Transcript Seminar Four

The History of Management
Thought
Mike Bejtlich
Based on The History of Management Thought, 5th edition, 2005 by Daniel A. Wren
Part Four
The Modern Era
Chapter Nineteen
Management Theory and Practice
The Modern Era
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The Renaissance of General Management
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Fayol’s Intellectual Heirs
Management Education
Other Views of Managerial Work
Peter Drucker: The Guru of Management
From Business Policy to Strategic Management
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Markets and Hierarchies
Governance and Agency Issues
Management as an Integrating and Innovating Task
Strategy and Views of the Firm
Strategic Leadership and Evolutionary Dynamics
The Renaissance of General
Management
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Henri Fayol – the first to propose a general
theory of management
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The elements of management describing what
managers did (plan, organize, command, coordinate,
and control).
The principles, which were lighthouses, or guides, to
how to manage.
Henri Fayol
Fayol’s Intellectual Heirs
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William Newman (1909-2002) – “the basic objectives
of the firm should define its place or niche in the
industry, define its social philosophy as a business
‘citizen,’ and serve to establish the general
managerial philosophy of the company” (Wren text)
George Terry (1909-1979)– first to call his book
Principles of Management
Harold Koontz (1908-1984) and Cyril O’Donnell
(1900-1976) – defined management as “the function
of getting things done through others” in their
popular text.
Management Education
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The Gordon and Howell Report 1959:
Asked: What are we teaching in business schools
and does this prepare our students for a career in
a changing environment?
Cited the need for more courses in:
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The humanities and liberal arts.
Mathematics.
The behavioral and social sciences.
Compare a pre-1959 B-school curriculum to your
current requirements.
Management Theory Jungle –
Harold Koontz (1908-1984)
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Six Different Schools – management process,
empirical, human behavior, social system, decision
theory, mathematical schools.
Each can contribute, but some are “tools.”
Causes of confusion and the “jungle warfare”
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“The semantics jungle”
Problems in defining management as a body of
knowledge
The misunderstanding of principles through trying to
disprove an entire framework of principles when one
principle was violated in practice
Inability or unwillingness of management theorists to
understand each other.
Other Views of
Managerial Work
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Henry Mintzberg (1939- observed five
executives and concluded mangers perform ten
roles within three categories: interpersonal,
informational, and decisional.
Henry Mintzberg,
courtesy of the University of Western
Ontario
Other Views of
Managerial Work
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Rosemary Stewart examined the "demands,"
"constraints," and "choices“of a managers
job.
John Kotter's studies of general managers
and his finding of certain "demands" or
regularities in all general managers' jobs that
resemble traditional management functions.
Note, also, the factors that cause these to
vary.
Other Views of
Managerial Work
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Fred Luthans, Richard
Hodgetts, and Stuart
Rosenkrantz studied 44
managers, recording
activities and behaviors.
In Real Managers they
note four categories:
routine communication,
traditional management,
networking, and human
resource management.
Richard M. Hodgetts
The Search for Excellence
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Thomas Peters and Robert Waterman identified
eight attributes of corporate excellence in their
best selling book, In Search of Excellence.
Peters and Waterman relied solely on financial
measures in determining success.
Management Education
Revisited
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Harold Koontz revisited the management theory
jungle and expanded it from 6 to 11
approaches.
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Called for leading managers to narrow the gap
between professional practice and business
schools.
Lyman Porter and Lawrence McKibbin surveyed
management education for the AACSB.
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Called for professors to be more broadly educated
and possess relevant work experience.
Peter Drucker (1909 –
Guru of Management Practice
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Drucker achieved prominence through his
writings and consulting.
He asks:
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What is our business?
Who I the customer?
What does the customer buy?
What does the customer consider value?
What will our business be?
And what should it be?
Peter F. Drucker
Peter Drucker (1909 –
Guru of Management Practice
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Importance on Innovation
Key areas for setting objectives and evaluating
results
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Fortune magazine publishes a survey of the most
“admired” corporations. The areas that Fortune
uses bear a strong resemblance to Drucker’s key
areas.
Management by Objectives
Peter Drucker (1909 –
Guru of Management Practice
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Drucker’s focus on managerial practice asks the
lingering question: “Can our academic research
have rigor and also be relevant to the practice
of management?”
From Business Policy to
Strategic Management
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Markets and hierarchy
 Echoing the work of earlier economists such
as Say and Marshall, who saw management
as a factor of production and able to provide
competitive advantage, Ronald Coase, in a
1937 article, asked why have business firms?
 Coase saw the firm as an alternative to the
market with certain advantages in allocating
resources.
From Business Policy to
Strategic Management
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Markets and hierarchy
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Echoing the work of earlier economists such as Say
and Marshall, who saw management as a factor of
production and able to provide competitive
advantage, Ronald Coase, in a 1937 article, asked
why have business firms?
Coase saw the firm as an alternative to the market
with certain advantages in allocating resources.
Ronald Coase
From Business Policy to
Strategic Management
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Oliver Williamson (1932-) and the “new
institutional economics” saw the
hierarchy of the firm being typically
more efficient than markets because
firms could internalize transaction costs
(remember Commons?) and provide
monitoring mechanisms to thwart,
hopefully, opportunism.
Oliver Williamson
From Business Policy to
