The State of Business Education (Part I)

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The discipline of management, as a field of scientific inquiry, is relatively young. Mirroring the socio-political developments that followed the Industrial Revolution in the Western world — and, particularly, the emergence of the large-scale organizations — the need to better understand and define the job of the manager really came into the spotlight in the late 1800s (Drucker, 1986). While the idea of management could be traced back to the roots of the modern economics, when Adam Smith published his 1776 book The Wealth of Nations, the first foundational building blocks for what we could call modern management were developed at the beginning of the twentieth century.

One of the most influential was Frederick Taylor’s 1911 book The Principles of Scientific Management, which advocated for engineering rigor in order to increase efficiency and “secure the maximum prosperity for the employer, coupled with the maximum prosperity for each employé” (Taylor, 1913). Nonetheless, the roots of management knowledge can be pushed even further back, if we look at some of its components (i.e., psychology, accounting) in isolation.

In spite of a strong start, the first half of the twentieth century was not very productive. Quite telling, the most extensive management library that was assembled before World War II contained no more than seventy volumes that could be categorized as management (Drucker, 1986). And that covered everything that was written to date, in any language, except Japanese. Sure, two global conflagrations and a major economic downturn could have such an effect. Nevertheless, the society was moving forward and, with it, so was the discipline of management. Most notably, in the years between the two wars, management began to be taught in schools.

Although business schools were in existence since 1881, when Wharton School was founded at the University of Pennsylvania, business education was still highly fragmented, with different schools emphasizing different skills (i.e., commerce, banking, accounting). It was only in the thirties that Harvard Business School began to teach courses in management (Drucker, 1986), long after they began to offer a Masters of Business Administration (MBA) degree in 1908; the second such program after Dartmouth College set up theirs in 1900 (Mintzberg, 2004). Also, around the same time, James McKinsey and Lyndall F. Urwick started the management consulting industry by establishing a company focused on fundamental management concerns, such as business policy.

Harvard Business Review, a publication that would end up playing a key role in bringing research to practitioners over the years, was founded in 1922. In its very first issue, the article Essential Groundwork for a Broad Executive Theory written by the school’s dean Wallace Donham gives us a good feel for what the environment was like at that time and where things were headed:

“Unless we admit that rules of thumb, the limited experience of the executives in each individual business, and the general sentiment of the street, are the sole possible guides for executive decisions of major importance, it is pertinent to inquire how the representative practises of business men generally may be made available as a broader foundation for such decisions, and how a proper theory of business is to be obtained. The theory of business, to meet the need, must develop to such a point that the executive, who will make the necessary effort, may learn effectively from the experiences of others in the past what to avoid and how to act under the conditions of the present” (Donham, 1922) 

Reading like a mission statement, the article acknowledges the lack of a generalized theory of business and, inspired by the field of law, spells out the publication’s plans to build a “mass of facts upon which alone business theory can properly develop.” But, throughout, it also reveals the obsession with the scientific method; a view that will significantly shape the future of the discipline.

After World War II, the first major milestone was Peter Drucker’s 1946 book Concept of the Corporation, which was based on a study of the organization commissioned by Alfred Sloan, Chairman of General Motors. It provided the very first inside look at the inner-workings of a large company, revealing and analyzing matters such as power structures, politics, and information flows (Drucker, 1993). Then, for the next few years, things seemed to have been advancing in a natural direction.

With the American economy booming, and with more and more people getting involved in business in one way or another, it was expected to see the body of knowledge advancing toward a better understanding of how to successfully perform an increasingly larger set of activities over increasingly longer spans of time.

In just a few years, a “big picture” subdomain of business knowledge began to emerge. The abstract of a 1956 Harvard Business Review article describes the new trend:

“A growing number of top business executives have lately become interested in the concept of long-range planning, i.e., the planning of a company's major strategic moves five or more years in advance. As might be suspected, however, information about this subject is hard to come by. Businessmen are generally reluctant to talk about any of their firms' long-range plans, which are almost always closely guarded secrets; and since long-range planning was, until ten years ago, a rarity in business, it is not surprising that as yet there are no ‘classic’ treatments of it in the literature. Nevertheless, there are books and articles containing some valuable discussions of the new strategy” (Ewing, 1956) 

Even the knowledge about what makes a good business school made significant progress. While recognizing that “the tasks of a business school are to train men for the practice of management (or some special branch of management) as a profession, and to develop new knowledge that may be relevant to improving the operation of business,” ideas on the necessity of preventing a school’s natural tendency of evolving toward a compartmentalized structure, and thus of increasing its interdisciplinary approach, are being put forth (Simon, 1967).

However, as it always happens, the environment and the immediate circumstances had a significant and lasting effect on those developments. As the American post-war economy was expanding, the Western society was growing increasingly concerned with the threats of the Cold War. 

After observing the benefits of investing in scientific research during World War II (i.e., the development of the atomic bomb), policy makers were now convinced that the government should play a key role in supporting such scientific endeavors (Khurana, Rakesh & Spender, 2012). And while most of the federal funding went to life and physical sciences, a slew of philanthropic foundations focused on the social sciences. Fearing communism and a recession, the leaders of these organizations were driven to raise the scientific respectability of the social sciences.

To Be Continued…

[Part II here]

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REFERENCES

Donham, Wallace B. (1922), Essential Groundwork for a Broad Executive Theory, Harvard Business Review

Drucker, Peter F. (1986), Management: Tasks, Responsibilities, Practices, Truman Talley Books

Drucker, Peter F. (1993), Concept of the Corporation, Transaction Publishers

Ewing, D.W. (1956), Looking Around: Long-Range Business Planning, Harvard Business Review

Khurana, Rakesh & Spender, J.C. (2012), Herbert A. Simon on What Ails Business Schools: More than a Problem in Organizational Design, Journal of Management Studies

Mintzberg, Henry (2004), Managers not MBAs: A Hard Look at the Soft Practice of Managing and Management Development, Berrett-Koehler Publishers

Simon, Herbert A. (1967), The Business School: A Problem in Organizational Design, Journal of Management Studies

Taylor, Frederick W. (1913), The Principles of Scientific Management, Harper & Brothers Publishers

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Image: An ichthyocentaur (parts human, horse and fish) plays a viol on a map of Scandinavia from the 1573 edition of Ortelius’s Theatrum orbis terrarum. The sea surrounding Scandinavia showed sailing ships and this traditionally peaceful ichthyocentaur, perhaps suggesting safe passage. -- Hannah Waters, The Enchanting Sea Monsters on Medieval Maps, Smithsonian.com (2013)

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This article (and Part II) is a slightly-edited excerpt from a draft manuscript of the "letter to the reader," which was intended to be included in Cristian Mitreanu's 2013 book Spointra and the Secret of Business Success (The Aged Edition). As is, it was first published here.

Cristian Mitreanu