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Determinants of Organisational Size: Bhp and Vertical Integration 1885–1915

Published online by Cambridge University Press:  18 September 2015

Douglas Blackmur
Douglas Blackmur*
Affiliation:
Canberra Institute of Technology, GPO Box 826, Canberra ACT 2601, Tel: (06) 207 3104, Fax: (06) 207 3109
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Abstbact

One of the most important strategic issues for managers involves deciding the size of the organisation. Factors which influence this decision include economic, social and political change. The boundaries of the organisation are thus not fixed, and are in part contingent upon the particular characteristics of the environmental context. Theoretical progress in the discipline of strategic management, as far as it relates to matters of organisational size (and structure), requires that serious consideration be given to the analysis of the dynamics of vertical integration which is available in the New Institutional Economics literature. One of the most interesting strands in this literature is the Transactions Costs Economics developed by R.H. Coase and O.E. Williamson. This paper provides an overview of the Coase-Williamson theory of vertical integration. It then uses this theory as a point of departure in conducting an empirical discussion of decisions to integrate vertically taken by one of the world's largest mining enterprises, The Broken Hill Proprietary Company Limited, during the first 30 years of its existence. The paper seeks to demonstrate that theorising in strategic management is enriched if analytical (albeit critical) attention is paid to advances in the economics of organisation.

Type
Research Article
Information
Journal of Management & Organization , Volume 3 , Issue 1 , January 1997 , pp. 15 - 29
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 1997

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