Evolution of the Management - Article Example

Critically evaluate: Most ideas representative of general administrative theories are relevant to modern global organizations The basic objective ofthis paper is to unearth the ideas representative of general administrative theories or more specifically management theories in order to examine their relevance to modern global organisations. There has a considerable debate as to whether the words 'administration' and 'management' essentially mean the same thing or are they functionally different. Fayol (1930) has pointed out that one should not confuse administration with management as management essentially means effective conduct of an organization with the optimum utilization of the available resources for ensuring smooth working of the organization's essential functions. Administration is only one of these functions. Hence it is more realistic to talk of management theories instead of the administrative theories as the former encompasses the latter. Evolution of the Management Theory Broadly speaking, management theory attempts to emphasize management functions with a view to generate broad administrative principles that would serve as guideline for the realization of organizational activities. There has been numerous attempts made by scholars of various disciplines to construct a 'general management theory'. However, neither of these attempts seems to favor one another and it has almost become impossible to find out two scholars sharing a common view. Suojanen (1963).The earliest writings on the subject came from such eminent scholars like Henri Fayol, Mooney and Reiley, and Gulick and Urwick (1937). The greatest development that has occurred in the management literature in recent years is the classification of various views of management in a coherent and logical way. This scientific classification of diverse approaches to the subject has been done by Koontz (1961), widely known as the 'management theory jungle'. Koontz (1961) classified the major schools of management theory into six broad categories. 1. The Management Process School: Often referred to as the 'classical' or 'universalist' school, it has been developed by Henri Fayol. Fayol attempted to formulate a comprehensive theory of management applicable to all organizations. His main contributions included among others to define a body of principles that would empower a manager to formulate a formal structure of the organization for its effective administration. Being a staunch advocate of the universality of management concepts and principles, Fayol introduced management as a separate discipline is his original contribution to management thought. Fayol opined that the five functions of managers were to plan, organize, command, coordinate, and control. His fourteen principles of management included division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interests to general interests, remuneration of personnel, centralization, scalar chain, order, equity, stability of tenure of personnel, initiative, and esprit de corps (union is strength).Though he been often associated with his Frederick W. Taylor, the two had opposite viewpoints. Whereas Fayol advocated productivity improvements from the "top down", the Scientific Approach of Taylor advocated "bottom up". 2. The Empirical School: The empirical school seems to be based on the premises of 'learning by doing/following'. In other words, it advocates learning from the experiences of successful managers or mistakes made in the management policies in the past for successful implementation of management policies in the future. More specifically it views management as a study of experience. However, it must be argued that though past experiences are priceless but it may not always be the case that what seemed right in the past would also be applicable in the future. Hence it is advisable to not only learn from the past but consider the present and if possible the future while formulating a management decision. 3. The Human Behavior School: It views management as a study of inter and intra personal relations. The basic premises of this school is based on the fact that the more people understand one another, the easier it becomes to get along together and work coherently as a group. It emphasizes the understanding human relations in order to get things done in the best possible manner. Thus there is a greater emphasis on understanding human relations. 4. The Social System School: Contrary to the Human Behavior School, it views management as a social system in which cultural interrelationships of diverse social groups are identified so as to relate them to an integrated system for proper implementation of management policies. The greatest exponent of this school is Chester Barnard who advocated that managers need to know more about human behavior, particularly the informal groups of an organization which may contain outsiders so as to overcome differences of workers with the management. 5. The Decision Theory School: The decision making school advocates the selection of the best management decision from the available alternatives. The school draws heavily on the principles of consumer behavior and related aspects of risk and uncertainty and thus involves considerable mathematical modeling. However, it needs to be mentioned that the selection of a particular management encompasses the entire spectrum of human activity and views the enterprise as a social system. 6. The Mathematical School: The mathematical opines that if management is a logical process, it can be expressed in terms of mathematical operators and relationships. Needless to say, this school comprises mainly of persons proficient in operations research. Management Theory and its relevance to Modern Global Organizations In order to examine the relevance of the management literature as it stands today, it become imperative to highlight the distinguishing features of the Modern Global Organizations (MGOs) when compared to their indigenous counterparts. This would facilitate better and adequate evaluation of the existing literature on a comparable basis. The basic structural differences between the MGOs and indigenous organizations are noted below: The MGOs operating overseas suffer additional costs, arising from their operation in foreign countries, which are not incurred by indigenous firms what Zaheer (1995) calls 'the liability of foreignness'. They offset these additional costs by developing their firm-specific advantages, and hence develop a somewhat different set of advantages, in sharp contrast to the indigenous firms. In contrast to indigenous firms, MGOs being part of an international network are able to draw some advantages from the scope of this network. Indigineous firms need to develop adequate management policies in order to acquire comparable advantages. Bartlett and Ghoshal (1989) MGOs, due to fierce international competition are forced to develop suitable innovative capabilities to boost their productivity. Such forced innovation is a rarity for indigenous firms. It has been found out that even when MGOs and indigenous firms operate in the same geographical arena, considerable differences in performance still exist mainly due