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Organizational Behavior: Where Does It Fit
in Today’s Management Curriculum?

ABSTRACT. Maximizing shareholder
value is the dominant goal that influences G
R hoshal (2005) questioned and
admonished academia for its
role in establishing the maximization of
global competition have had far more
to do with the establishment of what
Ghoshal viewed as a flawed goal than
management decision making in business
shareholder value as the primary goal of has academia. Nevertheless, we believe
practice. This goal—with rapid improve- business executives and managers. He that Ghoshal’s work opened the door for
ments in technology, changes in capital explicitly lamented that “by propagating serious discussions about management
markets, and global competition—has ideologically inspired amoral theories, education and curriculum.
business schools have actively freed their Academics may differ on how and
altered employment relations between
students from any sense of moral respon- why the maximization of shareholder
workers and top executives. The authors’ sibility” (p. 76). This, in his view, has value has become the goal of most
purpose in this article was to share thoughts contributed to the corporate scandals, firms today, but these issues may not be
and concerns about the value and relative unethical business practices, and mis- as important as the effects of that goal
treatment of employees that are common on management education. Whether
importance of organizational behavior the-
in today’s business world. one accepts or rejects Ghoshal’s (2005)
ory in current business school curricula and Ghoshal’s (2005) major arguments two major aforementioned arguments,
to offer recommendations for the future. were that (a) maximization of share- maximization of shareholder value is
holder value is not an appropriate goal the driving force behind most manage-
for managers to pursue and (b) that ment decision making in firms today.
Keywords: business school curricula,
academia has played a major part in Although some organizations may
management, organizational behavior the establishment of that goal. The first choose to pursue altruistic nonfinancial
argument is a philosophical issue that goals (e.g., nonprofit organizations,
Copyright © 2007 Heldref Publications reasonable people may disagree about government bureaucracies, and some
on the basis of their personal ideologies smaller entrepreneurial ventures whose
and academic training. For this reason, founders are not financially motivated),
we doubt that consensus can be estab- most executives, managers, and entre-
lished within academia about the value preneurs are measured by the firm’s
of that goal. bottom-line performance in growing
We also agree with Gapper (2005), profits and shareholder value. This
Kantor (2005), and Mintzberg (2005) measurement results in decision mak-
that Ghoshal overstated the power that ing that is consistent with improving
academia has had in establishing share- the bottom line (Beatty & Zajac, 1994).
holder value maximization as the goal If researchers accept that maximization
of today’s top management teams. We of shareholder value is the dominant
argue that the forces of capitalism, great goal influencing management decision
technological advances, the changing making in business practice, then we
nature of capital markets, and rising can have a lively debate about how

July/August 2007 349
this goal affects management educa- All of these factors contribute to our Kantor (2005) briefly mentioned the
tion and curricula. contention that it is time for management growing power of institutional investors
As professors who teach organi- academics to have an open, candid, and in her response to Ghoshal (2005). We
zational behavior (OB) at the levels critical dialogue about core business expand on it here. Institutional investors
of undergraduate, master of business curricula. To this end, our purpose in are entities with large amounts of capital
administration (MBA), and PhD, we this article to share some thoughts about to invest, such as insurance companies,
have struggled increasingly with the the value and relative importance of OB investment firms, mutual funds, and
relevance of major OB constructs in within today’s business school curricula pension funds. Institutional investors
the context of today’s common man- and to offer directions for the future. now dominate trading volume on the
agement practices and executive com- major financial markets (e.g., New York
pensation and reward structures. Cer- OB Professors Often Teach Stock Exchange, NASDAQ), account-
tainly, OB is a core course for most Context Free ing for as much as 70% of trading vol-
established management programs. ume (Schwartz & Shapiro, 1992). These
But as Rynes and Trank (1999) pointed One can trace the roots of OB back entities are now the primary holders of
out, behavioral sciences struggle for to the emergence of the human rela- equity in the United States, and their
credibility in business schools. Still, tions school and the writings of Elton growth has been astounding.
most management students are famil- Mayo. Mayo (1945) railed against what In 1999, institutional investors account-
iar with classic theories such as the he viewed as the evils of Taylorism and ed for more than 50% of total U.S. equity
Hawthorne Effect (Mayo, 1945; Roeth- industrialization. He advocated a prein- ownership, up from 7% in 1950 and 28%
lisberger & Dickson, 1939), Maslow’s dustrial mindset that focused on social in 1970 (Bennett, Sias, & Starks, 2003).
