Management Ideas: A Short History of Business Administration

272 Pages·2022·6.696 MB·English

by  Klaus Brockhoff

Contributions to Management Science
Klaus Brockhoff
Management
Ideas
A Short History of Business
Administration
Contributions to Management Science
The series Contributions to Management Science contains research publications in
all fields of business and management science. These publications are primarily
monographs and multiple author works containing new research results, and also
featureselectedconference-basedpublicationsarealsoconsidered.Thefocusofthe
seriesliesinpresentingthedevelopmentoflatesttheoreticalandempiricalresearch
acrossdifferentviewpoints.
ThisbookseriesisindexedinScopus.
Klaus Brockhoff
Management Ideas
A Short History of Business Administration
KlausBrockhoff
Koblenz,Germany
ISSN1431-1941 ISSN2197-716X (electronic)
ContributionstoManagementScience
ISBN978-3-031-09961-8 ISBN978-3-031-09962-5 (eBook)
https://doi.org/10.1007/978-3-031-09962-5
Translation from the German language edition: “Betriebswirtschaftslehre in Wissenschaft und
Geschichte”byKlausBrockhoff,©SpringerFachmedienWiesbadenGmbH2021.PublishedbySpringer
Gabler,Wiesbaden.AllRightsReserved.
©TheEditor(s)(ifapplicable)andTheAuthor(s),underexclusivelicensetoSpringerNatureSwitzerland
AG2022
Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whether
thewholeorpartofthematerialisconcerned,specificallytherightsofreprinting,reuseofillustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilarmethodologynowknownorhereafterdeveloped.
Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthispublication
doesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevant
protectivelawsandregulationsandthereforefreeforgeneraluse.
The publisher, the authors, and the editorsare safeto assume that the adviceand informationin this
bookarebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernortheauthorsor
theeditorsgiveawarranty,expressedorimplied,withrespecttothematerialcontainedhereinorforany
errorsoromissionsthatmayhavebeenmade.Thepublisherremainsneutralwithregardtojurisdictional
claimsinpublishedmapsandinstitutionalaffiliations.
ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG
Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland
Preface
Fewbusinessschoolscontinue,andevenfewerschoolsstartthesedayswithcourses
on the history of ideas. A particularly bitter complaint on the neglect of history is
voiced with respect to one of the core fields of business administration, namely
accounting.“Fornearlytwodecadesnow,historyarticleshavenotbeenwelcomed
by journals of the perceived highest echelon ... Relatedly, history scholarship is
frequently regarded as of secondary importance even when appearing in top-rank
journalspublishedabroad...Atmanyuniversities,accountinghistorystudiesmust
be supplemented by work of a more contemporary genre lest their authors are
discriminated against in tenure and promotion decisions” (Richard
K. Fleischmann/Vaughan S. Radcliffe/Paul A. Shoemaker, eds., Doing Accounting
History. Contributions to the development of accounting thought, JAI: Amsterdam
etal.2003,vii).Theseobservationsarenotpeculiartoaccounting,andtheyarenot
relatedtotheUSAalone.Thereareexceptions,buttheyhavebecomerare.Aswill
beexplainedinmore detail,thiscan lead toseveraldeficitsinmanagement educa-
tion, including fallibility to accept potentially new ideas, which in fact are
re-packaged older ones. Furthermore, a historical perspective is an excellent
approach to mentally organize the often diverging models and tools presented in a
program. Thus, at least some basic understanding of the history of the discipline
wouldbeusefulandnecessary.However,amorecompletepresentationofthetopic
maywellarriveatmorethan1200pages,asisevidenced,forinstance,bythegreat
HistoryofEconomicAnalysisbythelateJosephA.Schumpeter(OxfordUniversity
Press:NewYork1954).ThePalgraveHandbookofManagementHistory,editedby
BradleyBowdenetal.(SpringerNature:Cham2020),offers1464pagesoftext.A
perspective that includes societal developments and public management is offered
byVadimIvanMarshevinHistoryofManagementThought(Springer:Cham2021)
with 710 pages, although its focus is primarily on organizations and human
resources. On business administration, one could draw on Dieter Schneider,
Betriebswirtschaftslehre, Vol. 4 (Oldenbourg:Munich/Vienna 2001), with 1036
pages,ortheshorterEntwicklungenderBetriebswirtschaftslehre,editedbyEduard
Gaugler and Richard Köhler (Schäffer-Poeschel: Stuttgart 2002), with 544 pages.
