte Stahlwerke's detachment of management from ownership. Throughout this work, Fear emphasizes the pivotal roles managers played in the development of both firms' managements, contending that the Herr-im-Hause view, which dominates both scholarly and popular conceptions of German business, overlooks the impact of middle management in corporate organization. While Fear does recognize the decisive role of August Thyssen, founder and director of the Thyssen-Konzern until his death in 1926, Fear's aim is to demonstrate that dynamic, young managers were instrumental in the development of a management culture at the Thyssen-Konzern. Thyssen, he asserts, built a decentralized management structure that delegated considerable authority to entrepreneurial managers with technical expertise. Thus, with his emphasis on middle management, Fear questions historical interpretations that depict German businesses as dominated by a pre-industrial authoritarian business culture, whether it be the "Kruppian absolutist ruler paradigm," Siemens' "Prussian state-bureaucratic model," or "IG Farben's Hapsburg Monarchy model" (p. 716). Even though Thyssen privately owned and controlled Thyssen & Co. until his death, the Herr-im-Hause entrepreneurial style, Fear argues, was not suitable to the large-scale modern business Thyssen had built. Indeed, Thyssen's mantra to "delegate as much as possible, but supervise" (p. 716) developed a prototype of modern corporate management that would be emulated in the twentieth century around the globe.
With this massive undertaking, a bold challenge to previous views, Fear successfully carves a new path in German business historiography by demonstrating that previous models contain key shortcomings in their capacity to narrate and frame the history of the Thyssen corporation as well as German business history more generally. In fact, the introduction provides a cogent analysis of business historiography, which is recommended to all scholars of business history. Above all, Fear successfully challenges Americanization models, Alfred Chandler's business classification paradigm and Weberian bureaucratization approaches.
Another strength of this work is Fear's attention to placing the Thyssen-Konzern and the Vereinigte Stahlwerke within national and international contexts, comparing them with business cultures and practices in Germany, the United States and even Japan. The key to the Thyssen-Konzern's success, Fear maintains, was its emphasis on commercial and financial profitability of a diverse product line. While companies such as Siemens concentrated on technological innovation and American companies devoted themselves to mass production of specialized product lines, the Thyssen-Konzern emphasized vertical integration and product diversification. Fear's main objective is to demonstrate that different companies had different production agendas and adjusted their managerial operations accordingly. This point is important because it addresses a pivotal question that has decisively shaped business historiography: namely, Americanization. Fear convincingly pokes holes in the Americanization model, arguing that it "fails to show how selected ideas became embedded in long-standing--innovative not backward--German institutional and business practices" (p. 521). Accordingly, the main weakness of the Americanization model is that it "posits a one-way diffusion process from the most modern example and confuses innovative adaptation, selection, and transformation with mere imitation" (p. 521). In some instances, German companies such as the Thyssen-Konzern and Vereinigte Stahlwerke did borrow business practices and technologies from the United States, but they usually adapted them to their unique German contexts. In other cases, U.S. companies incorporated distinctly German business practices and technologies into their corporate culture. The premise that U.S. corporations should provide the model to measure international corporate cultures is deeply flawed from the outset, and as Fear convincingly demonstrates, in many ways the Thyssen-Konzern was more pioneering than many leading American companies.