(1954) hierarchy of needs, Herzberg’s cohesion in the workplace (see Guillén, In addition, a growing trend in the use
(1966) theories on motivation, and 1994; Scott, 2003; Trahair, 1984). In OB of algorithmic trading is developing, pri-
McGregor’s (1960) Theory X and textbooks and classes today, authors and marily driven by institutional investors.
Theory Y personality types. However, professors still often cite and discuss Algorithmic trading accounted for 25%
capstone strategic management cases Mayo’s interpretation of the research of all equities trading volume in 2003.
and class discussion rarely focus on conducted by Roethlisberger and Dick- Friedlander (2005) estimated it as grow-
these or other OB theories. When they son (1939) at the Hawthorne plant of the ing by 150% per year from 2004 to 2006.
do, the theories do not trump profit and Western Electric Company. Although we are not familiar with the
financial considerations. As Whetten Economic forces and business, how- specific mathematical models that mutual
(1989) pointed out, one of the tests of ever, have changed dramatically over funds, investment banks, and other insti-
good theory is to pass the “So what?” the last 60 years. The Internet and wide- tutional investors use, we are confident
test. In light of Ghoshal’s (2005) spread out-sourcing did not exist, and that the models do not take into account
discussion about maximizing share- institutional investors and global com- employee satisfaction, motivation, or other
holder value and executives’ behavior petitors did not have the power that common OB constructs. These models
today and about how little impact OB they do today. Just as Ghoshal (2005) are likely tied to the increase or decrease
apparently has within most capstone neglected to discuss macroenvironmen- in financial performance and the rate of
strategic management courses, it is tal factors, which have led business change of firms relative to their respec-
unclear what contribution OB makes leaders and academic curricula to focus tive industries. These changes have con-
to business education. Rynes and Trank on maximizing shareholder value, so centrated capital, equity, and power into
(1999) provided a good discussion of too has OB failed to keep up with the fewer hands and have put further pres-
the diminished importance of OB to macroenvironmental changes. These sure on top executives to achieve superior
business curricula. changes have greatly diminished the financial performance.
The findings of Pfeffer and Fong practical value of classic OB constructs Firm performance is greatly affected
(2002) raised a red flag about the value and theory. We argue that such concepts by the resources and capabilities that
of MBA curricula. Consistent with their as the Hawthorne Effect and Theory X the firm mobilized (Castrogiovanni,
view is a recently published article show- and Theory Y little influence the deci- 1991; Chandler & Hanks, 1993; Tush-
ing that MBA applications have fallen sion making of today’s executives, man & Anderson, 1986). For example,
by 30% since 1998 at the nation’s top- because of the broader goal of maxi- today’s information technologies have
ranked business schools (Merritt, 2005). mizing shareholder value. The growing greatly improved organizations’ abili-
There also has been discussion about power of institutional investors (Ben- ties to access and manage resources and
a new “professional services model” nett, Sias, & Starks, 2003; Schwartz capabilities around the world. The liter-
(Armstrong, 2003, p. 371) for business & Shapiro, 1992), algorithmic equity ature is full of examples that support the
students to better serve their needs (see trading (Friedlander, 2005), globaliza- notion that companies adopting newer
Ferris, 2002, 2003). In addition, tradi- tion, and technological advances are technologies are more likely to enjoy
tional universities and business programs changing the economic landscape and the advantages of such technologies,
are facing increasing pressure as a result further supporting and strengthening the which can create significant competitive
of the rapid growth of the for-profit col- desire of businesses to maximize share- advantages (e.g., Brown & Eisenhardt,
lege industry (Hechinger, 2005). holder value. 1995; Cooper & Kleinschmidt, 1987;

350 Journal of Education for Business
Hammer & Champy, 1993; Lawless & ematical models” that Ghoshal (2005, ton wrote it over a decade ago, because
Anderson, 1996). p. 81) pointed out as sought by agency OB theory has not changed to reflect the
There can be no question that pow- theorists and economists and manage- dramatic changes in the macroenviron-
erful and ever more affordable infor- ment practitioners. This has resulted in ment. It is important for OB thought
mation technologies have altered the the question that is often asked about leaders to better reconcile OB theory
competitive landscape by increasing many classic OB constructs, “How do with the changing macroenvironment.
