Ghoshal on Economics — Cont’d

1 October 2006 at 11:12 am 4 comments

| Nicolai Foss |

Frequent readers of this blog will know that we have often posted on the bashing of economics that is going on in the management field (e.g., here and here). The bashing has been cumulating lately. A recent high point of management econ-bashing is the conferment of the AoM Prize for best paper in Academy of Management Review to Ferraro, Pfeffer, and Sutton’s adaptation of extreme and unqualified sociology of knowledge arguments in their “Economics Language and Assumptions: How Theories Can Become Self-Fulfilling.” Much of the management-bashing of economics may not seem worth taking seriously; the ignorance of economics implied in these critiques is usually abysmal. However, econ-bashing is unfortunately extremely influential, and I think the effects are increasingly discernible in the top-journals (the Strategic Management Journal  and  Management Science being excepted): It seems to me that papers with some economics content are increasingly rare in, say, the Academy of Management Review, and probably also in the rest of the top-journals in management.

Economists ought to take issue with the nonsense that is being said about their discipline; otherwise, economics may continue to lose ground in management. However, economists are usually not prepared to debate with their critics, perhaps out of arrogance or perhaps out of ignorance of the existence of the critique.  I have witnessed economists simply refusing debate with critics that they considered too out of touch with what economics is about or simply too muzzy.  Such an attitude, while understandable, is, however, maintained at the peril of economics.  

Moreover, even the econ-bashing management types seem to be shaping up now.  At least, a recently published paper by Hector Rochas of the London Business School and über-econ basher (the late) Sumantra Ghoshal, “Beyond Self-Interest Revisited,” published in the May issue of Europe’s leading management journal, The Journal of Management Studies, is a scholarly and (certainly compared with the rest of the econ-bashing literature) sophisticated discussion of the notion of self-interest.  Here is the abstract:

We revisit the self-interest view on human behaviour and its critique, and propose a framework, called self-love view, that integrates self-interest and unselfishness and provides different explanations of the relationship between preferences, behaviour, and outcomes. Proponents of self-interest as the only valid behavioural assumption argue for simplified assumptions and clear models in order to propose precise prescriptions, while critics to this self-interest view argue for realistic assumptions and rich descriptions in order to reach better explanations. This debate inhibits theoretical development because it faces the problem of incommensurability of standards for choosing among paradigms. We propose the concept of self-love, or the inclination of human beings to strive for their own good and perfection, to remove the assumption self-interest vs. unselfishness. Self-love distinguishes between the object and the subject of motivation and therefore creates a bi-dimensional motivational space. This framework replaces the unidimensional continuum self-interest – unselfishness, specifies eight interrelated motives, and provides different expected relationships between preferences, behaviour, and outcomes. We show that a better understanding of motivational assumptions, their embodiment in theories, and their influence on the very behaviours these theories assume provides managers and policymakers more alternatives for the designing of motivational contexts than in the case of assuming either self-interest or a permanent conflict between self-interest and unselfishness.

As the abstract indicates, this is an attempt to build an alternative to economics’ narrow self-interest assumption based on more Aristotelian ideas (the paper comes complete with references to The Nichomachean Ethics as well as to Aquinas).

I think some of the arguments are misguided, but I was (pleasantly) surprised to find myself in agreement with much of the paper. It is also noteworthy that the rather extreme implications for management research and practice that Ghoshal has drawn in earlier work are conspiciuous by their absence in the present paper. And there are even approving references to Friedrich Hayek.

Entry filed under: - Foss -, Management Theory, Myths and Realities, Papers.

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