While the book is a groundbreaking work in the history of corporate management in Germany, Fear's overall framework is not entirely convincing. Specifically, Fear aims to highlight the continuity in the Thyssen-Konzern's and Vereinigte Stahlwerke's managerial cultures from 1871 until 1936. Downplaying significant political ruptures that dominated German history in the early twentieth century as well as the death of Thyssen in 1926, Fear maintains that the Thyssen-Konzern and Vereinigte Stahlwerke were stamped with a managerial culture forged by Thyssen in the late nineteenth century. This managerial culture emphasized decentralization with supervisory oversight and it established a "managerial legacy" that "decisively influence[d] the organizational trajectory of" the Vereinigte Stahlwerke (p. 517). Yet, the founding of the Vereinigte Stahlwerke in 1926 (through the union of four major steel companies including the Thyssen-Konzern) represents such a significant rupture in the history of the company that that Fear's continuity narrative is less convincing for the period after 1926. Indeed, the corporate character of the Vereinigte Stahlwerke differed so fundamentally from that of the Thyssen-Konzern that it is difficult to discern the logic of continuing the narrative of the company after the establishment of the Vereinigte Stahlwerke. With its separation of corporate headquarters from manufacturing, its efforts to establish uniform and coherent policies and regulations for disparate company cultures, and, most notably, its corporate framework with shareholders eager for dividends, the Vereinigte Stahlwerke from 1926 until 1934 marked a clear departure from the managerial culture established at the Thysse-Konzern by Thyssen. In fact, the chapters devoted to the history of Vereinigte Stahlwerke from 1926-34 tell the story of a company that bore little resemblance to the Thyssen-Konzern described by Fear in the first two sections of the book. It is only when Fear discusses the reorganization of Vereinigte Stahlwerke in the mid-1930s that his continuity argument seems more plausible. After 1934, he contends, Vereinigte Stahlwerke began to pattern its managerial organization more closely upon the multi-subsidiary form developed by the Thyssen-Konzern, but now under the financial control of corporate headquarters. This reorganization "reunited the manufacturing plants with their former corporate headquarters, with their communities, and with their historic, reputable names, which had been lost with the merger" into Vereinigte Stahlwerke, he maintains (p. 714). It might be accurate to characterize the reorganized Vereinigte Stahlwerke as continuing the managerial legacy developed by Thyssen. But as Fear suggests that the crucial interwar years were an anomaly to the Thyssen-Konzern's and Vereinigte Stahlwerke's managerial cultures, and because he offers an abbreviated examination of Vereinigte Stahlwerke during the Third Reich that does not extend beyond the postwar years, his continuity thesis is weakened.
Despite its assiduous attention to detail, Organizing Control left a number of vital issues only cursorily explored. In particular, readers are left with questions about Vereinigte Stahlwerke's relationship with the Nazi regime. While Fear points out that top manager Heinrich Dinkelbach, who joined the Nazi Party in 1938 for seemingly professional reasons, "appears to have been immune to the dubious appeals of Nazism" (p. 687), the history of Vereinigte Stahlwerke during the Third Reich is under-explored. Above all, an investigation of managerial decisions regarding Vereinigte Stahlwerke's interests in German-occupied territories as well as its use of slave labor during the Nazi years warrants further study. It appears that in Fear's desire to take the history of the company past 1945, the history of Vereinigte Stahlwerke during the Third Reich is only hastily addressed; yet the reader may wonder if developments during the Nazi years, such as the use of slave labor, might in fact undermine Fear's continuity thesis.
Another overlooked topic is management's relationship with labor. Fear's objective is to study the company's management; however, this book often divorces management decision-making from day-to-day operations, such as labor relations. While Fear provides great attention to managerial decisions regarding accounting, finances, interpersonal managerial relationships and the integration of technology in the production process, management's relationship with its blue-collar employees and organized labor are entirely ignored (except during early Weimar years, when the Thyssen-Konzern was legally obligated to include labor in managerial decision-making). Fear includes no discussion of labor relations prior or subsequent to early Weimar. While it is clear that Fear's focus is the development of corporate management at the company, even a study of managerial practices is incomplete without consideration of how management shaped labor and vice versa.
Organizing Control is an ambitious study of one of the most influential companies in German history. This work excels, above all, in its persuasive challenge of historiographical approaches that have dominated business history, and as such, it warrants serious attention by scholars of business history. In addition, Fear's compelling questioning of the scholarly and popular perception that German companies maintained antiquated corporate structures distinguished by the Herr-im-Hause mentality well into the twentieth century contributes meaningfully to ongoing debates about how to characterize Germany's history in the first half of the twentieth century more broadly.
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Citation:
Sara Ann Sewell. Review of Fear, Jeffrey R., Organizing Control: August Thyssen and the Construction of German Corporate Management.
H-German, H-Net Reviews.
July, 2006.
URL: http://www.h-net.org/reviews/showrev.php?id=12004
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