Corporate Learning and Traffic Management at the Bell System, 1900-1929: Probability Theory and the Evolution of Organizational Capabilities

Abstract:     
This study analyzes the evolution of organizational capabilties for assessing market growth and capital budgeting in the traffic management operations of the Bell System from 1900 to 1929. The initial impetus for developing the complex procedures that were integrated into this process was the need to enhance firm competitiveness, particularly in response the threats to its survival during the financial panic of 1907. The resultant new organizational capabilities, however, also eventually proved vital in successfully guiding the firm's planning for system automation and in demonstrating compliance with regulatory mandates for efficient and economical service. Moreover, this study explains how probability theory became a key eleement in this managerial transition, thus, providing the Bell System with a powerful analitical tool useful in confronting uncertainty and business planning.

Keywords: corporate learning, capital budgeting, market planning, telephone industry, probability theory, traffic management, organizational capabilities, economic evolution, innovation, technology management

JEL Classification: c44, d83, g31, k23, l96, m3, n8, o31, o32

Accepted Paper Series