efficiency and allowing global com- they affect firm performance?” Such changes are driving the pursuit of
munications. This has allowed capital Unfortunately, the answers to this shareholder value maximization, which
to flow to lower cost labor markets question are too often “We don’t know” often comes at the expense of workers.
around the world. The result has been or—even worse—“They don’t!” Results The underlying value of OB in focus-
globalization and its profound impact found in the OB literature that pertain to ing attention on microlevel constructs
on national and world economies. As the link between OB constructs and firm that are related to employee behaviors,
former Federal Reserve Chairman Alan performance have been mixed, lead- perceptions, and relations with man-
Greenspan (2004) noted, ing Austin (2000) to suggest that most agement will continue to diminish as
practitioners do not use much of the organizations shift focus more to the
Globalization has altered the economic academic work on OB. desires of institutional investors and
frameworks of both advanced and devel-
oping nations in ways that are difficult
In their summary review article on the shareholders.
to fully comprehend . . . . Because of a state of the OB literature, Mowday and
lowering of trade barriers, deregulation, Sutton (1993) criticized much of the lit- How Business Students View OB
and increased innovation, cross-border erature as being too heavily focused on
trade in recent decades has been expand- individual outcomes and psychological To better understand how students
ing at a far faster pace than GDP. As a view OB, we conducted a survey of
result, domestic economies are increas-
factors, rather than on organizational
contexts and organizational outcomes: MBA students and upper level under-
ingly exposed to the rigors of interna-
tional competition and comparative graduates during the last week of classes
Our review of the current literature, how-
advantage. In the process, lower prices ever, suggests that the focus of research
of the Fall 2006 semester. We surveyed
for some goods and services produced by and writing in our field is increasingly on (a) 46 MBA students—all of whom
our trading partners have competitively theory and method, and less on the stuff had taken OB—representing about 60%
suppressed domestic price pressures. (pp. of organizational life. Much published of the total MBA student body at our
450–451) research is motivated by the desire to university and (b) 70 undergraduate stu-
test and extend theory, resolve theoretical
The need to remain competitive in debates, and apply new, more sophisti-
dents who had just completed their OB
the growing global economy has pushed cated methodologies to old theoretical class. Table 1 presents the demographic
firms to treat employees as commodities problems. As a result, we sometimes for- profile of the respondents.
