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Organizational Behavior: Where Does It Fit in Today’s Management Curriculum?
ROBERT P. SINGH ALLEN G. SCHICK MORGAN STATE UNIVERSITY BALTIMORE, MARYLAND
ABSTRACT. Maximizing shareholder value is the dominant goal that influences management decision making in business practice. This goal—with rapid improvements in technology, changes in capital markets, and global competition—has altered employment relations between workers and top executives. The authors’ purpose in this article was to share thoughts and concerns about the value and relative importance of organizational behavior theory in current business school curricula and to offer recommendations for the future. Keywords: business school curricula, management, organizational behavior Copyright © 2007 Heldref Publications
hoshal (2005) questioned and admonished academia for its role in establishing the maximization of shareholder value as the primary goal of business executives and managers. He explicitly lamented that “by propagating ideologically inspired amoral theories, business schools have actively freed their students from any sense of moral responsibility” (p. 76). This, in his view, has contributed to the corporate scandals, unethical business practices, and mistreatment of employees that are common in today’s business world. Ghoshal’s (2005) major arguments were that (a) maximization of shareholder value is not an appropriate goal for managers to pursue and (b) that academia has played a major part in the establishment of that goal. The first argument is a philosophical issue that reasonable people may disagree about on the basis of their personal ideologies and academic training. For this reason, we doubt that consensus can be established within academia about the value of that goal. We also agree with Gapper (2005), Kantor (2005), and Mintzberg (2005) that Ghoshal overstated the power that academia has had in establishing shareholder value maximization as the goal of today’s top management teams. We argue that the forces of capitalism, great technological advances, the changing nature of capital markets, and rising
global competition have had far more to do with the establishment of what Ghoshal viewed as a flawed goal than has academia. Nevertheless, we believe that Ghoshal’s work opened the door for serious discussions about management education and curriculum. Academics may differ on how and why the maximization of shareholder value has become the goal of most firms today, but these issues may not be as important as the effects of that goal on management education. Whether one accepts or rejects Ghoshal’s (2005) two major aforementioned arguments, maximization of shareholder value is the driving force behind most management decision making in firms today. Although some organizations may choose to pursue altruistic nonfinancial goals (e.g., nonprofit organizations, government bureaucracies, and some smaller entrepreneurial ventures whose founders are not financially motivated), most executives, managers, and entrepreneurs are measured by the firm’s bottom-line performance in growing profits and shareholder value. This measurement results in decision making that is consistent with improving the bottom line (Beatty & Zajac, 1994). If researchers accept that maximization of shareholder value is the dominant goal influencing management decision making in business practice, then we can have a lively debate about how July/August 2007 349
this goal affects management education and curricula. As professors who teach organizational behavior (OB) at the levels of undergraduate, master of business administration (MBA), and PhD, we have struggled increasingly with the relevance of major OB constructs in the context of today’s common management practices and executive compensation and reward structures. Certainly, OB is a core course for most established management programs. But as Rynes and Trank (1999) pointed out, behavioral sciences struggle for credibility in business schools. Still, most management students are familiar with classic theories such as the Hawthorne Effect (Mayo, 1945; Roethlisberger & Dickson, 1939), Maslow’s (1954) hierarchy of needs, Herzberg’s (1966) theories on motivation, and McGregor’s (1960) Theory X and Theory Y personality types. However, capstone strategic management cases and class discussion rarely focus on these or other OB theories. When they do, the theories do not trump profit and financial considerations. As Whetten (1989) pointed out, one of the tests of good theory is to pass the “So what?” test. In light of Ghoshal’s (2005) discussion about maximizing shareholder value and executives’ behavior today and about how little impact OB apparently has within most capstone strategic management courses, it is unclear what contribution OB makes to business education. Rynes and Trank (1999) provided a good discussion of the diminished importance of OB to business curricula. The findings of Pfeffer and Fong (2002) raised a red flag about the value of MBA curricula. Consistent with their view is a recently published article showing that MBA applications have fallen by 30% since 1998 at the nation’s topranked business schools (Merritt, 2005). There also has been discussion about a new “professional services model” (Armstrong, 2003, p. 371) for business students to better serve their needs (see Ferris, 2002, 2003). In addition, traditional universities and business programs are facing increasing pressure as a result of the rapid growth of the for-profit college industry (Hechinger, 2005). 350 Journal of Education for Business
