Journal of Management History

The business ethics of management theory

Mark Schwartz
Article information:
To cite this document:
Mark Schwartz, (2007),"The business ethics of management theory", Journal of Management History, Vol.
13 Iss 1 pp. 43 - 54
Permanent link to this document:
http://dx.doi.org/10.1108/17511340710715160
Downloaded on: 31 January 2016, At: 05:00 (PT)
References: this document contains references to 40 other documents.
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

To copy this document: permissions@emeraldinsight.com

The fulltext of this document has been downloaded 15518 times since 2007*
Users who downloaded this article also downloaded:
Charles Holme, (2008),"Business ethics Part One: Does it matter?", Industrial and Commercial Training,
Vol. 40 Iss 5 pp. 248-252 http://dx.doi.org/10.1108/00197850810886487
Bruce Macfarlane, (1995),"Business ethics: too little, too late", Education + Training, Vol. 37 Iss 5 pp. 32-36
http://dx.doi.org/10.1108/00400919510089130
Marilyn Kleinberg Neimark, (1995),"The selling of ethics: The ethics of business meets the
business of ethics", Accounting, Auditing & Accountability Journal, Vol. 8 Iss 3 pp. 81-96 http://
dx.doi.org/10.1108/09513579510094705

Access to this document was granted through an Emerald subscription provided by emerald-srm:277061 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for
Authors service information about how to choose which publication to write for and submission guidelines
are available for all. Please visit www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company
manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as
providing an extensive range of online products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee
on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.

*Related content and download information correct at time of download.

 The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1751-1348.htm

Business ethics
The business ethics of
management theory
Mark Schwartz
Atkinson Faculty of Liberal and Professional Studies, 43
School of Administrative Studies, York University, Toronto, Ontario, Canada

Abstract
Purpose The purpose of this paper is to examine the current gap between the subjects of business
ethics and pre-1960 management theory.
Design/methodology/approach In an attempt to achieve the objective of the paper, the business
ethics content of three leading management theorists during the first half of the 1900s is examined:
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

Frederick Taylor; Chester Barnard; and Peter Drucker.

Findings The paper concludes that there are significant business ethics content as well as ethical
implications in the writings of each of the three management theorists.
Research limitations/implications The analysis focused on only three, albeit significant,
management theorists. A more complete discussion would have included other important management
theorists as well.
Practical implications The analysis suggests that management theory should not be taught
without discussing both the business ethics implications and the business ethics content inherent in
the theory. In addition, failure on the part of business ethics academics to understand early
management theory, the ethical ramifications of such theory, and the business ethics issues explicitly
discussed by leading management theorists, may lead to teaching and research in a subject without a
proper theoretical foundation.
Originality/value The paper attempts to address a gap in management literature by
demonstrating some of the linkages between business ethics and business management thought,
and thereby be of value to management theorists as well as business ethicists in their teaching and
research efforts.
Keywords Business ethics, Management theory
Paper type General review

Although it is always difficult and somewhat arbitrary to attempt to identify the exact
point in time a particular field of study emerged, both the fields of management as well
as business ethics appear to have only recently become formal fields of study. For
example, according to Bluedorn (1986, p. 442) in his introduction to a special book
review section on the classics of management in the Academy of Management Review,
around 100 years [ago] . . . management began as a discipline. The emergence of the
management field, according to Bluedorn, may have commenced upon the delivery by
Henry Towne of his paper The Engineer as an Economist to a meeting of the
American Society of Mechanical Engineers in 1886. Townes paper made a
resounding call for both management research and education (Bluedorn, 1986, p. 442).
While the history of ethics in business is a long one, going back to the beginning of
business (De George, 1987, p. 201), the academic field of business ethics appears to Journal of Management History
Vol. 13 No. 1, 2007
have emerged even more recently. According to De George (1987, p. 203), By 1985 pp. 43-54
business ethics had become an academic field, albeit still in the process of definition. q Emerald Group Publishing Limited
1751-1348
As his evidence, De George points out that by 1985, there were already hundreds of DOI 10.1108/17511340710715160
 JMH university business ethics courses across the USA, at least 20 textbooks, at least ten
13,1 casebooks, numerous business ethics centers, as well as conferences taking place.
Today, on just about every business school campus in North America, one can find
courses in either subject. As the new kid on the block however, business ethics
academics continue to face scepticism as to the legitimacy and practicality of their
newly emerged field (Swanson, 2005). Such criticism is typically raised by
44 management professors who may fail to realize that they too have only relatively
recently been validated as a legitimate academic field. For example, one might hear
the following question from a management professor: So what does business ethics
have to do with business anyways? In response, however, one could reply with:
By the way, what can you tell me about the ethical implications of Frederick Taylors
theories and how he responded to such criticisms? What did Chester Barnard say about
the moral status and responsibility of executives? Why is Peter Drucker so concerned
with the social responsibilities of business?
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