and seek out lower cost labor markets get that theory and method are only tools The participants were all enrolled in
to help us understand organizations and AACSB-accredited business programs
(Jones, 2005; Wildasin, 2006). Clearly, their members. (p. 225)
domestic job losses and the out-sourc- in a midsized, public urban university
ing of manufacturing, white collar, and We believe that this observation is on the East Coast. The students were
research and development activities to truer today than when Mowday and Sut- pursuing a variety of majors and had
firms across the globe have altered psy-
chological contracts and employment
TABLE 1. Demographic Information, Work Experience, and Supervisory
relations between management and Experience of Master of Business Administration (MBA) and Undergrad-
workers (Capelli, 1999; Guzzo, Noon- uate Students
an, & Elron, 1994). Perhaps because
these impacts of globalization are still MBA Undergraduate
relatively new, one can find little discus- (n = 46) (n = 70)
sion or research in the OB literature on
these important phenomena. Item M % M %
The problem with OB is that profes-
sors often teach OB textbooks and classes Age 28.0 23.8
context free — without consideration of Full-time work experience (in years) 6.4 4.4
Full-time supervisory experience (in years) 2.8 1.1
macroenvironmental and economic reali- Gender
ties. Employee satisfaction, commitment Male 41 40
to the organization, empowerment, and Female 59 60
employee turnover are central constructs MBA concentration and undergraduate major
within the OB literature, but it is diffi- Marketing 20 11
Business and Human Resource Management 31 37
cult to measure the economic benefits of Accounting and Finance 39 33
these constructs to a firm’s bottom line. Information Systems 10 11
As the softer side of management educa- Hospitality Management 8
tion, OB does not enjoy the “nice math-

July/August 2007 351
years of full-time work experience. We mize profit; 7 = treat employees fairly). did not provide empirical support for
asked the students to rank the impor- The mean scores for the MBAs and the his Theory X and Theory Y discussion.
tance of five courses (strategic manage- undergrads were 2.4 and 2.0, respec- Rather, his discussion was based on
ment, marketing management, financial tively. Therefore, if executives have to what appears to be a moral assumption
management and accounting, OB, and decide between maximizing profits and that is not necessarily based on fact but
human resource management) to CEOs treating employees fairly, the students rather on hope.
or presidents. In particular, we asked stu- believed that CEOs/Presidents would It would be wonderful from a moral,
dents, “Which of the following courses choose profits over people. ethical, and humanitarian standpoint
would the CEO/President of a com- One of the major principles under- if more satisfied workers resulted in
pany find MOST important to LEAST lying what is discussed, researched, optimum firm performance, but several
IMPORTANT course. In addition, 67% and published in the OB field is fair studies have indicated that efforts to
of both MBA and undergraduate stu- treatment of employees. Our aforemen- boost employee morale, commitment,
dents identified Human Resource Man- tioned results were again consistent with and satisfaction have not yielded better
agement (HRM) as being one of the two our broader discussion about the value financial performance (see Brayfield &
least important courses. The surveyed of OB, because they suggest that fair Crockett, 1955; Mitchell, 1979; Petty,
students appeared to view financial and treatment of employees is secondary to McGee, & Cavender, 1984; Staw, 1984;
strategic planning as far more important profits. Because we collected the data Vroom, 1964). It is unclear whether
to top executives. Both MBA (72%) and for this study from students at just one such efforts make financial sense in light
undergraduate (80%) students identi- university, the results were somewhat of growing global competitive pressures
fied financial management or account- limited and may not have reflected the to find cheaper labor around the globe.
ing courses as being either the first or views held by the majority of business Consider the fact that McDonald’s is
the second most important course. Sev- students across the country. However, preparing to test whether drive-thru cus-
enty-one percent of MBA students and we would be surprised if the opinions tomer ordering can be handled through
a majority of undergraduate students of business students at other universities remote call centers (USA Today, 2005).