All of these factors contribute to our contention that it is time for management academics to have an open, candid, and critical dialogue about core business curricula. To this end, our purpose in this article to share some thoughts about the value and relative importance of OB within today’s business school curricula and to offer directions for the future. OB Professors Often Teach Context Free One can trace the roots of OB back to the emergence of the human relations school and the writings of Elton Mayo. Mayo (1945) railed against what he viewed as the evils of Taylorism and industrialization. He advocated a preindustrial mindset that focused on social cohesion in the workplace (see Guillén, 1994; Scott, 2003; Trahair, 1984). In OB textbooks and classes today, authors and professors still often cite and discuss Mayo’s interpretation of the research conducted by Roethlisberger and Dickson (1939) at the Hawthorne plant of the Western Electric Company. Economic forces and business, however, have changed dramatically over the last 60 years. The Internet and widespread out-sourcing did not exist, and institutional investors and global competitors did not have the power that they do today. Just as Ghoshal (2005) neglected to discuss macroenvironmental factors, which have led business leaders and academic curricula to focus on maximizing shareholder value, so too has OB failed to keep up with the macroenvironmental changes. These changes have greatly diminished the practical value of classic OB constructs and theory. We argue that such concepts as the Hawthorne Effect and Theory X and Theory Y little influence the decision making of today’s executives, because of the broader goal of maximizing shareholder value. The growing power of institutional investors (Bennett, Sias, & Starks, 2003; Schwartz & Shapiro, 1992), algorithmic equity trading (Friedlander, 2005), globalization, and technological advances are changing the economic landscape and further supporting and strengthening the desire of businesses to maximize shareholder value.
Kantor (2005) briefly mentioned the growing power of institutional investors in her response to Ghoshal (2005). We expand on it here. Institutional investors are entities with large amounts of capital to invest, such as insurance companies, investment firms, mutual funds, and pension funds. Institutional investors now dominate trading volume on the major financial markets (e.g., New York Stock Exchange, NASDAQ), accounting for as much as 70% of trading volume (Schwartz & Shapiro, 1992). These entities are now the primary holders of equity in the United States, and their growth has been astounding. In 1999, institutional investors accounted for more than 50% of total U.S. equity ownership, up from 7% in 1950 and 28% in 1970 (Bennett, Sias, & Starks, 2003). In addition, a growing trend in the use of algorithmic trading is developing, primarily driven by institutional investors. Algorithmic trading accounted for 25% of all equities trading volume in 2003. Friedlander (2005) estimated it as growing by 150% per year from 2004 to 2006. Although we are not familiar with the specific mathematical models that mutual funds, investment banks, and other institutional investors use, we are confident that the models do not take into account employee satisfaction, motivation, or other common OB constructs. These models are likely tied to the increase or decrease in financial performance and the rate of change of firms relative to their respective industries. These changes have concentrated capital, equity, and power into fewer hands and have put further pressure on top executives to achieve superior financial performance. Firm performance is greatly affected by the resources and capabilities that the firm mobilized (Castrogiovanni, 1991; Chandler & Hanks, 1993; Tushman & Anderson, 1986). For example, today’s information technologies have greatly improved organizations’ abilities to access and manage resources and capabilities around the world. The literature is full of examples that support the notion that companies adopting newer technologies are more likely to enjoy the advantages of such technologies, which can create significant competitive advantages (e.g., Brown & Eisenhardt, 1995; Cooper & Kleinschmidt, 1987;
Hammer & Champy, 1993; Lawless & Anderson, 1996). There can be no question that powerful and ever more affordable information technologies have altered the competitive landscape by increasing efficiency and allowing global communications. This has allowed capital to flow to lower cost labor markets around the world. The result has been globalization and its profound impact on national and world economies. As former Federal Reserve Chairman Alan Greenspan (2004) noted,