This type of discussion may lead to other general questions about the relationship
between management theory and business ethics. How have the two subjects evolved?
Are there any linkages between them? Should they be integrated together? Have the
origins of business ethics theory been properly identified? A review of management
and business ethics literature suggests that these are issues which do not appear to
have been explored to date to any great extent.
To address this gap in the literature, this paper will briefly examine the evolution or
historical development of US management thought during the first half of the 1900s as
expounded by three of its more significant theorists:
(1) Taylor (1903, 1911, 1912, 1947);
(2) Barnard (1938, 1948, 1958); and
(3) Drucker (1946, 1954).

Following a brief summary of each individuals contribution to management theory, an

analysis will be conducted from a business ethics perspective. Criteria used in the
analysis will consist of:
.
the ethical implications of their theory; and
.
the business ethics content inherent in their theory.

Implications from the analysis will include discussion of the potential linkages between
management thought and the subject of business ethics, and the implications for
teaching and conducting research in management theory and business ethics.

Frederick Taylor
Frederick Taylor is recognized as the leading advocate of scientific management. He is
considered one of the first major management theorists. Taylors (1903, 1911, 1912)
major contribution consisted of three papers, which were originally published at
different times for different audiences: Shop Management; The Principles of Scientific
Management; and Testimony Before the Special House Committee. The three papers
were later compiled together and published well after Taylors (1947) death in 1915 in
Scientific Management. Taylors observations of workers at a steel mill led to his three
reasons why workers were deliberately not achieving maximum efficiency:
 (1) the fallacy that a material increase in the output of each man or machine would Business ethics
result in a large number of men being thrown out of work;
(2) the defective management systems which make it necessary for each employee
to work slowly in order to protect his own best interests (classified as natural
and systematic soldiering); and
(3) the passing on of inefficient rule of thumb work methods.
45
Taylor proposed a scientific system for breaking down each activity into its
components parts and determining the most efficient means by which to perform each
task. Stopwatches would then be used to establish an optimum daily production rate,
and workers would be trained to perform in the manner desired by management.
To encourage adoption of the scientific method, each worker would be paid under a
piece rate compensation plan, which rewarded an individuals high levels of output
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

by paying at one rate until the optimum daily standard was achieved. Once the
worker output surpassed the specified standard, a higher rate of compensation would
then be paid.

Taylor: business ethics content of theory

At first glance, Taylor does not appear to explicitly say anything about the subject of
business ethics in his writings. In addition, a review of general business ethics
literature (i.e. business ethics textbooks) does not reveal any direct mention of the
scientific method. Taylors theory, however, despite not specifically addressing
business ethics, generates significant business ethics implications. For example,
discussion of any employee related business ethics issue such as employee job
satisfaction, well-being, participation, or rights, might be related to Taylor-based
management practices.
The major charges raised against Taylors theory were the coldness and
impersonality of scientific management and the omission of the human factor in his
theory. His scientific method was seen as rationalizing the work process and increasing
managerial control over employees by establishing standards. By doing so, employees
were viewed as merely a labour resource as opposed to human beings with personal
needs and aspirations (Green, 1986). This paradigm was seen as reversing Kants
moral law by always treating people as a means and never as an ends in themselves
(Waring, 1991, p. 40). By implication, managers would not hesitate to replace
individual employees who were not maximizing their output. Piece rate compensation
would lead to a highly competitive environment which emphasized individual output
as opposed to group output. Managers would find it much easier to manipulate the
resulting highly fractionalized organizational work force. Little emphasis was seen to
be placed on employee participation in the work process.
There is no question that scientific management is still influential in management
theory (Nelson, 1980; Waring, 1991) and continues to generate many ethical issues.
In fact, Taylor was aware of many of the ethical challenges levelled against scientific
management, and responded to such concerns. Taylor indicated that there were some
basic limits to the optimum daily production rates; they were not based on spurts of
activity and were not intended to injure the workers health (Wren, 1972, p. 122). Taylor
did not advocate that workers stop thinking; in fact, Taylor (1947, p. 128) believed that
every encouragement should be given to the worker to suggest improvements, both in
 JMH methods and in implementation. In response to a general question on the issue of
human relations in his theory, Taylor (1947, pp. 184-5) replied:
13,1
No system of management, however good, should be applied in a wooden way. The proper
personal relations should always be maintained between the employers and men; and even
the prejudices of the workmen should be considered in dealing with them. The employer . . .
who talks to his men in a condescending or patronizing way, or else not at all, has no chance
46 whatever of ascertaining their real thoughts or feelings . . . Each man should be encouraged to
discuss any trouble which he may have, either in the works or outside, with those over him.
Despite Taylors response (which almost sounds like a business ethics dialogue), ethical
challenges against Taylor based management practices continue even today, especially
with respect to mass production or the delivery of fast-food service (Royle, 2005).