(54%) identified strategic management differ significantly from our aforemen- Soon you may be going through a drive-
as either the first or second most impor- tioned results. On the basis of personal thru at a McDonald’s in San Francisco
tant course. work experiences, what they have read and not even know that someone in
These results are consistent with the and observed about today’s economic West Virginia or even India is taking
trends that we discussed earlier. They landscape, and what have been taught in your order. Although there is the poten-
point to the perceived importance of business programs, students have come tial advantage of having order takers
financial and strategic management to their own conclusions about what is with superior communication skills deal
over human capital management. As important to know. We believe that it is with customers, make no mistake: the
further evidence of this, respondents important for OB scholars to be realistic real driver for this effort is the cutting
were asked to rate the importance of and recognize the relative importance of labor costs. We believe that if this
(a) generating profits, and (b) treating that students place on OB courses. Fur- out-source pilot test is successful and
employees fairly, to a firm CEO or Pres- ther, in the following section, we will is more widely adopted, there will be
ident in today’s marketplace. Respon- discuss what we perceive to be a grow- a further erosion of the skills that are
dents used a 7-point scale (1 = not very ing credibility gap between academia necessary to work in a fast-food restau-
important; 7 = extremely important). and practice with respect to OB. rant. Somehow we doubt that there will
The mean score for MBA respondents be concerns about how to better retain,
on “generating profits” was a 6.5 and Sermonizing, Individualism, and increase job satisfaction, or improve the
the mean score on “treating employ- the Gap Between Academia and morale of these types of employees.
ees fairly” was 4.9. The undergradu- Practice Ghoshal (2005) also made the point
ate responses were similar with mean that society in general and business
scores of 6.8 and 4.8 for the two items. Ghoshal (2005, p. 86) pointed out, education in particular, is being great-
Thus, both groups of students believed “Wishes and hopes are not theory. ly influenced by the ideological phi-
that generating profits was both very Sermons and preaching are not theory losophy of radical individualism. An
important and significantly (p < .001) either.” Without either consideration inherent contradiction occurs between
more important to firm executives than of macroenvironmental realities or classroom instruction, in which instruc-
treating employees fairly. confirmatory empirical evidence, and tors tell students that firms will reap
We also asked our respondents the in fact with often contradictory evi- rewards by treating employees well.
following question: “In today’s mar- dence, most OB textbooks and academ- On the basis of popular press articles,
ketplace, if a CEO or President had to ics preach and sermonize rather than students read about firms outsourcing
choose between maximizing the firm’s provide sound, empirically supported jobs, cutting health and pension ben-
profit and treating employees fairly what theories that work in business prac- efits, laying off employees, and at the
do you believe he or she is more likely tice. We believe that most OB scholars same time reaping record profits. Sev-
to choose?” Respondents indicated their agree with McGregor’s (1960) Theory eral decades ago many jobs led to life-
answer on a 7-point scale (1 = maxi- Y view of employees. But, McGregor long careers. Today, few students expect

352 Journal of Education for Business
to be with an employer for life (Brown, Again, it largely does not mat- OB theory. Professors could teach OB
2005). They have learned not to expect ter whether (a) business schools have as a course that does not necessarily
lifelong employment, and to watch out adjusted their curricula to focus on max- apply to most profit-seeking ventures.
for themselves. Executive compensa- imization of shareholder value above Management scholars and OB faculty
tion is just another example of radi- all else or (b) they have always taught may choose to focus theory and discus-
cal individualism. Many top executives it, resulting in the ethical lapses that sion on nonprofits, government agen-
receive large bonuses when their firm’s we find today. What is relevant is that cies, and smaller organizations whose
stock performance improves (Daily & the primary focus, both in practice and founding entrepreneurs pursue altru-
Dalton, 2002). This may be enough of within academic programs in business, istic goals and are not concerned with
an incentive for some top management is maximization of shareholder value maximizing profit and shareholder
teams to manipulate earnings report largely to the exclusion of all other value (e.g., entrepreneurs who enjoy
(Cheng & Warfield, 2005), break rules, goals. Both academics and executives providing employment or improving a
and engage in unethical and unlawful view workers as an expense, and firms community). Within a business school’s
behaviors (Nwogugu, 2005). compensate managers on the basis of curricula, business cases in capstone
Regardless of putting aside arguments how well they improve efficiencies, strategic management classes or other
about why executives engage in unethi- cut expenses, and increase profits. This relevant classes, which focus on the
cal or illegal behaviors, the fact remains focus creates the conflict between OB aforementioned types of organizations,
that firms richly reward most executives and most of the rest of the business and may help students to better understand
for cutting expenses and improving the management program curricula today. the contexts in which they can use OB
bottom-line. OB scholars must recog- theories to make a difference in strate-
nize that for most firms, labor costs are Suggestions for Academia gic decision making.