Globalization has altered the economic frameworks of both advanced and developing nations in ways that are difficult to fully comprehend . . . . Because of a lowering of trade barriers, deregulation, and increased innovation, cross-border trade in recent decades has been expanding at a far faster pace than GDP. As a result, domestic economies are increasingly exposed to the rigors of international competition and comparative advantage. In the process, lower prices for some goods and services produced by our trading partners have competitively suppressed domestic price pressures. (pp. 450–451)
ematical models” that Ghoshal (2005, p. 81) pointed out as sought by agency theorists and economists and management practitioners. This has resulted in the question that is often asked about many classic OB constructs, “How do they affect firm performance?” Unfortunately, the answers to this question are too often “We don’t know” or—even worse—“They don’t!” Results found in the OB literature that pertain to the link between OB constructs and firm performance have been mixed, leading Austin (2000) to suggest that most practitioners do not use much of the academic work on OB. In their summary review article on the state of the OB literature, Mowday and Sutton (1993) criticized much of the literature as being too heavily focused on individual outcomes and psychological factors, rather than on organizational contexts and organizational outcomes:
Our review of the current literature, however, suggests that the focus of research and writing in our field is increasingly on theory and method, and less on the stuff of organizational life. Much published research is motivated by the desire to test and extend theory, resolve theoretical debates, and apply new, more sophisticated methodologies to old theoretical problems. As a result, we sometimes forget that theory and method are only tools to help us understand organizations and their members. (p. 225)
ton wrote it over a decade ago, because OB theory has not changed to reflect the dramatic changes in the macroenvironment. It is important for OB thought leaders to better reconcile OB theory with the changing macroenvironment. Such changes are driving the pursuit of shareholder value maximization, which often comes at the expense of workers. The underlying value of OB in focusing attention on microlevel constructs that are related to employee behaviors, perceptions, and relations with management will continue to diminish as organizations shift focus more to the desires of institutional investors and shareholders. How Business Students View OB To better understand how students view OB, we conducted a survey of MBA students and upper level undergraduates during the last week of classes of the Fall 2006 semester. We surveyed (a) 46 MBA students—all of whom had taken OB—representing about 60% of the total MBA student body at our university and (b) 70 undergraduate students who had just completed their OB class. Table 1 presents the demographic profile of the respondents. The participants were all enrolled in AACSB-accredited business programs in a midsized, public urban university on the East Coast. The students were pursuing a variety of majors and had
The need to remain competitive in the growing global economy has pushed firms to treat employees as commodities and seek out lower cost labor markets (Jones, 2005; Wildasin, 2006). Clearly, domestic job losses and the out-sourcing of manufacturing, white collar, and research and development activities to firms across the globe have altered psychological contracts and employment relations between management and workers (Capelli, 1999; Guzzo, Noonan, & Elron, 1994). Perhaps because these impacts of globalization are still relatively new, one can find little discussion or research in the OB literature on these important phenomena. The problem with OB is that professors often teach OB textbooks and classes context free — without consideration of macroenvironmental and economic realities. Employee satisfaction, commitment to the organization, empowerment, and employee turnover are central constructs within the OB literature, but it is difficult to measure the economic benefits of these constructs to a firm’s bottom line. As the softer side of management education, OB does not enjoy the “nice math-
We believe that this observation is truer today than when Mowday and Sut-
TABLE 1. Demographic Information, Work Experience, and Supervisory Experience of Master of Business Administration (MBA) and Undergraduate Students MBA (n = 46) Item Age Full-time work experience (in years) Full-time supervisory experience (in years) Gender Male Female MBA concentration and undergraduate major Marketing Business and Human Resource Management Accounting and Finance Information Systems Hospitality Management M 28.0 6.4 2.8 41 59 20 31 39 10 % Undergraduate (n = 70) M 23.8 4.4 1.1 40 60 11 37 33 11 8 %