Strategic Management
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Governance and Agency Issues
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If the firm, through management, is more efficient
than the market, then the actions of those who
govern the firm becomes more significant.
A number of individuals, such as Michael Jensen,
criticize the behavior of those in the managerial
hierarchy who serve their own interests rather
than those of their shareholders.
The separation of ownership and control is an
evergreen issue to catch the conscience that lies
within.
From Business Policy to
Strategic Management
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Agency theory,
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assuming it is a theory, creates situations that lead
to opportunistic behavior.
Assumes that everyone will engage in
opportunistic behavior—leading to contracts and
other means of monitoring behavior.
Involves issues of trust, fidelity, and other
appropriate behaviors in contrast to the
assumptions of agency theory.
How do our assumptions about the behavior of
others influence how we manage?
Management as an Integrating
and Innovative Task
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Henri Fayol was a strategist. (See quote in Wren
text.)
Arch Shaw (1876-1962) pioneered the study of
business policy as a academic subject at
Northwestern University.
Henri Fayol
Management as an Integrating
and Innovative Task
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There is a rich heritage of “strategy” in Barnard,
Newman, Drucker, and Chandler.
Strategic management has emerged as the “new”
view of business policy and long range planning.
Alfred D. Chandler,
Courtesy of Harvard Business School
From Business Policy to
Strategic Management
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Strategy and Views of the Firm
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Michael Porter (and others) in
industrial/organizational economics made
key contributions to strategy.
Porter’s “five forces” framework, value
chain and “generic” strategies.
Michael E. Porter,
Courtesy of Harvard Business School
From Business Policy to
Strategic Management
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Strategy and Views of the Firm
 Edith Penrose (1914-1996)asked why firms
differed in performance, providing seminal
insights for the resource based and the
knowledge based views of the firm.
 SWOT— In 1960s HBS policy group began
use of the term.
 Important developments in “core
competencies” and “distinctive competencies”
followed through the work of Wernerfelt,
Rumelt, Barney, Prahalad, and Hamel.
From Business Policy to
Strategic Management
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Strategic Leadership and Evolutionary
Dynamics
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“Evolutionary economics”—how to create and gain
competitive advantages through innovation.
Organizational learning to “unbound” rationality
and move to new and innovative forms of
competitive advantage.
Strategic leadership—the bridge to general
management theory.
Summary
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General management theory reawakened as
organizations grew more complex and needed
more broadly educated general managers.
Drucker and others emphasized the need to
improve the practice of management.
General management also grew through a
resurgence in industrial/organizational
economics.
Business policy evolved to strategic
management.
Chapter Twenty
Organizational Behavior
and Theory
Organizational Behavior
and Theory
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People and Organizations
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Organizations and People
Gordon & Howell Report 1959
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Triggered more interest in the behavioral and
social sciences
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The behavioral/social scientists were trained
differently in research methods and drew on a
different body of literature.
Human relations thought was modified by these
behavioral scientists, providing for a transition
from human relations to organizational behavior.
Keith Davis (1918-2002)
Mr. Human Relations
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Acts as a transition point for human relations
and organizational behavior.
Defined human relations as “the integration of
people into a work situation in a way that
motivates them to work together productively,
cooperatively, and with economic, psychological,
and social satisfaction.”
Modern Human Relations – Two Facets
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Organizational behavior
Human relations
Chris Argyris (1923 
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Influenced by the humanist approach of
Abraham Maslow and the socio-technical
process of E. Wight Bakke.
Indicated his feelings about how organizations
neglected human needs.
Chris Argyris
courtesy of the University of Western
Ontario
Chris Argyris –
Personality vs. Organization
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Certain organizational practices, such as the division
of labor, interfered with the development of health
human personalities.
These practices promoted immature, not mature
behavior.
In an attempt to self-actualize, individuals ran into
the obstacles posed by formal organizations.
The result was defensive behaviors, with
management reacting by becoming more autocratic
or by turning to sugar-coated human relations.
Chris Argyris
Douglas McGregor (19061964)
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Taught psychology at MIT.
At Antioch College, McGregor found that his
classroom teaching of human relations did not
always work in practice.
From these experiences, his ideas evolve and
lead him to recognize the influence of
assumptions we make about people and our
managerial style.
Douglas McGregor
Courtesy of University of Western Ontario
Theory X
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Management is responsible for organizing the elements of
productive enterprise – money, materials, equipment,
people – in the interest of economic ends.
With respect to people, this is a process of directing their
efforts, motivating them, controlling their actions,
modifying their behavior to fit the needs of the
organization.
Without this active intervention by management, people
would be passive – even resistant – to organizational
needs. They must, therefore, be persuaded, rewarded,
punished, controlled – their activities must be directed.
This is management’s task -- in managing subordinate
managers or workers. We often sum it up by saying that
management consists of getting things done through other
people.
Theory X (continued)
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Behind this conventional theory there are several
additional beliefs – less explicit, but widespread:
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The average man is by nature indolent – he works as
little as possible.
He lacks ambition, dislikes responsibility, prefers to be
led.
He is inherently self-centered, indifferent to
organizational needs.