a significant operating expense, which is Scholars should work to demonstrate
We realize that broaching this subject
why executives work to cut labor costs. the financial and strategic applicabil-
may not be popular among some OB
Researchers often cite Wal-Mart, one ity of OB theory constructs. Instructors
faculty: However, the gap between aca-
of the largest employers and one of the should eliminate from the classroom
demia and practice is wide and grow-
most financially successful firms in the these core OB concepts that cannot be
ing wider. Braverman (1974) stated
world, as giving poor—and sometimes empirically supported. We intend these
that “Taylorism dominates the world of
unethical—treatment to its workers. changes to eliminate preaching about
production; the practitioners of ‘human
Wal-Mart pays low wages, offers lim- what should be and to focus on empiri-
relations’ and ‘industrial psychology’
ited benefits, engages in discriminatory cally supported theoretical constructs.
are the maintenance crew for the human
practices against women, and negatively In some cases, firms may need to extend
machinery” (p. 87).
affects social webs within communities their time horizons to capture the benefits
It is surely disheartening, but increas-
(Quinn, 2000). Federal officials have of organizational changes that are based
ingly more difficult to argue that execu-
investigated executives at the firm for on OB theory. For example, organiza-
tives do not pursue maximization of
spying on union organizers to root them tional benefits from efforts to improve
shareholder value above all else. For
out before they can unionize work- employee morale and improve retention
OB to have meaning in the 21st cen-
ers (Bandler & Zimmerman, 2005). may not be visible for months or even
tury, other than as a management tool
Although the latter effort is illegal under years after formal organizational inter-
for keeping labor under control, serious
the Taft-Hartly Act, many of their other ventions. Many firms report quarterly
debate and discussion among scholars
practices are perhaps unethical, but are financial results, with executives being
is necessary. OB theory may still have a
not necessarily illegal. compensated and often rewarded with
place when researchers look at govern-
Depending on one’s own perspective bonuses on the basis of these results.
ment and nonprofit employers, but the
about individual and corporate responsi- This circumstance has contributed to
aforementioned macroenvironmental
bility, one may or may not support Wal- the short-term focus that many execu-
changes have greatly diminished the
Mart’s efforts to control labor costs. tives exhibit in their decision making. It
value of OB theory to most profit-seek-
One could argue that controlling labor is possible that just extending the time
ing ventures. The question is where do
costs keeps prices lower for the end to expect and achieve financial ben-
we go from here? If nothing is done, OB
consumer and thus are just. Converse- efits from OB-based investments may
theory will continue to wither within
ly, one could argue that it is immoral reveal significant results that support
management curricula. For OB theory
to achieve tremendous profits on the the value of OB theory. Of course this
to remain a viable part of core busi-
backs of underpaid and underinsured is an empirical issue that needs further
ness curricula, we propose following
labor. As academics, we argue that Wal- longitudinal research. There are signifi-
Mart and other firms with similar labor cant risks for both (a) executives who
practices are simply pursuing what we may not enjoy compensation systems
Short-Term Changes
teach every day in business schools: that reward longer-term results and (b)
the established strategy of shareholder The easiest adjustment would be academics who are on tenure clocks
wealth maximization, which requires simply to acknowledge and openly or who wish to complete their doctoral
minimizing costs. discuss limits to the applicability of programs in a timely manner.