years of full-time work experience. We asked the students to rank the importance of five courses (strategic management, marketing management, financial management and accounting, OB, and human resource management) to CEOs or presidents. In particular, we asked students, “Which of the following courses would the CEO/President of a company find MOST important to LEAST IMPORTANT course. In addition, 67% of both MBA and undergraduate students identified Human Resource Management (HRM) as being one of the two least important courses. The surveyed students appeared to view financial and strategic planning as far more important to top executives. Both MBA (72%) and undergraduate (80%) students identified financial management or accounting courses as being either the first or the second most important course. Seventy-one percent of MBA students and a majority of undergraduate students (54%) identified strategic management as either the first or second most important course. These results are consistent with the trends that we discussed earlier. They point to the perceived importance of financial and strategic management over human capital management. As further evidence of this, respondents were asked to rate the importance of (a) generating profits, and (b) treating employees fairly, to a firm CEO or President in today’s marketplace. Respondents used a 7-point scale (1 = not very important; 7 = extremely important). The mean score for MBA respondents on “generating profits” was a 6.5 and the mean score on “treating employees fairly” was 4.9. The undergraduate responses were similar with mean scores of 6.8 and 4.8 for the two items. Thus, both groups of students believed that generating profits was both very important and significantly (p < .001) more important to firm executives than treating employees fairly. We also asked our respondents the following question: “In today’s marketplace, if a CEO or President had to choose between maximizing the firm’s profit and treating employees fairly what do you believe he or she is more likely to choose?” Respondents indicated their answer on a 7-point scale (1 = maxi352 Journal of Education for Business
mize profit; 7 = treat employees fairly). The mean scores for the MBAs and the undergrads were 2.4 and 2.0, respectively. Therefore, if executives have to decide between maximizing profits and treating employees fairly, the students believed that CEOs/Presidents would choose profits over people. One of the major principles underlying what is discussed, researched, and published in the OB field is fair treatment of employees. Our aforementioned results were again consistent with our broader discussion about the value of OB, because they suggest that fair treatment of employees is secondary to profits. Because we collected the data for this study from students at just one university, the results were somewhat limited and may not have reflected the views held by the majority of business students across the country. However, we would be surprised if the opinions of business students at other universities differ significantly from our aforementioned results. On the basis of personal work experiences, what they have read and observed about today’s economic landscape, and what have been taught in business programs, students have come to their own conclusions about what is important to know. We believe that it is important for OB scholars to be realistic and recognize the relative importance that students place on OB courses. Further, in the following section, we will discuss what we perceive to be a growing credibility gap between academia and practice with respect to OB. Sermonizing, Individualism, and the Gap Between Academia and Practice Ghoshal (2005, p. 86) pointed out, “Wishes and hopes are not theory. Sermons and preaching are not theory either.” Without either consideration of macroenvironmental realities or confirmatory empirical evidence, and in fact with often contradictory evidence, most OB textbooks and academics preach and sermonize rather than provide sound, empirically supported theories that work in business practice. We believe that most OB scholars agree with McGregor’s (1960) Theory Y view of employees. But, McGregor
did not provide empirical support for his Theory X and Theory Y discussion. Rather, his discussion was based on what appears to be a moral assumption that is not necessarily based on fact but rather on hope. It would be wonderful from a moral, ethical, and humanitarian standpoint if more satisfied workers resulted in optimum firm performance, but several studies have indicated that efforts to boost employee morale, commitment, and satisfaction have not yielded better financial performance (see Brayfield & Crockett, 1955; Mitchell, 1979; Petty, McGee, & Cavender, 1984; Staw, 1984; Vroom, 1964). It is unclear whether such efforts make financial sense in light of growing global competitive pressures to find cheaper labor around the globe. Consider the fact that McDonald’s is preparing to test whether drive-thru customer ordering can be handled through remote call centers (USA Today, 2005). Soon you may be going through a drivethru at a McDonald’s in San Francisco and not even know that someone in West Virginia or even India is taking your order. Although there is the potential advantage of having order takers with superior communication skills deal with customers, make no mistake: the real driver for this effort is the cutting of labor costs. We believe that if this out-source pilot test is successful and is more widely adopted, there will be a further erosion of the skills that are necessary to work in a fast-food restaurant. Somehow we doubt that there will be concerns about how to better retain, increase job satisfaction, or improve the morale of these types of employees. Ghoshal (2005) also made the point that society in general and business education in particular, is being greatly influenced by the ideological philosophy of radical individualism. An inherent contradiction occurs between classroom instruction, in which instructors tell students that firms will reap rewards by treating employees well. On the basis of popular press articles, students read about firms outsourcing jobs, cutting health and pension benefits, laying off employees, and at the same time reaping record profits. Several decades ago many jobs led to lifelong careers. Today, few students expect