He is by nature resistant to change.
He is gullible, not very bright – the ready dupe of the
charlatan and the demagogue.
Theory Y
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Management is responsible for organizing the elements of
productive enterprise – money, materials, equipment, people –
in the interest of economic ends.
People are not by nature passive or resistant to organizational
needs. They have become so as a result of experience in
organizations.
The motivation, the potential for development, the capacity for
assuming responsibility, the readiness to direct behavior
toward organizational goals are all present in people.
Management does not put them there. It is a responsibility of
management to make it possible for people to recognize and
develop these human characteristics for themselves.
The essential task of management is to arrange organizational
conditions and methods of operation so that people can
achieve their own goals best by directing their own efforts
toward organizational objectives.
Theory X
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Work is inherently distasteful
to most people.
Most people are not
ambitious, have little desire
for responsibility, and prefer
to be directed.
Most people have little
capacity for creativity in
solving organizational
problems.
Motivation occurs only at the
physiological and safety
levels.
Most people must be closely
controlled and often coerced
to achieve organizational
objectives.
Theory Y
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Work is as natural as play, if
the conditions are favorable.
Self-control is often
indispensable in achieving
organizational goals.
The capacity for creativity in
solving organizational
problems is widely distributed
in the population.
Motivation occurs at the social,
esteem, and self-actualization
levels, as well as physiological
and security levels.
People can be self-directed
and creative at work if
properly motivated.
Personnel/Human Resource
Management
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Human Resource Management did not always
receive the attention it deserved. An example
is the Gordon and Howell’s 1959 assessment
of personnel management.
John R. commons was the first to use the
phrase “human resource.”
E. Wight Bakke appears to be the first person
to cast personnel in a human resources
framework.
Personnel/Human Resource
Management
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Wendell French was the first to add human
resources to a personnel management text.
The contributions of George Strauss, Leonard
Sayles, and Thomas Kochan have enriched
human resource management literature by
noting it is complementary to industrial
relations.
Frederick Herzberg
(1923-2000)
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His research emphasized job
enrichment (depth) rather than job
enlargement
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Job context (hygiene factors) –
needed to be optimal to prevent
job dissatisfaction. These factors
(according to Herzberg) did not
motivate.
Job content (motivators) – factors
that did lead to motivation
Money (according to Herzberg)
could motivate if it was seen as a
reward for accomplishment; but if
money was given without regard
for merit, then it was a hygiene
factor.
Frederick Herzberg
Motivation and Hygiene Factors
HYGIENE FACTORS
ENVIRONMENT
MOTIVATORS
WHAT THEY DO
Policies and Administration
Achievement
Supervision
Recognition for Accomplishment
Working Conditions
Challenging Work
Interpersonal Relations
Increased Responsibility
Money, Status, Security
Growth and Development
Motivation and Hygiene Factors
THE JOB SURROUNDINGS
AND THE
HYGIENE FACTORS
SUPERVISION
WORKING
CONDITIONS
RESPONSIBILITY
BENEFITS
INTERPERSONAL
RELATIONSHIPS
ACHIEVEMENT
THE JOB ITSELF
AND THE
WORK ITSELF MOTIVATOR RECOGNITION
FACTORS
COMPANY
POLICY AND
ADMINISTRATION
GROWTH
ADVANCEMENT
SECURITY
STATUS
SALARY
Work Design
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Richard Hackman, Edward Lawler, and Greg
Oldham’s work extended Herzberg’s notions
by adding a situational (it depends…)
dimension
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Key job characteristics
Depending on an individual’s “growth-need
strength,” these characteristics could be amplified
to make the job more meaningful.
Motivation: Expectancy Theory
Victor Vroom
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The expectancy theory of Victor Vroom helps
explain the choosing process among individuals
in terms of the value (valence) of the reward
and the expectancy of receiving the reward.
Victor Vroom
Expectancy Theory
Expectancy Theory
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Lyman Porter and
Edward Lawler
extended Vroom’s work
with their model of
expectancy.
Expectancy Theory
(Lyman W. Porter – Edward E. Lawler III)
Revised Diagram of the Theoretical Model
1
Abilities
And
Traits
Value of
Reward
Perceived 8
Equitable
Rewards
4
7A
Intrinsic
Rewards
3
9
6
Performance
(Accomplishments)
Effort
Satisfaction
7B
Extrinsic
Rewards
Perceived 2
Effect-Reward
Probability
5
Role
Perceptions
SOURCE: Managerial Attitudes and Performance, 1968, Richard D. Irwin Inc.
Equity Theory
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Equity theory is not a
new one but focuses on
how individuals
perceive their reward or
pay compared to what
others are receiving.
Issues of social justice
and distributive justice
are involved in the
theories of Stacy Adams
and Elliot Jaques.
Elliot Jacques
Edwin Locke –
Goal Setting Theory
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Edwin Locke
History of Management Thought by D. Wren
Over a 35 year period,
research has demonstrated
its practical and theoretical
value.
Money is a motivator
because of its
“instrumentality” or as an
economist would say, money
is a medium of exchange for
the things we want.
Goal setting theory is rooted
in the work of Taylor, the
Gilbreths, Drucker, Cecil
Mace, and Thomas Ryan.
Individuals need specific
rather than general goals.
Edwin Locke –
Goal Setting Theory
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The goals should be challenging but not exceed the
person’s ability.
Performance feedback is essential.
Goal-setting by management works best when
people are already internally motivated by a need to
achieve.
Participative goal-setting works best for individuals
with a lower need for achievement, and when they
are familiar and at ease with participative
management techniques.
Goal-setting is related to self-efficacy in terms of how
goals are chosen and how results are fed back.
Leadership
Rensis Likert (1903-1981)
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Rensis Likert
Leadership is a part of
general management
theory
Likert proposed four
types of leadership
termed System 1-4.
Leadership
Rensis Likert
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The key to good leadership,
according to Likert, is to
move toward System 4 by:
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The principle of supportive
relationships
The use of group decision
making and supervision. “Link
pins” is important here.
Setting high performance goals
“System 5” was further