July/August 2007 353
Long-Term Changes firms would not exist, but these stake- for a more aggressive focus on rev-
holders are being increasingly marginal- enue growth there may be some trick-
If one believes that OB should con- ized because any efforts to address their ledown effects on the way customers
tinue to be taught to students who intend needs are viewed as expenses and employees are valued. Retention of
to pursue management or entrepreneur- The unyielding focus on quarter-to- every customer becomes more critical
ial careers in for-profit ventures, then quarter short-term financial results, util- for those who pursue revenue growth. A
instructors and administrators must itarianism, transaction cost economics management team that is being evalu-
change how OB is researched, taught, (Williamson, 1979), and maximization ated in terms of either the revenue maxi-
and positioned in management curricula. of shareholder value does not mesh well mization goal or the shareholder wealth
Executives must also make an effort to in practice with most OB theories. If maximization goal is likely to view the
change fundamental business practices. customers and employees are, in fact, firm’s largest customers as most impor-
More specifically, a change in the vigor important stakeholders, then the firms' tant. However, managers working with
with which firms or executives pursue executives must pay renewed commit- the revenue maximization goal are more
and promote the goal of maximizing ment and attention to these stakeholders. likely to work to deliver high-quality
shareholder wealth would prevent fur- As we discussed earlier, this circum- customer service to all customers to
ther erosion of the relevance of OB stance requires changing the prevail- increase sales through repeat and refer-
theory. The aforementioned suggestions ing management goal of maximizing ral business and to minimize the amount
with respect to minor and intermediate shareholder value. However, no change of customer turnover. With respect to
changes address teaching methods and in management behavior can come from employees, the retention and perhaps
positioning issues. The latter require- preaching the benefits of a new focus an increase in the numbers of employ-
ment, changing fundamental business without reinforcement through new sys- ees who deal directly with customers
practices, is obviously more difficult. tems of measurement and compensation. become more critical. Rather than lay-
Some may argue that academia is As long as the measurement systems for ing off a worker, a firm may choose to
reactionary rather than proactive in effective management remain the same retrain the worker to improve longer-
promoting business practices. Others, as they are now, there can be no change term client relation, and internal opera-
such as Ghoshal (2005), believe that in practice. Therefore, the employer’s tional efficiencies, which can improve
academia has a deterministic power measurement of effective management both revenue growth and profits.
over business practices. Regardless of a and resulting compensation or bonuses Researchers, academics, and firms
reader’s personal belief, it is likely that must shift away from meeting only the should recognize that change might not
he or she will agree that academia has a needs of shareholders to also include be possible. The acceptance of share-
responsibility to at least try to influence the needs of customers and employees. holder wealth maximization may be too
business practices and behavior. Still, Reducing the value that firms place well entrenched—and the resistance to
it must be recognized that any effort to on profit may help to relieve some of the change may be too great—to overcome.
change business practices and behavior pressure on firm executives to maximize However, the effects of the corporate
will require a significant amount of time: shareholder wealth. However, firms must scandals of recent years and the grow-
years and perhaps decades. Firm execu- operate profitably, and there can be little ing discussions of religious faith that are
tives and employees will need time to doubt that any performance appraisal of engulfing American life may be open-
overcome structural inertia (Hannan & a firm or the effectiveness of manage- ing an opportunity to promote change.
Freeman, 1977) that would prevent new ment must include net income. Then the There likely are key executives who
management and organizational values, question becomes this: What other mea- would encourage shifting focus away
belief systems and behaviors, and per- surement variables can be used to assess from maximizing shareholder wealth
formance effectiveness evaluation sys- firm and management performance? as a way to contribute to more ethical
tems from taking root. Resistance to widespread use of quali- behavior in their own firms and a better
In our view, and consistent with tative measures will be likely because moral society in general. Such execu-
Ghoshal (2005), management focus on of the difficulty in reliably scoring and tives may also welcome an opportunity
shareholders to the exclusion of all other meaningfully comparing results between to promote better balance between prof-
stakeholders is inappropriate. Rather firms. Hence, alternative quantitative it and morality in the workplace without
than encouraging managers to focus on measures are the most likely source for being punished for missing quarterly
best practices to build lasting relations new performance measures. financial goals.