v
vi Preface
For a course, this is too much, and for a focus on management in all specialized
sub-disciplinesorbranchesofbusiness,itistoolittle.Thisbookstrivesforamiddle
roadtobecomeacceptableforcourseworkontheonehandandmotivatingcuriosity
for detailed and more profound studies on the other hand. It originates from a
German text used during the first 20 years of twenty-first-century business school
teaching (Klaus Brockhoff, Betriebswirtschaftslehre in Wissenschaft und
Geschichte,6thed.,Springer:Wiesbaden2021).
Anever-increasing use ofEnglishincoursework isa major reason forthis text.
Hopefully,itwillbeusedbeyondGerman-speakingcommunities.Therefore,afew
specificsthatcatertotheGermanarenaaredeletedfromtheoriginaltext.Still,asin
anyhistoricalwork,theauthor’sbackgroundandperspectivecannotbeeliminated.
This should not be too limiting a constraint because the text does not reach out
beyond the 1970s (because then the trend to specialized sub-fields of business
administration would haverequired adifferent approach, which would atthesame
time have exploded the number of pages). The strong position of the academic
developmentsofbusinessadministrationbothintheUSAandinGermanyiseasily
recognized.Furthermore,unfortunatehistoricaleventsinGermanyduringthetwen-
tieth century offer an opportunity to demonstrate how its political-economic envi-
ronmentinfluencesmainstreambusinessthoughts.
Citations are made in footnotes: In historical texts, in particular, the author
dislikes to skip pages to the back of a book when searching for a reference. It is
much easier to find the information at the bottom of a page. To read the complete
source ofaparticularcitationrepeatedlyshouldnotcause anuisancetothereader.
TranslationsoforiginalcontributionsinFrench,German,Italian,orLatinarethose
oftheauthor.Relativelyextensivequotesareusedtodeliveranimpressionoftheir
author’swayofpresentingtheirargumentsorfindings.
Thebookhasfourparts.Ibeginbydescribingmanagementideasasarisingfrom
experiences accumulated in society. Later, this knowledge is made available in
comprehensivebooksformerchants.Businessadministrationasasciencedoesnot
yet exist, although emerging ideas can be taught. Theoretical ideas are developed
from agriculture or in economics. In the second part, I refer to indications of a
science with particular reference to business administration. It is shown how busi-
ness administration lives up to these indications. At the beginning of the twentieth
century, the discipline had arrived at business schools and universities, curricula
were designed and taught, methodologically controlled research developed, and
infrastructure of professional associations and publications came into life. The
thirdpartsummarizesdevelopmentsoftheinstitutionalizeddisciplineasinteracting
with its societal and economic environment. Germany offers extreme examples in
this respect. Furthermore, the discipline splitting into sub-disciplines or branches
callsforsketchesofsomeoftheirdevelopments.Inthefinalpart,severallimitations
tohistoricalanalysesofthissortandessentiallearningsfromthehistoryofthought
arepresented.
Iamgrateful toWHU—Otto BeisheimSchool ofManagement for theopportu-
nity to use its library and IT department, and I would like to thank their staff
members for their friendly help. My friend and colleague Hermann Simon talked
Preface vii
me into writing this text, which offered a welcome opportunity to engage more in
enjoyable reading during the past year or so. Corona tied everybody down so that
somemorehomeworkcouldbedone.
