Management and organisations - Essay Example

?Introduction It was mainly the global financial crisis that became an impetus to the ongoing debates on the role of business schools in molding a generation of managers who care for public good. This debate was flagged off by a book, From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession, written by Rakesh Khurana (2010), a professor of Harvard Business School. Khurana (2010) started his discussion of the topic by drawing attention towards the way in which modern management has gone above the purview of public scrutiny and below the demands of public good (p.1). He (Khurana, 2010) has also raised the question whether “the purpose of management is to maximize shareholder value” which of course is an assumption that agrees with the prevailing common sense (p.5). But any business establishment is a part of the society and also it enjoys the common facilities provided by the society, like security to life and property, transportation facilities, etc. Hence it is my argument that business has an obligation towards public good. And business schools being the place where managers and leaders of business are developed, I believe that business education should incorporate values of public good, as Khurana (2010) has demanded in his book. As far as Khurana (2010) is concerned, he has but made a differentiation between university-based business education and private business education because in his view, the legitimacy and credibility imparted to a university-educated business graduate by the industry as well as the general public makes it mandatory that such business students/professionals orient their profession in harmony with public good (Khurana, 2010) . Khurana (2010) has reminded his readers that the 125 years old univerity-based business school system, though initially meant for the professionalisation of management study, is now run by a “managerialistic logic that emphasized professional knowledge rather than professional ideals, and ultimately by a market logic that taken to its conclusion, subverts the logic of professionalism altogether” (p.7). I also agree with this opinion as I have always felt that managers of most business establishments have no problems of conscience in using unethical means to achieve their ultimate end, that is, enhancing the profits of their company. After arguing in this line, Khurana (2010) has called for the balancing of university-based business school education in the favour of “professionalism and professional leadership” (p.20). He (Khurana, 2010) has also stressed the need of this realignment in four areas of the interactions of such business schools, namely, “student, faculty, business, and society at large” (p.20). In totality, what Khurana (2010) has tried to focus is the questions related to the abandoning of the notions of public good in management education, which I also feels to be the need of the hour. From the definition offered by Oxford English Dictionary that public good is actually common good, to the definition given by Barley (2007) that “public good is where externalities happen”, there are a wide range of definitions for public good (p.202). Calhoun (2006) has reminded that what is expected from a university-based education system are mainly four “public missions”- imparting education for training people in “occupations traditionally centered on public service,” furthering “social mobility,” developing “new technologies,” and providing information needed for “the public sphere and also prepare the citizens to participate in it” (p.10). It is also observed that the “direct governmental financing and governance of universities” is necessitated by the notion that universities have to “contribute to the public good” (Calhoun, 2006, p.10). I want to remind here that whatever finance that reaches universities from the government is actually the taxes paid by the people. But as is criticized by Calhoun (2006), when universities turn into profit making ventures and start making huge profits as well, and also when universities step out of the shade of the nation state and take refuge under private funding, the public good angle of them gets blurred (p.10-11). The arguments of Barley (2007), and Calhoun (2006) thus provide a basic frame work for understanding the issue that Khurana (2010) is raising. The discussion above has also revealed that university-based education system has a moral duty to act in favour of the public and public good. This is the context in which the position taken by Khurana (2010) is explored here. The rise of the ‘corporation’ was another phenomenon that prompted the kind of retrospective criticism as is raised by Khurana (2010). I think that the way in which corporations changed the fabric of the community and of the employee-employer relationship has become too visible to ignore. The impact of corporations on the society was viewed with great apprehension by many observers which is reflected in the remark made by Henry Adams that “they tore society to pieces and trampled it under foot” (cited in Khurana, 2010, p.35-36). Hence it becomes clear that the position taken by Khurana (2010) that university-based management schools have failed in their objective of catering to larger social goals, is supported by at least some members of the academic community concerned. Review of Literature As early as in 1973, Keith Davis had summarised the arguments favouring social responsibility of business which include, a) “long- run self-interest of business” lies in fulfilling the social responsibilities, b) the public image of the company has to emerge out of socially responsible action , c) the long-run viability of the business depends on the same, d) actions with a concern for society will reduce government regulation, d) “problems can become profit”, and so on (p.313-317). She (Davis, 1973) had also not forgotten to list the arguments against business social responsibility, which are, a) social responsibility hinders “profit maximisation”, b) it costs more, the business has no skills needed for social intervention, c) social intervention would shift the focus away from the primary goals of business, d) social costs will add up to the price the consumer has to pay, e) giving social power to business will create an accountability problem