with customers and committed work- One alternative quantitative perfor- We are neither advocating any one
ers to achieve the long-term strategic mance measure could be maximizing type of change nor arguing that our
goals of an organization, shareholder revenues as opposed to maximizing proposals for change are the correct
wealth maximization encourages short- profits. There is precedent for elevating proposals. Part of the problem is that
term thinking, unethical behavior, and the value of revenues as a performance the macroenvironment is changing so
a culture that views the most important measure. The Fortune 500 list of the rapidly it is impossible to really know
stakeholders of the firm—customers largest firms in the United States is how the economic landscape will con-
and employees—as secondary because based on revenues—not profits or stock tinue to change. Policy changes that will
without customers and employees, price. If academics and executives push address out-sourcing of jobs or regula-

354 Journal of Education for Business
tory changes that will restrict institu- that business education will not change Castrogiovanni, G. (1991). Environmental munifi-
cence: A theoretical assessment. Academy of
tional ownership will be quite possible in overnight. We simply point out that OB Management Review, 16, 542–565.
coming years and would have profound theories are increasingly at odds with the Chandler, G. N., & Hanks, S. H. (1993). Measur-
effects on the macroenvironment. Still, current philosophy of business education ing the performance of emerging businesses: A
validation study. Journal of Business Venturing,
the bigger issue remains that OB is being and are rarely used in practice. The rea- 8, 391–408.
marginalized. We strongly believe that sons why this is true and the changes that Cheng, Q., & Warfield, T. D. (2005). Equity
for OB to remain a part of core curri- we and other propose are certainly open incentives and earnings management. Account-
ing Review, 80, 441–477.
cula in business programs, some changes for discussion. But this debate must take Cooper, R., & Kleinschmidt, E. (1987). Success
are necessary. If nothing is done, OB place, and we hope that we have focused factors in product innovation. Industrial Mar-
is at risk of obsolescence and at best attention on why. keting Management, 16, 215–233.
Daily, C. M., & Dalton, D. R. (2002). The prob-
will simply be a tool for management lem with equity compensation. Journal of Busi-
exploitation rather than a vibrant part of NOTE ness Strategy, 23, 28–30.
strategic organizational decision making. Dr. Robert P. Singh is an associate professor
Ferris, W. P. (2002). Students as junior partners,
professors as senior partners, the B-school as
Whatever the changes, researchers need of Management in the Earl Graves School of the firm: A new model for collegiate business
to reestablish relevance for OB theory Business and Management at Morgan State Uni- education. Academy of Management Learning
versity. His research interests are entrepreneurial
to address the realities of the new hyper- opportunity recognition, entrepreneurial strategy,
& Education, 1, 185–193.
Ferris, W. P. (2003). Why the partnership model’s
competitive economic landscape that is organizational renewal, and entrepreneurship edu- usefulness far exceeds that of the client model:
due to outsourcing, technology, institu- cation. Reply to Armstrong. Academy of Management
Dr. Allen G. Schick is an associate professor
tional investors, and rapid globalization. of Management in the Earl Graves School of
Learning & Education, 2, 375–377.
Friedlander, J. (2005, May 30). Algo wars: The
As such research progresses, it would Business and Management at Morgan State Uni- Street is pushing algorithmic trading with a
strengthen the OB foundation on which versity. His research interests are business ethics, vengeance—perhaps even down into small
organizational downsizing, the role of business in
firms could base their strategic planning society, and business education.
caps, Investment Dealer’s Digest, p. 1.
Gapper, J. (2005). Comment on Sumantra
and organizational decision-making. Correspondence concerning this article should Ghoshal’s article. Academy of Management
be addressed to Dr. Robert P. Singh, Morgan State Learning & Education, 4, 101–103.
University, Graves School of Business and Man- Ghoshal, S. (2005). Bad management theories are
Conclusion agement, 1700 E. Cold Spring Lane, Baltimore, destroying good management practices. Acad-
MD 21251. emy of Management Learning & Education.
The recent passing of the great man- E–mail: 4, 75–91.
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