to be with an employer for life (Brown, 2005). They have learned not to expect lifelong employment, and to watch out for themselves. Executive compensation is just another example of radical individualism. Many top executives receive large bonuses when their firm’s stock performance improves (Daily & Dalton, 2002). This may be enough of an incentive for some top management teams to manipulate earnings report (Cheng & Warfield, 2005), break rules, and engage in unethical and unlawful behaviors (Nwogugu, 2005). Regardless of putting aside arguments about why executives engage in unethical or illegal behaviors, the fact remains that firms richly reward most executives for cutting expenses and improving the bottom-line. OB scholars must recognize that for most firms, labor costs are a significant operating expense, which is why executives work to cut labor costs. Researchers often cite Wal-Mart, one of the largest employers and one of the most financially successful firms in the world, as giving poor—and sometimes unethical—treatment to its workers. Wal-Mart pays low wages, offers limited benefits, engages in discriminatory practices against women, and negatively affects social webs within communities (Quinn, 2000). Federal officials have investigated executives at the firm for spying on union organizers to root them out before they can unionize workers (Bandler & Zimmerman, 2005). Although the latter effort is illegal under the Taft-Hartly Act, many of their other practices are perhaps unethical, but are not necessarily illegal. Depending on one’s own perspective about individual and corporate responsibility, one may or may not support WalMart’s efforts to control labor costs. One could argue that controlling labor costs keeps prices lower for the end consumer and thus are just. Conversely, one could argue that it is immoral to achieve tremendous profits on the backs of underpaid and underinsured labor. As academics, we argue that WalMart and other firms with similar labor practices are simply pursuing what we teach every day in business schools: the established strategy of shareholder wealth maximization, which requires minimizing costs.
Again, it largely does not matter whether (a) business schools have adjusted their curricula to focus on maximization of shareholder value above all else or (b) they have always taught it, resulting in the ethical lapses that we find today. What is relevant is that the primary focus, both in practice and within academic programs in business, is maximization of shareholder value largely to the exclusion of all other goals. Both academics and executives view workers as an expense, and firms compensate managers on the basis of how well they improve efficiencies, cut expenses, and increase profits. This focus creates the conflict between OB and most of the rest of the business and management program curricula today. Suggestions for Academia We realize that broaching this subject may not be popular among some OB faculty: However, the gap between academia and practice is wide and growing wider. Braverman (1974) stated that “Taylorism dominates the world of production; the practitioners of ‘human relations’ and ‘industrial psychology’ are the maintenance crew for the human machinery” (p. 87). It is surely disheartening, but increasingly more difficult to argue that executives do not pursue maximization of shareholder value above all else. For OB to have meaning in the 21st century, other than as a management tool for keeping labor under control, serious debate and discussion among scholars is necessary. OB theory may still have a place when researchers look at government and nonprofit employers, but the aforementioned macroenvironmental changes have greatly diminished the value of OB theory to most profit-seeking ventures. The question is where do we go from here? If nothing is done, OB theory will continue to wither within management curricula. For OB theory to remain a viable part of core business curricula, we propose following changes. Short-Term Changes The easiest adjustment would be simply to acknowledge and openly discuss limits to the applicability of
