Professional Documents
Culture Documents
........................................................................................................................................................................
2005
Pfeffer
ascendancy? Until we deeply understand the answers to this question, progress in changing the
situation will be limited.
ITS EVEN WORSE THAN GHOSHAL MAINTAINS
Ghoshal argues that we need to own up to our
own role in creating Enrons, and indeed we do.
There is evidence that both economics, a subject
that forms the foundation for most business
schools and a majority of business school courses
and education, and business school training and
business school environments themselves, can
have deleterious effects.
Consider first the effects of business schools on
student values and behavior. An Aspen Institute
study (2001) found that student values changed
during their two years in the MBA program. Not
surprisingly, over the time they were in business
school, enhancing shareholder value became more
important and customers and employees became
less important for the students. Business education
apparently also has effects on conduct beyond
business school. A study of citations for violating
occupational safety and health regulations found
that the positive effect of firm size on the number of
citations received by organizations in the sample
was mediated by the MBA composition of the top
management team. The link between firm size
and corporate illegal activity becomes stronger as
the percentage of TMT [top management team]
members possessing an MBA degree . . . rises
(Williams, Barrett, & Brabston, 2000: 706). Studies of
cheating and student values also raise questions
about the role of business education. For example,
in a large empirical study McCabe and Trevino
found that business school students placed the
least importance on knowledge and understanding, economic and racial justice, and the significance of developing a meaningful philosophy of
life (1995: 211) and that business majors report
almost 50% more [cheating] violations than any of
their peer groups and almost twice as many violations as the average student in our study (p. 210).
Economics training also has some important
consequences for behavior. As reviewed elsewhere (Ferraro et al., 2005) there is evidence that
taking economics courses or majoring in economics results in (a) more free-riding (e.g., Marwell &
Ames, 1981); (b) more defection in prisoners dilemmas experiments (e.g., Frank, Gilovich, & Regan,
1993); (c) more selfish behavior in ultimatum games
(Carter & Irons, 1991); and (d) more willingness to
recommend a plumber for a film club when the
plumber charges a higher price but the subject
personally receives more money for making the
97
recommendation (Frank & Schulze, 2000), an example of succumbing to the temptation to behave
corruptly.
These data on the effects of both business
schools and economics raise the interesting question of whether the observed effects are the result
of self-selectionwho attends business schools or
majors in economics or the educational and socialization process (e.g., Frank et al., 1993) that
occurs in these classes and settings. It is likely that
both effects may be operating. In any event, further
exploration of the question of the effect of business
school and economic education on values and behavior, and the mechanisms by which such effects
occur, would seem to remain an important research agenda.
THE PROBLEMATIC OF THE CURRENT
SITUATION
It is easy to forget, as one reads Ghoshals wellwritten lament about the current state of affairs,
that economics was not always so dominant a social science, nor was the content of economics,
with its neoclassical, antigovernment intervention
slant and its emphasis on mathematical proof, always as it is today. Bernstein (2001) opens his history of the transformation of the economics profession in the 20th century by describing how the
Smoot-Hawley tariff was passed in the Hoover administration even though one third of the members
of the American Economic Association had signed
a petition opposing it, as a way of illustrating the
limited influence of economics at that point in
time. Bernstein also describes how the economics
profession was very early on not only concerned
about increasing its membership but also quite
self-conscious in embarking on strategies to enhance its influence: No amount of enforcement of
particular boundaries of expertise could substitute
for the rigorous refinement of colleagues that
would result from the inculcation of specific ways
of doing the [economic] communitys business
(2001: 20).
Considering the content of economics and the
form of economic theory, Kuttner (1996), among others, reminds us that that the reliance on mathematical proof and the ascendancy of an emphasis on
market-based solutions to almost every problem
and disdain for the role of government and regulation is a relatively recent phenomenon. In the
1950s, Milton Friedman was dismissed as a curiosity. By the 1980s, Friedman and several of his followers had won the Nobel Prize (Kuttner, 1996: 33).
Kuttner (1996) has analyzed when markets and
conventional economic models work and when
98
March
2005
Pfeffer
99
100
March
Aspen Institute 2001. Where will they lead? MBA student attitudes about business and society. New York: Aspen Institute
for Social Innovation Through Business.
