Evolving Status of The Manager

Evolving Status of the Manager

Evolution of the status of the manager has gone hand in hand with evolution in the status of the corporation. The concept of structural differentiation, first introduced in Website 3, is helpful in understanding how the manager's status has evolved. The process of structural differentiation is a general explanation of structural change.

When changing circumstances render an existing structural entity inefficient because it is too generalized to function effectively in the new situation, the structure breaks up into two or more of its constituent parts. Each part now has an independent existence and specializes in the performance of part of the functions of the old structure. Taken together, the new structural entities are the functional equivalent of the old structure. They function more effectively, however, because of the greater specialization of labour that structural differentiation has made possible.

An example of the process of structural differentiation is provided by the historical evolution of marketing institutions. When distribution was in an early stage of development, there was no distinction between wholesaling and retailing, and they were carried on simultaneously in the same enterprise.

But as the market expanded and there were increasing opportunities for specialization of marketing functions, the existing institutional arrangement became unwieldy. Through the process of structural differentiation, separate wholesale and retail institutions developed. As the market continued to expand, further structural differentiation occurred and more specialized kinds of wholesaling establishments and retailing establishments came into being.

The process of structural differentiation also occurs in the professions. The earliest doctors were all general practitioners. But the expansion of the market for medical services and the increase in medical knowledge have led to the development of the many specialties of modern medical practice.

The same thing has occurred in the practice of law and the practice of business management. The structural differentiation of the practice of business management can be demonstrated by contrasting the managerial functions performed by the preeminent businessmen in the stages of mercantile capitalism, industrial capitalism, and big-business capitalism.

In the period roughly between the thirteenth and eighteenth centuries, it was the merchant who occupied the centre of the stage of capitalism. Indeed, without him there could not have been capitalism in that period. Production of goods took place on a small scale in geographically isolated locations, and transportation and communication facilities were rudimentary. Through the efforts of the merchant, producing and consuming areas were tied together.

He financed the production of goods for export, transported the goods to markets in which they were scarce, stored them, and eventually sold them. The merchant thus performed all the major functions of business: production, finance, transportation, warehousing, and marketing.

In time technological development and improvements in transportation and communication led to a significant change in the business world. Roads were built, the compass was discovered, and the seas were charted.

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