developed by Jane Gibson
Likert – influenced by Mary
Parker Follett.
Fred Fiedler – Situational or
Contingent Leadership Theories
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Fiedler suggested that
leadership style "depends" or
is contingent upon certain
leader orientations and
situational characteristics
LPC scale to measure
leadership style
Situational factors of:
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Leader-member relation
Task structure
Position power, meaning
formal authority
Fred Fielder
Situational Leadership
Situational Leadership
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Depending on the
situation, high LPC or
relationships-oriented
leaders fared best in
situations that were
intermediate in
favorableness.
Low LPC leaders tended to
perform better in either
very favorable or very
unfavorable situations.
Fiedler Investigations of Leadership
Group Situation
Leader-Member
Condition
Relations
Task
Structure
Position
Power
Leadership Style
Correlating with
Effectiveness
1
Good
Structured
Strong
Directive
2
Good
Structured
Weak
Directive
3
Good
Unstructured
Strong
Directive
4
Good
Unstructured
Weak
Permissive
5
Moderately poor
Structured
Strong
Permissive
6
Moderately poor
Structured
Weak
No data
7
Moderately poor
Unstructured
Strong
No relationship
found
8
Moderately poor
Unstructured
Weak
Directive
Leadership Theories
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Bob House and Gary Dessler’s “path-goal”
theory focuses more on the role of the leader
in identifying people’s needs and providing
means for subordinates to satisfy those
needs. The difference in this notion,
contrasted with Fiedler, is that the same
leader could be task or relationship oriented.
Leadership Theories
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Charisma re-emerges in modern theory.
Charismatic leaders may attract followers for
evil ends (Hitler, Bin Laden, etc.)
Transformational leadership also reflects the
trend toward personality traits of leaders.
Is charisma too unstable for organizational
continuity, as Max Weber suggests?
Leadership Theories
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James McGregor Burns’ transactional and
transformational leadership also reflects the
trend toward personality traits of leaders.
George Graen and leader-member exchange
theory has enriched our study of interpersonal
relations.
Leader-member exchange theory furthers
understanding of intra-organizational
connections.
Organizations and People
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Organizations as Open Systems
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Chester Barnard’s idea of the organization as
including investors, suppliers, etc. was an early
example of viewing the organization as an open
system.
Ludwig von Bertalanffy’s (1901-1972) system
theory furthered the idea of organizations as open
systems. He was a biologist.
Organizations as Open
Systems - Joan Woodward
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Joan Woodward
Researched the impact
of technology on
organizational structure.
Classified organizations
by the complexity of the
technology used.
Joan Woodward
Organizations as Open
Systems
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The Aston Group also considered technology
but arrived at different findings than
Woodward.
Paul Lawrence and Jay Lorsch's viewed the
impact of environmental factors on structure
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Rate of change in environmental conditions
Certainty of information available
Time span of feedback of results from decisions.
Behavioral Theories of the
Firm
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Emphasis on internal processes of coalitions,
organizational learning, conflict resolution, and so
forth was a new approach. Representatives of this
approach are Richard Cyert & James March, Daniel
Katz & Robert Kahn, and Karl Weick.
Another emphasis was on external forces and
factors as primary shapers of the organization.
Jeffrey Pfeffer & Gerald Salancik, Michael Hannan
& John Freeman, and John Meyer & Richard Scott
are cited as representatives.
The Paradigm Wars
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“Paradigm,” a model, example, or pattern to help
us view organizations.
Disagreements about the number of contemporary
paradigms exist — some indicating this as a sign
of progress and others seeing this as creating an
organization theory jungle.
Miner’s analysis of 73 theories is important as he
indicates no organization theory high in estimated
scientific validity or usefulness in application.
Strategy and Structure
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Chandler’s study led to the idea that
“structure follows strategy.”
Fayol saw the need for a “fit” between
structure and the “objectives, resources, and
requirements” of the firm.
In the 1960s and 1970s, economic and
political factors influenced many mergers and
acquisitions as firms diversified outside of
their industry.
Summary
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The influx of behavioral scientists into business
schools brought different perspectives, research
tools, and ideas.
Their impact was felt on organization design and
job design.
Personnel management evolved into human
resource management.
Organizational theory evolved from a number of
factors, internal and external.
Better theory, it was suggested, can be built by
examining successful practice.
Chapter Twenty One
Science and Systems in Management
Science and Systems in
Management
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Operations Research – World War II
Ideas the U.S. took to Japan
Impact of Computers
Quest for Science in
Management
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Scientific Method – roots in Aristotle,
Descartes, Babbage, and scientific
management
Operations research – developed in Great
Britain during World War II by P.M.S. Blackett
and others.
Patrick Maynard
Stuart Blackett (1897-1974)
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Patrick Blackett
Attempted to apply the
scientific method and to
quantify complex
problems.
“Blackett’s Circus” was a
team of specialists who
could bring a variety of
techniques to apply to
problems.
Operations research
applications after the war
were primarily in the area
of production
management.
Frederick Taylor Revisited
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
Frederick W. Taylor
Used specialists in his
metal-cutting
experiments, suggesting
numerous parallels
between management
science and scientific
management.
“Optimal Decisions” – is
this the “One Best Way?”
The search was for a use
of science in
management, not a
science of management.
Production Management in
Transition
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Gordon and Howell’s 1959 remark “Production
management courses are often the repository for
some of the most inappropriate and intellectually
stultifying materials to be found in the business
curriculum…”
Also, they recommended more mathematics for
business school students.
Production management and operations research
merged into into production/operations management.
Gantt Chart