Chester Barnard
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

Barnards (1938) best known work, The Functions of the Executive, focused on formal
organizations as cooperative systems. His main contribution to management theory was
his attempt to bridge the requirements of the formal organization with the needs of the
socio-human system. His work has been considered . . . a landmark in management
thought which persists to this day (Wren, 1972, p. 313). Barnard recognized that
individuals in an organization have their own motives (i.e. purposes, desires, and
impulses) which can be modified through the executive function to match the goals of the
organization (i.e. by offering incentives or changing attitudes). If the individual and
organizational goals match and cooperation is achieved, the system is considered
effective. Barnard also developed the acceptance theory of authority by which a zone of
indifference (i.e. acceptance of orders without questioning authority) was created if four
conditions were met: understanding of order; consistency with purpose of organization;
compatibility with personal interests; and mental and physical ability to comply.
Barnard also suggested three major executive functions: to provide a system of
communication; to promote the securing of essential personal efforts; and to formulate
and define the organizations purpose and objectives (Barnard, 1938, p. 217).

Barnard: business ethics content of theory

Barnards theory raises a number of business ethics issues. The most significant issue
is with respect to the methods used by managers to bring the individuals motives in
line with the corporations goals. Just as concerns have been raised over the
manipulation of consumer desires (Galbraith, 1958), one could argue that Barnard is
advocating the manipulation of employee desires and goals. The inculcation of ideas
designed to nurture cooperation such as appeals to loyalty, esprit de corps, and belief in
organizational purpose, could be criticized as violating the freedom of conscience and
belief of employees (Tubbs, 1993).
In addition to such ethical implications of Barnards theory, there is specific inclusion
of business ethics by Barnard in his discussion of the nature of executive responsibility.
In fact, one could argue that the current business ethics discussion on ethical leadership
can trace its roots to Barnards (1938, 1948, 1958) writings, and in particular, in
The Functions of the Executive, Organization and Management, and Elementary
Conditions of Business Morals published in California Management Review. In his
chapter entitled The Nature of Executive Responsibility in The Functions of the
Executive, Barnard (1938, pp. 262, 263, 1948, p. 95) identifies the origins of an individuals
 morals or private code of conduct; the social environment (including political, religious, Business ethics
economic environments); biological properties and phylogenetic history; technological
practice or habit; and education or training. He defines responsibility as the power of a
particular code of morals to control the conduct of the individual in the presence of strong
contrary desires or impulses. In his later work, Organization and Management, he
similarly defines responsibility as an emotional condition that gives an individual a
sense of acute dissatisfaction because of failure to do what he feels he is morally bound to 47
do or because of doing what he thinks he is morally bound not to do, in particular
concrete situations. One finds strong similarities between Barnards views and Kants
expression of the obligation to act according to ones moral duty despite inclination and
self-interest (Kant, 1988). For example, some suggest that Barnard, based on an
Aristotelean view of human nature, deeply respects the worth of each human being
despite asking employees to willingly cooperate (i.e. self-abnegation) in order to achieve
their organizations objectives (Vasillopulos, 1988).
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

