wThe Smithian process of the
division of labor always tends to lead to finer specialization of function and increased coordination
through markets.
wBut the components of that
process —technology, organization,
and institutions — change at different rates.
wThe managerial revolution
was the result of an imbalance
between the coordination needs of high-throughput technologies and the abilities of contemporary markets and
contemporary technologies of coordination to meet those needs.
wWith further growth in the
extent of the market and the development of exchange-supporting institutions, the central management of
vertically integrated production stages is increasingly succumbing to the forces of specialization.