OB theory. Professors could teach OB as a course that does not necessarily apply to most profit-seeking ventures. Management scholars and OB faculty may choose to focus theory and discussion on nonprofits, government agencies, and smaller organizations whose founding entrepreneurs pursue altruistic goals and are not concerned with maximizing profit and shareholder value (e.g., entrepreneurs who enjoy providing employment or improving a community). Within a business school’s curricula, business cases in capstone strategic management classes or other relevant classes, which focus on the aforementioned types of organizations, may help students to better understand the contexts in which they can use OB theories to make a difference in strategic decision making. Scholars should work to demonstrate the financial and strategic applicability of OB theory constructs. Instructors should eliminate from the classroom these core OB concepts that cannot be empirically supported. We intend these changes to eliminate preaching about what should be and to focus on empirically supported theoretical constructs. In some cases, firms may need to extend their time horizons to capture the benefits of organizational changes that are based on OB theory. For example, organizational benefits from efforts to improve employee morale and improve retention may not be visible for months or even years after formal organizational interventions. Many firms report quarterly financial results, with executives being compensated and often rewarded with bonuses on the basis of these results. This circumstance has contributed to the short-term focus that many executives exhibit in their decision making. It is possible that just extending the time to expect and achieve financial benefits from OB-based investments may reveal significant results that support the value of OB theory. Of course this is an empirical issue that needs further longitudinal research. There are significant risks for both (a) executives who may not enjoy compensation systems that reward longer-term results and (b) academics who are on tenure clocks or who wish to complete their doctoral programs in a timely manner. July/August 2007 353
Long-Term Changes If one believes that OB should continue to be taught to students who intend to pursue management or entrepreneurial careers in for-profit ventures, then instructors and administrators must change how OB is researched, taught, and positioned in management curricula. Executives must also make an effort to change fundamental business practices. More specifically, a change in the vigor with which firms or executives pursue and promote the goal of maximizing shareholder wealth would prevent further erosion of the relevance of OB theory. The aforementioned suggestions with respect to minor and intermediate changes address teaching methods and positioning issues. The latter requirement, changing fundamental business practices, is obviously more difficult. Some may argue that academia is reactionary rather than proactive in promoting business practices. Others, such as Ghoshal (2005), believe that academia has a deterministic power over business practices. Regardless of a reader’s personal belief, it is likely that he or she will agree that academia has a responsibility to at least try to influence business practices and behavior. Still, it must be recognized that any effort to change business practices and behavior will require a significant amount of time: years and perhaps decades. Firm executives and employees will need time to overcome structural inertia (Hannan & Freeman, 1977) that would prevent new management and organizational values, belief systems and behaviors, and performance effectiveness evaluation systems from taking root. In our view, and consistent with Ghoshal (2005), management focus on shareholders to the exclusion of all other stakeholders is inappropriate. Rather than encouraging managers to focus on best practices to build lasting relations with customers and committed workers to achieve the long-term strategic goals of an organization, shareholder wealth maximization encourages shortterm thinking, unethical behavior, and a culture that views the most important stakeholders of the firm—customers and employees—as secondary because without customers and employees, 354 Journal of Education for Business
firms would not exist, but these stakeholders are being increasingly marginalized because any efforts to address their needs are viewed as expenses The unyielding focus on quarter-toquarter short-term financial results, utilitarianism, transaction cost economics (Williamson, 1979), and maximization of shareholder value does not mesh well in practice with most OB theories. If customers and employees are, in fact, important stakeholders, then the firms' executives must pay renewed commitment and attention to these stakeholders. As we discussed earlier, this circumstance requires changing the prevailing management goal of maximizing shareholder value. However, no change in management behavior can come from preaching the benefits of a new focus without reinforcement through new systems of measurement and compensation. As long as the measurement systems for effective management remain the same as they are now, there can be no change in practice. Therefore, the employer’s measurement of effective management and resulting compensation or bonuses must shift away from meeting only the needs of shareholders to also include the needs of customers and employees. Reducing the value that firms place on profit may help to relieve some of the pressure on firm executives to maximize shareholder wealth. However, firms must operate profitably, and there can be little doubt that any performance appraisal of a firm or the effectiveness of management must include net income. Then the question becomes this: What other measurement variables can be used to assess firm and management performance? Resistance to widespread use of qualitative measures will be likely because of the difficulty in reliably scoring and meaningfully comparing results between firms. Hence, alternative quantitative measures are the most likely source for new performance measures. One alternative quantitative performance measure could be maximizing revenues as opposed to maximizing profits. There is precedent for elevating the value of revenues as a performance measure. The Fortune 500 list of the largest firms in the United States is based on revenues—not profits or stock price. If academics and executives push