and exploitation, and f) social interventions may lack broad support from the stakeholders involved (p.317-321). What I feel is that at least some of these arguments are unethical and even selfish when viewed from the angle of public good. What I am trying to argue is not that business education should sacrifice its profit-motive to meet its social responsibility but only that business should realise that it is also part of the society and that only through a give and take with the society that it can pursue its goals in the long run. After arguing out, for and against business social responsibility, Davis (1973) concluded her paper by asserting the need for social responsibility. But she (Davis, 1973) had not tried to find out which of the two sides of the arguments held stronger logical sway and she stopped short of deriving an argumentative conclusion. Instead she (Davis, 1973) had chosen to be satisfied with expressing a personal opinion, which makes her study somewhat weak and contestable (p.321). I think Khurana (2010) also has this weakness of argument as he has not properly supported his argument with facts. Rather he (Khurana, 2010) has mostly used opinions and remarks by others to support his point. What people have observed about a particular topic, and what logical conclusion that the real facts about that topic lead to, are two typically different issues. Though I believe that what Khurana (2010) has said, approves to our common sense, the allegations that he floods on corporations are not substantiated by him using solid evidences or facts. All the same, the corporate scandals that have been rocking the United States indicate that the issues addressed by Khurana (2010) are relevant and need to be studied in a deeper way and of course with the support of more data and facts. Unlike Khurana (2010) and Davis (1973), Sumantra Ghoshal (2005) has examined the business study curriculum and found out specific examples of faulty approaches which deprives management studies of a social angle altogether. For example, Ghoshal (2005) has shown how the agency theory of management describes why managers are not to be trusted and how the transaction cost economics says that managers are opportunists (p.75). This is indicative of the loss of an ethical ground even on the side of theorisation, in management studies. Ghoshal (2005) has also listed the corporations which have proved the above-quoted words of Henry Adams to be true as they “granted themselves excessive stock options, treated their employees very badly, and took their customers for a ride when they could” (p.76). It seems to me that Ghoshal (2005) has gone one step ahead of Khurana (2010) by saying that academic activities on management not only let the social responsibility to fade but also had a specific negative influence in this course of events. While Ghoshal (2005) lingered on what has happened in management studies, Holt (2006) moved forward by telling us what would be the consequence. And Holt (2006) has raised an alarm that in the long run, adherence to moral principle is crucial in developing good management situations (p.1659). This kind of moral obligation, based not only on vague notions of public good but also on the benefit expected in the managerial task, is what Holt(2006) is talking about. And I think, this is why Holt (2006) can convince his target audience than others. Holt’s (2006) arguments are based on the Aristotelian theory of phronesis, that is practical judgment or common sense, and says that managers can develop better phronesis through moral character that has roots in the values of the community. This is an approach that I feel, tries to anchor management in public good by considering the materialistic aspects, rather than vague ideals. Ghoshal (2005) has also argued that “by propagating ideologically inspired amoral theories, business schools have actively freed their students from any sense of moral responsibility” (p.76). Ghoshal (2005) has extensively drawn from the research done so far on the debate of whether humanities can be considered equal to science subjects, to prove that management cannot be studied simply based on cause-effect relationships like science (p.78). Instead, Ghoshal (2005) has stressed the need to incorporate the human element that is always present in it (p.78). By placing the debate raised by Khurana (2010) in the realm of the broader debate of science versus social science, Ghoshal (2005) thus has grounded his argument with a strong base (p.77-79). Then he (Ghoshal, 2005) has further argued that it is the “pessimistic view of human nature, on the role of companies in society, and of the processes of corporate adaptation and change” as propagated by management theories that has deprived management of its social responsibility (p.82). I am of the opinion that there of course can be a converging point between public good and company profit, if the companies are satisfied with a reasonable profit. And I also feel that business management, being a subject involving human beings must not be learned in the method of science alone. What I have to say is that even disciplines like fine arts and language can play a role in imparting business students a sense of inheritance towards the common good of the society. The examples of approaches indifferent to public causes in the business studies that Ghoshal (2005) has provided include, the deterministic nature of the ecological […] and institutional […] analysis of organizations,” the mechanical application of behavioral theories, the priority given to “value appropriation” over “value creation,” and the inclusion of concept like “shirking, opportunism, and inertia” into management theories (p.82). I can say that by providing specific examples and also a sound theoretical frame work, Ghoshal (2005) has succeeded in delineating the causes of the decline of business social responsibility, even before Khurana (2010) had come up with his critique of university-based business schools. And more importantly, Ghoshal (2005) has traced deeper to find the roots of the problem in theory itself, while Khurana (2010) has limited his queries to what is happening in the general approach of the university-based business schools. It is clear that once management is accepted as an academic subject, a