© 1995 Oxford University Press
research-article |
The Authority and Responsibility of the Chief Executive Officer: Shifting Patterns in Large US Enterprises in the Twentieth Century
(Department of History, Johns Hopkins University Baltimore, MD 21218, USA)
Abstract
During the twentieth century, the scope of the responsibility of the Chief Executive Officers (CEOs) of large US businesses has expanded markedly. The change has taken place within firms as a result of their increase in size and in the complexity of their operations; it has taken place as well outside these firms, where political constraints on firm behavior have increased sharply and the problems of dealing effectively with the organizations' markets have multiplied. These changes have been accompanied by growing limitations on the authority of CEOs. The paper considers the problems these developments have created, using for illustration the history of the pharmaceutical firm Merck & Co., Inc., during the period 1930 through 1985. Focusing upon the ability of the firm to sustain innovation over the long-term, the article describes a series of cycles, each of which required forceful action on the part of the organization's CEO. There were two vital periods of transition: one in the 1950s and a second in the 1970s. The paper describes the factors making these transitions difficult and the consequences of making them successfully. It relates these phenomena to the problems many American companies have experienced in the past few decades and to the emergence of the US market for corporate control.