for a more aggressive focus on revenue growth there may be some trickledown effects on the way customers and employees are valued. Retention of every customer becomes more critical for those who pursue revenue growth. A management team that is being evaluated in terms of either the revenue maximization goal or the shareholder wealth maximization goal is likely to view the firm’s largest customers as most important. However, managers working with the revenue maximization goal are more likely to work to deliver high-quality customer service to all customers to increase sales through repeat and referral business and to minimize the amount of customer turnover. With respect to employees, the retention and perhaps an increase in the numbers of employees who deal directly with customers become more critical. Rather than laying off a worker, a firm may choose to retrain the worker to improve longerterm client relation, and internal operational efficiencies, which can improve both revenue growth and profits. Researchers, academics, and firms should recognize that change might not be possible. The acceptance of shareholder wealth maximization may be too well entrenched—and the resistance to change may be too great—to overcome. However, the effects of the corporate scandals of recent years and the growing discussions of religious faith that are engulfing American life may be opening an opportunity to promote change. There likely are key executives who would encourage shifting focus away from maximizing shareholder wealth as a way to contribute to more ethical behavior in their own firms and a better moral society in general. Such executives may also welcome an opportunity to promote better balance between profit and morality in the workplace without being punished for missing quarterly financial goals. We are neither advocating any one type of change nor arguing that our proposals for change are the correct proposals. Part of the problem is that the macroenvironment is changing so rapidly it is impossible to really know how the economic landscape will continue to change. Policy changes that will address out-sourcing of jobs or regula-
tory changes that will restrict institutional ownership will be quite possible in coming years and would have profound effects on the macroenvironment. Still, the bigger issue remains that OB is being marginalized. We strongly believe that for OB to remain a part of core curricula in business programs, some changes are necessary. If nothing is done, OB is at risk of obsolescence and at best will simply be a tool for management exploitation rather than a vibrant part of strategic organizational decision making. Whatever the changes, researchers need to reestablish relevance for OB theory to address the realities of the new hypercompetitive economic landscape that is due to outsourcing, technology, institutional investors, and rapid globalization. As such research progresses, it would strengthen the OB foundation on which firms could base their strategic planning and organizational decision-making. Conclusion The recent passing of the great management thinker, Peter Drucker, brings to mind his lessons about the importance of fulfilling customer needs and focusing on external opportunities. In recent years, many have lost those lessons because of greed and ethical lapses. Building on Ghoshal’s (2005) arguments regarding academia’s role in fostering ethical lapses in the business world and his criticisms of the management goal of shareholder value maximization, we have focused our attention on the growing obsolescence of OB as a core subject area within management education. We have argued here that because of the generally well-accepted proposition that today’s managers and business schools focus on maximizing shareholder value, it is hard for academia to justify how and why OB fits into any management curricula. We recognize that we are offering a decidedly negative view of the relevance of OB theory that is likely to elicit strong defensive responses. There are always significant challenges in going against the establishment and the commitment of academics to existing theories (Kuhn, 1996). However, for OB to remain a vital part of the core curricula, doing nothing is not an option. We also recognize
that business education will not change overnight. We simply point out that OB theories are increasingly at odds with the current philosophy of business education and are rarely used in practice. The reasons why this is true and the changes that we and other propose are certainly open for discussion. But this debate must take place, and we hope that we have focused attention on why.
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Journal of Education for Business
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