university- based business school and a private business school have to follow some common norms and theories in this area of study. Hence, the explanation provided by Ghoshal (2005) is more appealing to me than the arguments of Khurana (2010). It becomes also evident from the above discussion that the problem is more with the general theories that have been developed in management studies rather than with the way university-based business schools act and behave. But the study carried out by Khurana (2010) is still relevant because it was he who alerted the society that there is a problem at hand. Just like Ghoshal (2005), Bennis and O’Toole (2005) have also suggested that it was the adoption of the “model of science” that deprived management studies in business schools, of their social perspective (p.2). Hence, Bennis and O’Toole (2005) have called for anchoring business studies in humanities (p.8). What these researchers (Bennis and O’Toole, 2005) have demanded is that more subjects which are part of humanities be taught under management studies including literature and so on (p.8). This argument is in correlation with what Khurana (2010) has to say and needs to be taken as a basis of a paradigm change that is expected to happen in business education. As far as my understanding is concerned, such a paradigm change can revolutionise the way in which companies function and bring in a great interactive platform between business and the public. I feel this change has to be initiated to help global business to survive the present financial melt-down and the related uncertainties. Palazzo and Scherer (2008) also have studied the indifferent attitude of business towards public good and opined that “considering corporations as simple extensions of the private self” is no more a viable option (p.773). They (Palazzo and Scherer, 2008) have argued that a time has come when companies are not to do the public, good, out of individual philanthropic interests but out of an “implicit compliance with assumed societal expectations” (p.773). Just like Ghoshal (2005), these researchers (Palazzo and Scherer, 2008) also have linked the problem with another crucial fact- the relaxation of control over corporations under the changeover from national welfare states to liberal market-supporting states and “multi-level governance networks” (p.775). As per my views, this is a major aspect of any debate involving public good and business, in the sense that the decline of nation state has given corporations more freedom that can be misused for selfish purposes if they want to. Even the development of new management theories, focusing less on public good, can be found to have this as a causal factor. Freeman, Wicks and Parmer (2004) are another group of scientists who have argued that “business and ethics” not only need to be but are, closely “connected” (p.364). They (Freeman, Wicks and Parmer, 2004) have suggested that any understanding of the stakeholder theory in management has to be in terms of “a shared sense of the value they create,” that is, in terms of the idea of sharing with the community (p.364). I am sure that this has to be so because humans are social beings and cannot exist in isolation with the community. Here the need for incorporating public good into management theories is the only concern and how university-based business schools fare in this realm is not specifically taken under scrutiny. But Ensley and Hmieleski (2005) have linked this with the question why university-based management studies must be linked with public good. They (Ensley and Hmieleski, 2005) have pointed to how “university-based start-ups may gain cognitive legitimization through university media and entry into the university community” and also how “key stake-holders, the general public, key opinion leaders and government officials accept the new venture as appropriate with respect to existing norms and laws” just because of this legitimisation (p.1093). This is another very important ethical aspect that imparts a moral obligation upon the managers emerging out of university-based business schools to consider public good. And this inherent obligation is what Khurana himself (2010) is also stressing upon. Khurana (2010) has stated that university-based business schools were the key players who imparted legitimacy to “the business school degree from the perspective of business itself” (p.104). What Khurana (2010) demands is to acknowledge, “organizations are not just technical and production systems but social systems as well” (p.222). I feel, in this manner, the question raised by Khurana (2010) is legitimate and true. Implications of the literature The concept of managers as leaders rather than as formal task-masters in an organization, put forth by Khurana (2010) has very wide implications. But in the context of globalization, transnational corporations, and the flow of financial capital across boundaries, the possibility of such a paradigm shift is a doubtable proposition. For example, as Henry Adams had pointed out, the corporations have been showing no conscience loss in trampling the society under their feet to pursue their own selfish ends (cited in Khurana, 2010, p.35-36). The arguments favouring social responsibility of business like the “long- run self-interest” theory of business, and the “public image” theory, have not so far been taken seriously by the business community (Davis, 1973, p.313-317). It is the arguments that oppose the social responsibility of business that still holds the sway in the mainstream business circles. What managers generally are found to believe in, are the arguments like, social responsibility hinders “profit maximizsation”, it costs more, the business has no skills needed for social intervention, and social intervention would shift the focus away from the primary goals of business (Davis, 1973, p.317-321). What Khurana (2010) and Davis (1973) demand appear to be only wishful thinking because they have not explained why business education is under compulsion to reorient itself in favour of public good. Why university- based business should do this simply under a moral obligation is another question that is relevant. Thus their (Khurana, 2010; Davis, 1973) research falls short of convincing the profit-motivated management educational stake-holders on why