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The Gantt Chart concept was extended with
newer variations for planning and controlling,
PERT and CPM (Critical Planning Method)
PERT and CPM together plan a network of
activities, their relationships, and their
interaction along a path to a given completion
point.
Gantt Chart
Old Lessons Relearned
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Product quality was important historically – the
hallmark concept allowed customers to connect
quality with the maker of the firm (Carnegie).
Some maintained that the U.S. forgot how to
complete which enabled the Japanese to use U.S.
experts such as W. Edwards Deming, Joseph Juran,
and others for statistical quality control.
Wickham Skinner – incorporating manufacturing into
overall corporate strategy.
Richard Schonberger – integrating the firm around a
“chain of customers.”
Old Lessons Relearned
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
W. Edwards Deming
Courtesy of the University of Western Ontario
Statistical quality
control was pioneered
at Western Electric by
Walter Shewhart
(1891-1967).
Edwards Deming
(1900-1993) revived
Shewhart’s ideas and
took them to Japan.
Old Lessons Relearned
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Joseph Juran (1904-) also influenced by
Shewhart and Taylor.
Japanese developed quality circles.
Wickham Skinner – incorporating manufacturing
into overall corporate strategy.
Richard Schonberger – integrating the firm
around a “chain of customers.”
Inventory Management


Materials Requirements Planning (MRP)
developed.
Taiichi Ohno and “just-in-time” planning for
materials delivery was influenced by earlier
work at Ford Motor Company.
Systems and Information


