Book Reviews

• Author: Oliver E. Williamson
• Published date: 01 June 1974
• Date: 01 June 1974
• DOI: http://doi.org/10.1177/0003603X7401900227
• Subject Matter: Book Reviews

BOOK

REVIEWS

467

Robert J.

Larner,

Management Control and the Large Cor-

poration, Cambridge, Mass.: Dunellen (1970), xii +148

pp.,

$8.50.

Professor

Larner

examines the separation of ownership

from control in the 500

largest

nonfinancial corporations in

the United States in 1963, investigates the effects of alterna-

tive control relationships on firm profitability, and studies

the relationship between compensation of the chief executive

officer in 94 large corporations and the profitability, size, and

growth of

their

respective firms.

Larner

makes ahighly use-

ful contribution to the

literature

in this area. I do not, how-

ever, believe

that

the evidence

warrants

the author's conclu-

sion

that

only minor deviations from single-minded profit

maximization have occurred among

large

corporations

during

the

past

38 years (pp. 29, 66).

Larner

employs the Berle

and

Means classification scheme

for assigning firms to various control categories. Although

this

has

the advantage of facilitating comparability between

his study and the

earlier

work of Berle

and

Means (which

permits him to conclude

that

the "managerial revolution"

noted by Berle and Means in 1929 is substantially complete

among the 500

largest

nonfinancial corporations in

1963-

in

that

75 percent of these firms

are

assigned by

Larner

to

the management controlled category), the crucial importance

of preserving such comparability is

not

entirely obvious.

Is

the Berle and Means classification scheme really beyond re-

finement? Even were the Berle and Means scheme to be re-

garded as faultless

for

the period for which it was originally

devised, might

not

the condition of competition in the capital

market or other factors have changed between 1929

and

1963

in ways which

warrant

that

different assignment

criteria

be

employed nowt

Whether

Larner

considered this possibility

and concluded

that

the

net

effect of such changes was insub-

stantial is unclear;

that

the question deserves periodically to

be addressed, however, is surely to be conceded.

Larner

investigates the effects of management control on

the level

and

variability of firm profits and finds

that

it

has a