they should incorporate public good into their study realm. Ghoshal (2005) also has followed the same line of argument as Khurana (2010) and Davis (1973) though explaining more elaborately and with the support of facts, how management theories taught in both universities and private business schools have lost their association with public good. But Ghoshal (2005) also has no convincing case to prove that a vision of public good is essential for good management. This is the realm where Holt (2006) has moved one step ahead. He (Holt, 2006) has argued that good management can exist only based on sound moral grounds. Holt’s (2006) argument that managers can develop better practical judgment through developing moral character that has roots in the values of the community, is a convincing case in favour of what Khurana (2010) has said. Palazzo and Scherer (2008) also put forth a strong argument to explain why management education is compelled to incorporate public good into its purview by noting that to exist in a society, meeting its social expectations, they cannot simply forgo public good. Here it is reminded that any organization is a social entity as is pointed out by Khurana (2010) and any manager need to work in agreement with his/her social ambience. When Ghoshal (2005) and Bennis and O’Toole (2005) argued that it was the adaptation of the “model of science” that dehumanised and de-socialised business education, it is just an explanation of why business education has lost its social view. Similarly, Palazzo and Scherer (2008) have also explained this phenomenon in terms of the transformation of the nation state into a liberal state. Though these arguments throw light only upon the causal factors of the problem, I think, understanding the causes can help better the knowledge about the consequences and develop plans for the future. Freeman, Wicks and Parmer (2004) and Ensley and Hmieleski (2005) have again demanded the incorporation of public good based on the high moral grounds of obligation to the community and to the society held by university-based educational systems. Though this aspect need not compulsorily adopted by business educationists, again the social expectations as described by Khurana (2010) can act as the needed element of compulsion. And what I want to conclude is that any intelligent business manager who is planning for future as well, should not fail to realise the close connection between public good and profit as is discussed above. Practice Relevance The practical relevance of the literature regarding the connection sought between university-based business education and public good is that such introspection may help find solution to the existing global financial crisis through arriving at a paradigm shift. Now the business community has not been getting any support from the society and community in which it exists, apart from some financial help from the concerned governments. But if a paradigm shift is brought about with an orientation toward public good in business education, the managers can transform into real leaders who have roots in the community and who can lead and motivate it. This could be beneficial to the business on a long-term aspect and would do the society good as well. Conclusion Seeking a link between university-based business education and public good, the literature on the topic is a pointer towards the future directions business education has to explore. Particularly I think that in a world that is getting more democratised and more aware of values like human rights, freedom and equal rights, it is imminent that no social entity can exist without considering and caring for public good above sheer selfish self-interest. This is the context in which Khurana (2010) has sparked off a revolution in the thought processes involved. And this has to be the jumping board for the business to move on from the present crisis and have a better organic relationship with the community and the society as a whole. References Barley, S.R. 2007, ‘Corporations, democracy and the public good’, Journal of Management Inquiry, Vol.16, No.3, pp.201-215, viewed 08 September 2011, http://www.dosp.unibo.it/seminari/paper_barley.pdf Bennis, W.G. and O’Toole, J. May 2005, ‘How business schools lost their way’, Harvard Business Review, viewed 08 Septenber 2011, http://www.rasalevickaite.lt/kmtm/skaitinys.pdf Calhoun, C. 2006, ‘The university and the public good’, Thesis Eleven, No.84, pp.7-43, viewed 09 September 2011, https://www.nyu.edu/ipk/files/docs/publications/the_university_and_the_public_good_thesis-eleven.pdf Davis, K 1973, ‘The case for and against business assumption of social responsibilities’, Academy of Management Journal, Vol.16, No.2, p.312-322, Viewed 5 September 2011, http://uweb.txstate.edu/~ek10/socialresponsibility.pdf Ensley, M.D. and Hmieleski, K.M. 2005, ‘A comparative study of new venture top management team composition, dynamics and performance between university-based and independent start-ups’, Research Policy, 34, pp.1091-1105, viewed 09 September 2011, http://www.hmieleski.com/Publications/Ensley_Hmieleski_RP_2005.pdf Freeman, R.E., Wicks, A.C. and Parmer, B. 2004, ‘Stakeholder theory and “the corporate objective revisited”’, Organization Science, Vol.15, No.3, pp.364-369, viewed 7 September 2011, http://my.t-bird.edu/files/personalfiles/133488/10Corp_Obj_Freeman_Reply.pdf Ghoshal, S 2005, ‘Bad management theories are destroying good management practices’, Academy of Management Learning and Education, Vol.4, Issue.1, pp.75-91, Viewed 5 September 2011, http://www.corporation2050.org/documents/Resources/Ghoshal.pdf Holt, R. 2006, ‘Principles and practice: rhetoric and the moral character of managers’, Human Relations, Vol.59, No.12, pp.1659-1680, viewed 09 September 2011, http://hum.sagepub.com/content/59/12/1659.full.pdf+html Khurana, R 2010, From higher aims to hired hands: The social transformation of American business schools and the unfulfilled promise of management as a profession, Princeton University Press, Princeton, NJ. Palazzo, G. and Scherer, A.G. 2008, ‘Corporate social responsibility, democracy, and the politicization of the corporation’, Academy of Management Review, 33, p.773-775, viewed 6 September 2011, http://www.iou.uzh.ch/bwl/publications/manuskripte/Palazzo_Scherer_AMR_2008.pdf Read More