Pfeffer, J. 1993. Barriers to the advance of organizational science: Paradigm development as a dependent variable.
Academy of Management Review, 18, 599 620.
Blyth, M. 2002. Great transformations: Economic ideas and institutional change in the twentieth century. New York: Cambridge University Press.
Carter, J. R., & Irons, M. D. 1991. Are economists different, and if
so, why? Journal of Economic Perspectives, 5: 171177.
Coleman, J. S. 1993. The rational reconstruction of society. American Sociological Review, 58: 115.
Dezalay, Y., & Garth, B. 2002. The internationalization of palace
wars: Lawyers, economists, and the contest to transform
Latin-American states. Chicago, IL: University of Chicago
Press.
Ferraro, F., Pfeffer, J., & Sutton, R. I. 2005. Economics language
and assumptions: How theories can become self-fulfilling.
Academy of Management Review, 30(1): 8 24.
Fourcade-Gourinchas, M., & Babb, S. 2002. The rebirth of the
liberal creed: Paths to neoliberalism in four countries.
American Journal of Sociology, 108: 533579.
Frank, B., & Schulze, G. G. 2000. Does economics make citizens
corrupt? Journal of Economic Behavior and Organization,
43: 101113.
Frank, R. H., Gilovich, T. D., & Regan, D. T. 1993. Does studying
economics inhibit cooperation? Journal of Economic Perspectives, 7: 159 171.
Ghoshal, S., & Moran, P. 1996. Bad for practice: A critique of the
transaction cost theory. Academy of Management Review,
21, 13 47.
Gioia, D. A., & Corley, K. G. 2002. Being good versus looking
good: Business school rankings and the circean transformation from substance to image. Academy of Management
Learning & Education, 1: 107120.
Green, D. P., & Shapiro, I. 1994. Pathologies of rational choice
theory: A critique of applications in political science. New
Haven, CT: Yale University Press.
Hinings, C. R., & Greenwood, R. 2002. Disconnects and consequences in organization theory? Administrative Science
Quarterly, 47: 411 421.
Kuttner, R. 1996. Everything for sale: The virtues and limits of
markets. Chicago, IL: University of Chicago Press.
Marwell, G., & Ames, R. E. 1981. Economists free ride, does
anyone else? Journal of Public Economics, 15: 295310.
McCabe, D. L., & Trevino, L. K. 1995. Cheating among business
Pfeffer, J., & Fong, C. T. 2002. The end of business schools? Less
success than meets the eye. Academy of Management
Learning & Education, 1: 78 95.
Pfeffer, J., & Fong, C. T. 2004. The business school business:
Some lessons from the U.S. experience. Journal of Management Studies, 41, 15011520.
Pfeffer, J., & Salancik, G. R. 1978. The external control of organizations: A resource dependence perspective. New York:
Harper and Row.
Posner, R. A. 2003. Economic analysis of law (6th Ed). Aspen, CO:
Law and Business.
Scott, W. R. 1995. Institutions and organizations. Thousand
Oaks, CA: Sage.
Shenhav, Y. 1999. Manufacturing rationality: The engineering
foundations of the managerial revolution. New York: Oxford
University Press.
Trank, C. Q., & Rynes, S. L. 2003. Who moved our cheese?
Reclaiming professionalism in business education. Academy of Management Learning & Education, 2: 189 205.
Walsh, J. P., Weber, K., & Margolis, J. D. 2003. Social issues and
management: Our lost cause found. Journal of Management, 29: 859 881.
Williams, R. J., Barrett, J. D., & Brabston, M. 2000. Managers
business school education and military service: Possible
links to corporate criminal activity. Human Relations, 53:
691712.
Jeffrey Pfeffer is the Thomas D.
Dee II Professor of organizational behavior at the Graduate
School of Business, Stanford
University. He received his PhD
from Stanford University. His
article with Christina T. Fong,
The End of Business Schools:
Less Success Than Meets the
Eye? was the winner of the
Academy of Management
Learning & Educations Best Paper Award, 20022003. Pfeffer is
currently coauthoring a new
book on evidence-based management and conducting research on the effects of economic
language and assumptions.