“Systems” – an ancient
concept found new
meaning in General
Systems Theory (GST)
GST – a product of Ludwig
von Bertalanffy, was a
Gestalt concept. The GST
view was:



Study of the whole
organism
Organisms sought
equilibrium
All systems were open
Ludwig von Bertalanffy
Norbert Weiner (1894-1964)Cybernetics



Norbert Weiner
Developed cybernetics
Cybernetics fits into GST
by providing feedback
loops so systems could
“learn.”
Example: consider a firm
that scans its
environment to sense
changes that need to be
incorporated into future
plans (strategic
planning).
Computer Age to the Information
Age – Death to the Slide Rule
“The Faber-Castell 67/87 is a plastic 6-inch simplex pocket rule with the
Reitz scale arrangement and extended, self-documenting scales. It's a
nice little rule, and that's before you discover its secret: flip it over, and
there's a 6-digit addiator on the back!”
Source: http://www.toddtolhurst.com/sliderules/fc67-87.html
Computer Age to
the Information Age



Alan Turing - a specialized
machine to break the German
Code.
Herman Hollerith, founded the
firm that became IBM; his
punch cards were reminiscent
of the Jacquard loom.
John Atanasoff – built an
electronic digital computer for
Iowa State University in the
1930’s; his ideas were
plagiarized by Mauchly and
Eckert.
John V. Atanasoff
Courtesy of Iowa State University
Computer Age to the Information
Age
IBM1401
Source: http://www.computinghistorymuseum.org/


Early computers were monsters, slow, expensive, and with
limited applicability. This was the EDP stage of computer
evolution.
Computer technology evolved rapidly from vacuum tubes to
microcircuitry.
Computer Age to the Information
Age



JoAnne Yates
Courtesy of Dr. Yates
JoAnne Yates noted that
technological adoption, such as
computers, comes not with the
invention or advancement but when
managers see an application for the
new technology.
Computers have benefited
production/operations management,
such as Computer-Assisted-Design
(CAD).
Management Information Systems
replaced EDP for providing
information to management enabling
computer-assisted decision making
technologies.
Summary