Barnard (1938, pp. 273, 279) suggests the responsibilities which executives have in
relation to morals. First, leaders must hold some moral code, and possess strong
responsibility or adherence to it. Second, leaders must demonstrate a high capacity for
responsibility. Executives face a higher level of moral complexity and require the
ability to withstand inconsistent immediate impulses, desires, or interests. The ethical
codes which may be involved include: government codes; established systems; purpose
of department codes; subordinates codes; technical situation; code of his peers; code for
the good of the organization as a whole; informal organization of department code; and
technical requirements of department code. Third, leaders must be able to create moral
codes for others. For example, executives must often invent a moral basis for the
solution of moral conflicts: The solution of such cases lies either in substituting a new
action which avoids the conflict, or in providing a moral justification for exception or
compromise. In fact, one might argue that the modern origins of corporate codes of
ethics are found in Barnards explicit discussion of ethical codes. Barnard (1958, p. 2)
later reaffirms his view that management is significantly based on ethics: to a large
extent management decisions are concerned with moral issues.
Barnard may also have been one of the first to recognize the importance of external
stakeholders to the corporation. The traditional view of the organization was that it
consisted of a definite number of internal members, leading to a focus on
intra-organizational analysis. Barnard (1958, p. 7), despite facing criticism, rejected this
view and included in his concept of organizations other stakeholders whose actions
contributed to the firm. He states:
The responsibilities of corporations [include]: (1) those which may be called internal, relating
to . . . stockholders, creditors, directors, officers, and employees; and (2) those relating to the
interest of competitors, communities, government, and society in general.
It was not until much later that strategic management theorists such as Freeman (1984)
and others in business ethics (Carroll, 1991; Clarkson, 1995) picked up on the idea of
stakeholder management as a practical theoretical framework for managers.

Peter Drucker
Drucker (1946, 1954) wrote two influential texts on management theory, Concept of the
Corporation and The Practice of Management. A careful examination of these two
 JMH texts reveals numerous business ethics considerations by Drucker in his theory.
13,1 Each of the two texts devotes an entire chapter to business ethics considerations:
The Corporation as a Social Institution in Concept of the Corporation and
The Responsibilities of Management in The Practice of Management.
Drucker is often considered the founder of modern American management (Romar,
2004). Drucker arguably provided two major contributions to management theory:
48 (1) advocacy of the federally decentralized organization; and
(2) the concept of management by objectives (MBO).

Following two years of consulting for General Motors in the mid-1940s, Drucker (1954,
pp. 209-10) concluded that a federally decentralized organization best integrated
control or economic efficiencies with freedom or individual employee fulfilment.
A federally decentralized organization consists of autonomous profit/loss centres each
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

with its own product and market. The advantages of such a structure were:
.
focus on performance and results;
.
avoidance of profitable product lines subsidizing unprofitable lines;
. better assessment of managers performance; and
.
early and reasonable testing of employees in independent command.

Druckers second major contribution was the introduction of the concept of MBO as a
solution to combining managerial autonomy and control in a decentralized
organization. Essentially MBO is a process whereby decentralized superiors and
subordinates set goals and objectives, performance is then measured against these
objectives, and rewards and punishments are assessed based on the results.

Drucker: business ethics content of theory

Druckers management theory generates several ethical implications. His support of
decentralization raises several ethical concerns such as increased reliance on the moral
judgment of autonomous managers. The creation of autonomous profit/loss centres in
a decentralized organization may generate inter-organizational competition for
resources which is detrimental to the organization as a whole. MBO also leads to an
emphasis on the maximization of financial performance and results, often short-term,
which may in turn create pressures for short cuts and ethical abuses by managers and
employees. For example, some attribute the recent corporate ethical scandals such as
Enron and WorldCom to an emphasis on short-term results (Romar, 2004).
As well as raising ethical complications, Druckers theory of management
specifically addresses business ethics by making three arguments:
(1) profits, although important, are not the purpose of business;
(2) corporations are social institutions and therefore have social responsibilities;
and
(3) business has special responsibilities towards its employees.

First, Drucker (1954, p. 35) makes it clear that business cannot be explained or defined
in terms of profit: Profit is not the purpose of business enterprise and business
activity, but a limiting factor on it. Instead of profits, Drucker (1954, p. 37) suggests
 that the purpose of business must lie in society since a business enterprise is an organ Business ethics
of society. He argues that the only valid purpose of business is to create a customer,
meaning that the only two functions of business are marketing and innovation.
Second, Drucker makes arguments regarding corporate social responsibility (CSR)
which appear to be primarily attributed to later business ethics or CSR theorists. For
example, Drucker (1954, p. 381) is clearly an advocate of the social institution view of
corporations. He states: society is not just the environment of the enterprise. Even the 49
most private of private enterprises is an organ of society and serves a social function.
One finds elements of the social power justification for social responsibilities in
Druckers early writings. The social power justification suggests that the immense
power of corporations demands responsibility due to the significant potential
consequences that can result from corporate behavior. Most business ethicists attribute
the social power argument for corporate social responsibilities to Davis (1975). Drucker
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

