2/13/2014

On theories (Stuart A. Umpleby, George Washington University, US)

Early Developments of Management Theory

Elar Killumets Email: elar.killumets@ut.ee 10.02.2014

• In order to understand a theory, one needs to understand the theory that preceded it, and in order to understand that theory, one needs to understand the theory that preceded it • A theory is an answer to a question. To understand a theory, one must first understand the question that it answers

On theories and common sense (Stuart A. Umpleby, George Washington University, US)
A theory should not be evaluated in relation to common sense for three reasons
– Different people have different conceptions of common sense – Common sense changes in time – Common sense is not well-formulated and clearly stated

Adam Smith 1723 – 1790 Father of modern economics
The industrial revolution altered working conditions and created large organizations. Focus was on improving processes. 1759 – first work The Theory of Moral Sentiments. The main idea of the book was to explain formation of moral judgments, despite of man’s natural inclination to behave according to self-interest 1776 – The Wealth of Nations - invisible hand “when an individual pursues his self-interest, he indirectly promotes the good of society” - Deepening the division of labor – (under competition) it leads to lowered prices and extended markets IMPORTANT – although capitalism as we know it largely quotes Adam Smith’s “The Wealth of Nations” and his ideas of self-interest leading to common good and division of labor, he himself would despise current system. As also written in the book, division of labor turns people into stupid ignorant creatures.

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2/13/2014

Emergence of manager
Late 19th Century Business taught in high schools/commercial schools = bookkeeping + secretarial skills 1902 – Dartmouth College in New