The chapter traced the search for order through
science and systems in management.
Operations research was viewed as a modern
version of early scientific approaches to problem
solving.
Others outstripped U.S. industrial productivity
gains as they learned production lessons
overlooked in the U.S.
The development of computers and microcircuitry
led to new methods to assist managerial decision
making.
Chapter Twenty-Two
Obligations and Opportunities
Obligations and Opportunities


Individuals, Organizations, and Evolving
Expectations
Management Opportunities in a Global Arena
Individuals, Organizations, and
Evolving Expectations

Ethics


“The moral ‘oughts’ that sustain a civilized
society.”
Business ethics is an ancient issue:



St. Thomas Aquinas – the “just price” as the market
price without collusion, fraud, and coercion
Johannes Nider (from chapter 2) and the quest for
ethical business practices in the early fifteenth century.
Joseph Wharton, founder of the first collegiate school of
business, was very specific about ethics in the business
school curriculum.
Business Ethics



Johnson and Johnson’s credo is illustrative of both
ethical and social responsibility issues (ex: Tylenol
crisis).
Agency Theory – considered new, but an old issue
relative to principal-agent relations. As the ownership
of firms was separated from its management, there
was heightened interest in this notion of agency.
John Shad – donation of $23 million to the Harvard
Graduate School of Business to teach business ethics.
Business & Society



Ethics – individual moral conduct
Social Responsibility – expectations by others about the
conduct of the firm
Business leaders are long-standing patrons of the arts.




Example: Carnegie gave $480 million during his lifetime
The Federal Revenue Act of 1935 was a step toward
corporate philanthropy—but it became law during an
economic depression.
Morrell Heald’s quote about business people and
philanthropy. Do your students agree with this point of
view?
A. P. Smith Manufacturing Company vs. Barlow established
the precedent for modern corporate philanthropy
Business & Society


Donna Wood’s findings concerning the Meat
Inspection Act (1906) and the Pure Food and
Drug Act (1906) show the positive role of
business leaders.
Howard Bowen provided one definition of
social responsibility and observed that
business firms alone could not solve the
problems of economic life.
Business & Society



Keith Davis suggests an interesting maxim: “If you
mess it up, you clean it up.”
“Stakeholder” – a term that has come into use to
describe those others who are affected by business
decisions (originated by the Stanford Research
Institute)
Ansoff’s distinction between “objectives” and
“responsibilities” – secondary responsibilities cannot
be met unless economic objectives had been
achieved. (Ideas taken from Peter Drucker).
Business & Society

Archie Carroll’s categories
of responsibilities:




Economic - primary
Legal – regulations &
rules
Ethical – expectations
of how the firm
should conduct its
business
Discretionary –
voluntary choices.
Archie Carroll
Courtesy of Professor Carroll
Business & Society –
Archie Carroll

Archie Carroll
Courtesy of Professor Carroll
Dr. Carroll, attended Dan
Wren’s first doctoral course
on management history;
Notes from that class
became the foundation of
his own management
history course at the
University of Georgia. Dr.
Wren would use the notes
as a foundation for the first
edition of his book.
Business & Society –
Archie Carroll



Dr. Daniel A. Wren
Archie Carroll was a student
in Dan Wren’s first doctoral
course on management
history at Florida State
University.
Notes from that first course
became the foundation of
Dr. Carroll’s own
management history course
at the University of Georgia.
The notes from that course
would also be the
foundation for Dr. Wren’s
first edition of this book.
Management Opportunities in
a Global Arena

Trade – political strategy



Example: policy of
mercantilism
Adam Smith advocated a
market economy to replace
mercantilism and the wars
fostered those policies.
David Ricardo (an early 19th
century economist and
advocate of free trade with
each nation) – finding its
comparative advantage.
David Ricardo
Management Opportunities in
a Global Arena



Advances in transportation and communication
technology enabled a new era for multinational
business.
The U.S. was an importer of capital until about
1914, i.e., the U.S. was a debtor nation.
The tire and rubber industry is presented as one
example of the disappearance of U.S. firms in the
global market. Are there other industries? Where
does the U.S. have comparative advantage?
Managing Across Cultures


“Culture” is hard to
define but is used here as
a set of beliefs held in
common by a group of
people about economic,
social, and political
behavior.
Bernard Bass noted
differences between
cultures in the leadership
literature in Bass and
Stogdill’s Handbook of
Leadership
Managing Across Cultures


Bill England and his colleagues focused on
differences in the meaning of working.
The “centrality of work” notion affects how
leaders would motivate in different countries.
Managing Across Cultures

Geert Hofstede (1928 - )
describes cultural differences in
different countries.