to differences in their strategic policies. Zaheer (1995) The MGOs are in favourable position with respect to market size; product variety and quality, international and domestic linkages when compared to their indigenous counterparts (Nachum and Keeble 2000). Decentralization has been widespread in recent times in MGOs due to the emergence of outsourcing and other networked forms of production. Dunning (1997). The MGOs benefit from network externalities but indigenous firms do not. This is mainly due to their global presence. Let us now spell out the criteria as proposed Massie (1958) in analyzing the applicability of the various schools or postulates of the 'management theory'. These criteria are The framework must be broad, expandable and elastic It must be consistent. It must be based on clear-cut assumptions and premises It must act as a base for further research in the area It is quite obvious that a majority existing schools of management theory fail to accommodate the distinguishing dynamics of MGOs as regards the first criterion which seems to be an ideal framework that is broad, expandable and elastic. Only the decision and mathematical schools, with adequate modifications, would satisfy the first criterion. However, it needs to be mentioned that not every relations, whether physical or human can be accommodated using mathematical symbols and operators. The consistency criterion which comes second in the list is also very difficult to satisfy, not only due to the emergence of MGOs but due to the inconsistency inherent in the underlying management theories. It is often argued that writers, with their view to maintain consistency in their approaches, often tend to generalize diverse things as being one which completely renders their basic postulates completely irrelevant. The third criterion relating to specification of clear cut assumptions is also very difficult, especially when MGOs are concerned due the ever-changing world economic order in which they operate. It may hold to some extent when only indigenous firms are taken into consideration. However, though the mathematical modeling propounded by the mathematical school has to be based on a rigid set of assumptions no doubt, but sometimes a longer set of assumptions leave the model quite restrictive and renders the model completely useless as regards the general acceptability. The last and the most important one concern the usefulness of the various theories for further research. This is also central to our discussion. Every new management theory was developed in order to remove the deficiencies of the previous one. So in that context, every theory is relevant but it important to update the theory to the ever-evolving world order. Every new theory must have an empirical validity. However, it needs to reaffirmed that principles outlined in the human behavior and social system social systems schools must be satisfied in all possible for smooth execution of management decisions, irrespective of whether the firms are operating at the local or global level as the core to successful implementation of any policy rests on the coherent and sound relationships among those who are to carry out the task. The increasing globalization of firms' brings with it various socio-economic-cultural diversities, not only of its employees, but also its clients. These diversities may have a telling impact on the performance of the firm if not given proper attention. The diverse socio-economic-cultural attributes which are in more ways than one heterogeneous in nature has to be adequately dealt with because management decisions based on these must be diverse, which is completely ignored in the literature. In other words, the existing management theories must be broadened to take into consideration these cultural and/or geographical differences so as to become universal in appeal. Concluding Remarks From the above discussion, that there has been several meaningful attempts in devising a management theory which would act as a guideline for firms and mangers alike for smooth functioning of firms with the attainment of desirable objectives. The basic criteria emphasized by Massie need not be satisfied to the core for a management theory to be desirable. The question lies in vitality particular management decision in boosting firm's performance on one hand while regaining the confidence of the managers, employees, clients on the other. Having said that, one must also give adequate importance to the fact that attempts to devise a management theory applicable to indigenous as well as transnational firms are almost absent. Till date, the entire body of literature has centered on the indigenous firms with little or no emphasis to changing and unique dynamics of MGOs. The basic reason for this omission is that the entire body of the literature had been developed when the presence of firms with transnational presence was unthinkable and unheard of. Needless to say, they were developed for smooth and efficient functioning of indigenous firms only. With the advent of globalization, the management theories need to be redefined so as encompass the complexities, challenges and rewards of the globalized economic scenario. The novelty of this paper is that it highlights the need to develop a comprehensive management theory characterizing all firms, irrespective of the geographical spread of their activities. Hence, the existing management theories must integrate the dynamics of transnational operations of the firms into the mainstream management theory. For this, systematic conceptualizations of firms with global characteristics and with their indigenous counterparts become imperative. The task seems quite challenging as it is difficult to internalize the complexities and ever-changing dynamics of the globalized world into the mainstream or if we may say globalized management theory, but with wide spread interest among scholars from various disciplines on this very subject since inception, the task doesn't seem impossible either. References Bartlett, C. A. and Ghoshal, S. (1989) Managing Across Borders: The Transnational Solution. Boston, Harvard Business School Press Dunning, J. H. (1997) Alliance Capitalism and Global Business, London and New York, Routledge Fayol, Henri. (1930) Industrial and General Administration, translated by J. A. Coubrough. Geneva: International Management Institute. Koontz H. (1961) The Management Theory Jungle (1961), The Journal of Academy and Management, 4(3): 174-188 Massie J. L (1958) The Management Theory Jungle (1958), The Journal of Academy and Management, 1(2): 58-61 Nachum, L. and Keeble, D. (2000) MNE linkages in localised clusters: Foreign and indigenous firms in the media cluster of Central London, Cambridge University ESRC Centre for Business Research, working paper no. 155 Robert Dektor, Tung R.L., Glinow Mary Ann Vun (1991) Future Directions for Management Theory Development, Academy of Management Review, 16(2): 362-365 Suojanen Waino W. (1963) Management Theory: Functional and Evolutionary, Academy of Management Journal, 6(1): 7-17 Wren & Greenwood (1998): Management Innovations Zaheer, S. (1995) Overcoming the liability of foreignness, Academy of Management Journal, 38(2): 341-363 Read More