Koblenz,Germany KlausBrockhoff
Spring2022
Contents
PartI BeforetheInstitutionalizationofBusinessAdministration
asaScience
1 EarlyDevicesandTechniquesinWesternAsiaandtheNear
East. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 BeforeScriptandNumbersinIraq. . . . . . . . . . . . . . . . . . . . . . 3
1.2 EarlyBookkeepingintheNearEast. . . . . . . . . . . . . . . . . . . . . 5
1.3 LaterDevelopmentsinIndia. . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.4 HebrewandIslamicExperiencesTravelingtoEurope. . . . . . . . 10
2 ManagementofHomes,Estates,andTradeinEuropeUntil
theMiddleAges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 ManagementIdeasbyGreekPhilosophers. . . . . . . . . . . . . . . . 13
2.2 ManagementIdeasbyPoliticalMindsintheRomanEmpire. . . 16
2.3 ManagementIdeasbyTheologiansinCentralEurope
intheMiddleAges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4 SummarizingObservations. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3 TheAgeofEnlightenmentandBeyondinEurope. . . . . . . . . . . . . . 37
3.1 MethodologicalAdvancement:InductionfromExperiments. . . . 38
3.2 TheProblemofCompoundInterestSolvedbyLogic. . . . . . . . . 41
3.3 ComprehensiveBooksforMerchants. . . . . . . . . . . . . . . . . . . . 44
3.4 FirstIdeasonBusinessAdministrationasanAcademic
Discipline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4 ThreeStreamsofKnowledgeGenerationinNineteenth-Century
Europe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.1 TheNormativeApproach. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.2 TheEmpirical-RealisticApproach. . . . . . . . . . . . . . . . . . . . . . 61
4.3 TheoreticalApproaches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.4 InterimResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ix
x Contents
PartII CriteriaforBusinessAdministrationasaScience
5 IndicatorsofaScienceandModelsofItsDevelopment. . . . . . . . . . 73
5.1 MeaningsofSciencefromDifferentPerspectives. . . . . . . . . . . 73
5.2 TheExistenceofEssentialQuestionsasaCharacteristic
ofaScience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
5.2.1 FourAuthorsonImportantQuestions. . . . . . . . . . . . . 77
5.2.2 WhatIsaFirm?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5.2.3 WhyDoFirmsExist?. . . . . . . . . . . . . . . . . . . . . . . . . 83
5.2.4 WhoAretheEntrepreneurs,andWhyCan
TheyExist?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.2.5 InterimResult. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
5.3 SystematicProcedurestoDevelopNewKnowledge:
ControllingtheToolbox. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
5.3.1 ValueJudgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
5.3.2 Falsifiability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
5.3.3 ScientificControlanditsDisregard. . . . . . . . . . . . . . . 98
5.3.4 InterimResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
5.4 PreservationofKnowledgeortheCostofForgetting. . . . . . . . . 102
5.4.1 TheGeneralProblem. . . . . . . . . . . . . . . . . . . . . . . . . 102
5.4.2 LossofKnowledgeinBusinessAdministration. . . . . . 103
5.4.3 InterimResults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
6 ScientificProgressinGeneralandinBusinessAdministration. . .. 111
6.1 TheIndividual. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
6.2 TheDiscipline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
6.3 ScientificAdvancebySolvingPuzzles. . . . . . . . . . . . . . . . . . . 117
6.4 AModelforBusinessAdministration?. . . . . . . . . . . . . . . . . . . 119
6.5 PurposesofScience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
7 EmergingScientificInfrastructureforBusinessAdministration. .. 125
7.1 StartingBusinessSchools. . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
7.2 PublicationsfortheDiscipline. . . . . . . . . . . . . . . . . . . . . . . . . 139
7.3 ProfessionalAssociationstoServeScientificAdvances. . . . . . . 141
PartIII TheInstitutionalizedScience
8 InSearchofanObjectiveFunctionandaName. . . . . . . . . . . . . . . 147
8.1 IdeologicalControversiesinGermany. . . . . . . . . . . . . . . . . . . 147
8.2 PragmaticSolutionsintheUSA. . . . . . . . . . . . . . . . . . . . . . . . 158
9 DeclineUnderPoliticalInfluencesandTwoNewBeginnings:
TheCasesofGermany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
9.1 ThePeriod1933–1945. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
9.1.1 TheHumanAspects. . . . . . . . . . . . . . . . . . . . . . . . . . 161
9.1.2 MainstreamBusinessAdministration. . . . . . . . . . . . . . 166