Individualism vs.
collectivism (group
orientation);
Power Distance: The level of
preference for equality or
inequality within groups:
Uncertainty avoidance: The
preference for risk vs. structure.
Masculinity (assertiveness) vs.
femininity (tender values).
Long term vs. Short term
orientation.
Geert Hofstede
Courtesy of Prof. Hofstede
Last Thoughts ……
from Peter Drucker

“I would hope that American managers—indeed,
managers worldwide—continue to appreciate what I
have been saying almost since day one: that
management is so much more than exercising rank
and privilege; it’s so much more than ‘making deals.’
Management affects people and their lives, both in
business and in many other aspects as well. The
practice of management deservers our utmost
attention; it deserves to be studied” (Drucker, 1995,
p. 351-352).
Summary




Ethics, codes of moral conduct, have long been a
concern of history, but people still struggle to
make the right decisions.
Managers’ responsibilities are more complex with
the introduction of stakeholders.
Advancements in transportation and
communication have made the world a closer
place.
Stereotypes of individuals and nations must be
avoided.
Internet Resources








Academy of Management – Management History Division Website
http://www.aomhistory.baker.edu/departments/leadership/mgthistory/links.html
List of Internet Resources compiled by Charles Booth
http://www.jiscmail.ac.uk/files/MANAGEMENT-HISTORY/links.htm
Western Libraries Business Library – Biographies of Gurus
http://www.lib.uwo.ca/business/gurus.html
Henry Mintzberg
http://www.henrymintzberg.com/
Thought Leaders Forum – Mintzberg
http://www.pfdf.org/leaderbooks/mintzberg/
Rensis Likert
http://www.accel-team.com/human_relations/hrels_04_likert.html
David C. McClelland
http://www.accel-team.com/human_relations/hrels_06_mcclelland.html
Peter Drucker Interview
http://www.cio.com/archive/091597_interview_content.html
Internet Resources










Drucker - Leader to Leader Institute
http://www.leadertoleader.org/
Ludwig von Bertalanffy (1901--1972)
http://www.isss.org/lumLVB.htm
Chris Argyris
http://www.accel-team.com/motivation/chris_argyris_00.html
Douglas McGregor
http://www.accel-team.com/human_relations/hrels_03_mcgregor.html
Frederick Herzberg
http://www.accel-team.com/human_relations/hrels_05_herzberg.html
Victor Vroom
http://www.som.yale.edu/Faculty/vhv1/
Edwin A. Locke
http://www.edwinlocke.com/
http://www.rhsmith.umd.edu/mao/faculty/elocke/
Fred Fiedler
http://www.thoemmes.com/dictionaries/bdm_fiedler.htm
Joan Woodward
http://www.lib.uwo.ca/business/WOODWARD.html
Internet Resources









Joan Woodward
http://www.lib.uwo.ca/business/WOODWARD.html
P.M.S. Blackett
http://www.nobel.se/physics/laureates/1948/blackett-bio.html
Deming Institute
http://www.deming.org/
Ludwig von Bertalanffy
http://www.isss.org/lumLVB.htm
Norbert Wiener
http://www-groups.dcs.stand.ac.uk/~history/Mathematicians/Wiener_Norbert.html
What are Cybernetics?
http://pespmc1.vub.ac.be/CYBSWHAT.html
Death of the Slide Rule
http://www.xnumber.com/xnumber/hp.htm
John Vincent Atanasoff
http://www.cs.iastate.edu/jva/jva-archive.shtml
David Ricardo
http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/ricardo/
Internet Resources



Geert Hofstede
http://spitswww.uvt.nl/web/iric/hofstede/
Managing Oneself by Peter F. Drucker
http://www.pfdf.org/conferences/drucker99.html
Ansoff Matrix
http://www.quickmba.com/strategy/matrix/ansoff/
End of Part Four