(1954, p. 382), however, makes note of the concentration of resources controlled by

managers which results in immense power: [Managers] decisions have great impact
upon society, and they have to make decisions that shape the economy, the society, and
the lives of individuals within it for a long time to come. It is the granting of this vast
concentration of power which requires additional responsibilities of corporations
according to Drucker (1954, pp. 382-3):
[This concentration of power] imposes upon the business and its managers a responsibility
which not only goes far beyond any traditional responsibility of private property but is
altogether different. It can no longer be based on the assumption that the self-interest of the
owner of property will lead to the public good, or that self-interest and public good can be
kept apart and considered to have nothing to do with each other. On the contrary, it requires
of the manager that he assume responsibility for the public good, that he subordinate
his actions to an ethical standard of conduct, and that he restrain his self-interest and his
authority wherever their exercise would infringe upon the commonwealth and upon the
freedom of the individual.
The following statement emphasizes the critical importance Drucker (1954, p. 383)
attached to the social responsibilities of business:
The responsibility of management in our society is decisive not only for the enterprise itself
but for managements public standing, its success and status, for the very future of our
economic and social system and the survival of the enterprise as an autonomous institution.
The public responsibility of management must therefore underlie all its behavior. Basically it
furnishes the ethics of management . . . This responsibility cannot be compromised or
side-stepped.
Drucker (1954, p. 386) also outlines the strategic implications for a corporations
fulfilment of its social responsibilities. The first step is for the corporation to consider
demands made by society on the enterprise both at present or likely to be made within
the near future as may affect the attainment of the corporations objectives. The second
step is to find a way to convert these demands from threats to, or restrictions on, the
corporations freedom of activity into opportunities for sound growth, or to at least
satisfy them with the least amount of damage to the corporation. Drucker provides
concrete examples such as old age pensions, closing down of plants, or out-of-house
hiring. Drucker (1954, p. 386) states:
 JMH In brief, management, in every one of its policies and decisions, should ask: What would be
the public reaction if everyone in the industry did the same? What would be the public impact
13,1 if this behavior were general business behavior?
Drucker (1954, p. 387) does provide limitations and qualifications to his advocacy of
CSR. First, a corporation should never assume paternal authority over its managers; it
is not and must never claim to be home, family, religion, life or fate for the individual.
50 It must never interfere in his private life or his citizenship. Second, a corporation
should never assert responsibilities for a group which it does not have, such as
education, culture and the arts, the press, or foreign affairs. If corporations were to
assume such responsibilities, Drucker states that society would find sole control of
such an activity by management intolerable. From this argument one finds the possible
origins of Levitts (1958) famous business ethics article, The Dangers of Social
Responsibility. In this paper, Levitt (1958, p. 47) argues that business and government
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

each have functional responsibilities in society, and should not coalesce into a single
power, unopposed and unopposable. There is also similarity between Druckers ideas
and the Iron Law of Responsibility, often attributed to Davis and Blomstrom (1975),
who state that whoever does not use his social power responsibly will inevitably lose it.
In addition, in Concept of the Corporation, Drucker (1946) argues that the
corporation has special responsibilities towards its employees. Primarily based on
Christian philosophy, Drucker says that corporations must fulfil the human dignity of
status and function for the individual and provide equal opportunities to employees.
By status and function Drucker (1946, pp. 140-1) means that:
the citizen must obtain both standing in his society and individual satisfaction through his
membership in the plant, that is, through being an employee. Individual dignity and fulfilment
in an industrial society can only be given in and through work . . . everybody from the boss to
the sweeper must be seen as equally necessary to the success of the common enterprise.
At the same time corporations must offer equal opportunities for advancement.
Drucker (1946, p. 142) explains that equal opportunity means that advancement is not
based on external hereditary or other fortuitous factors. One finds here the potential
origins of the business ethics issue of affirmative action. Drucker provides three
reasons why corporations have failed to provide equal opportunities:
(1) from the view of the worker, promotion selection is seen as arbitrary;
(2) an emphasis on formal training and education as a prerequisite to the job; and
(3) the failure to provide opportunities for workers to demonstrate their abilities
due to specialization.

To equalize opportunities, Drucker (1946, pp. 180-2) suggests:

.
offer training;
.
provide opportunities to demonstrate talent and to acquire knowledge and
training (e.g. through rotation); and
.
rewards for inventiveness.

