THE TRANSFORMATION FROM MULTIDIVISIONAL FORM TO CORPORATE GROUPS OF SUBSIDIARIES IN THE 1980S - CAPITAL CRISIS THEORY

In the 1980s, the corporate form shifted from multidivisional forms to corporate groups of subsidiaries. Although many aspects of corporate change during the 1980s have been examined, the magnitude and nature o f changes in corporate form have received relatively little attention. Moreover, this transformation of corporate form has been inadequately explained by the dominant theoretical perspectives on corporate form- managerialism, institutionalism, and agency theory. A new theory that incorporates dimensions of the existing perspectives is presented. Thi s perspective maintains that corporate change occurs as a dialectical process, which in the 1980s involved a shift of corporate control from managers to owners, resulting from a crisis in the accumulation of ca pital in the corporation. After gaining control through institutional investments, owners insisted on greater return on their investments. M ergers and acquisitions transferred corporate capital from corporation s, controlled by managers, to shareholders. The relative utility of th is perspective compared to existing perspectives for explaining the tr ansformation of corporate form in the 1980s is demonstrated, and hypot heses for understanding changes in corporate form in the 1990s are pro posed.