What Drucker apparently advocates is a Kantian approach to the worker (Schwartz,

1998). Just as Kants categorical imperative requires respect for individuals by treating
them as ends and not merely as means, Drucker (1946, p. 208) recognizes that the
 modern large corporation is a human organization and not just a complex of Business ethics
inanimate machines.
More recently, Drucker (1981) felt it necessary to address the question of what is
business ethics. His discussion is a critique on the current understanding of business
ethics, as a subject which advocates lower moral standards for business activities as
opposed to those applied to individuals in daily life. Drucker first rejects business
ethics in its current formulation, that of casuistry or the balancing of individual and 51
societal demands due to the responsibility of holding a certain position. Instead,
Drucker argues in favour of the ethics of prudence (i.e. the exemplification of ethics by
leaders) and the Confucian ethics of interdependence (i.e. right behavior appropriate to
the specific relationship of mutual dependence because it optimizes benefits for both
parties, not merely an ethics for individuals) (Romar, 2004). In any event, despite what
some might see as an antagonistic view towards business ethics (Hoffman and Moore,
1982), Druckers earlier writings clearly raise ethical issues as well as explicitly address
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

business ethics concerns. Some have even gone so far as to label Drucker a business
moralist (Klein, 2000, p. 121) or someone having a deep preoccupation with morality
(Schwartz, 1998, p. 1685).

Limitations and implications

The above analysis focused on only three, albeit significant, management theorists:
Frederick Taylor; Chester Barnard; and Peter Drucker. A more complete discussion
would have delved much deeper into the writings of the three theorists, and would also
have included other important management theorists such as Frank and Lillian
Gilbreth, Mary Parker Follett, Henri Fayol, Elton Mayo, F.J. Roethlisberger, Herbert
Simon, Alfred Chandler, Paul Lawrence, Kenneth Andrews, Jay Lorsch, Henry
Mintzberg, and Michael Porter among others. Although not directly addressing
business ethics, each of their theories arguably raises ethical implications. The
continued discussion of such implications is left for another paper.
Despite the limited scope of the paper, the above discussion reveals an important
consequence for management professors, i.e. that one cannot and should not teach
management theory without discussing both the business ethics implications and the
business ethics content inherent in the theory. For example, to teach Frederick Taylors
scientific management and not discuss the potential ethical ramifications for
employees, arguably leads to an incomplete and morally biased education. A discussion
of Chester Barnard without mentioning his concern over the responsibilities of
executives in holding a moral code and creating a moral code for others could be
considered deficient and unbalanced. Finally, a lack of discussion of the concerns of
Peter Drucker with respect to profits, social responsibility, and respect towards
employees might be seen as demonstrating a lack of understanding of his theory.
In fact, while some may discuss the ethical implications arising from Frederick Taylor,
what many scholars may fail to realize is that both Chester Barnard and Peter Drucker
presented their overall theories and approaches within an ethical framework. While
Barnard may not have focused on the subject of business ethics, he fully embraced it in his
work. In addition, a review of the works of Peter Drucker indicates that he paid keen
attention to ethics within a business context throughout his career.
At the same time, the above analysis reveals an important weakness in the field of
business ethics and implications for business ethics academics. Failure on the part
 JMH of business ethics professors to understand management theory, the ethical
13,1 ramifications of such theory, and the business ethics issues explicitly discussed by
leading management theorists, is to teach a subject without a theoretical foundation in
business management. Currently, most business ethicists argue that moral philosophy
and other strands of academic disciplines form the foundation for the subject as an
independent academic field (De George, 1987). Unfortunately, the one body of theory
52 which is currently not discussed to any great extent in the business ethics literature,
that of management theory, is possibly the most important to incorporate if business
ethics is to gain greater legitimacy as a mainstream business subject. To even claim
that business ethics is a subject which should be taught in a business school and then
proceed to teach the subject without any knowledge or reference to management theory
is only to support those who might criticize business ethics as irrelevant, impractical,
and lacking any firm management theory foundation. At the very least, business ethics
professors may be able to attain a greater level of legitimacy by demonstrating a
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

knowledge and appreciation of the relationship between business ethics and

management theory. By doing so, the current strain and barriers to acceptance of
business ethics caused more by ignorance than anything else may be reduced. This, in
turn, may increase opportunities for fruitful discussion between the two disciplines.
The inclusion of management theory as part of the business ethics field will aid
business ethics professors in better understanding some of the historical origins and
ethical implications of management theory. Numerous individuals have questioned
what exactly the field of business ethics covers and how it should be defined (Lewis,
1985; Beversluis, 1987; De George, 1987; Nel et al., 1989). Clearly, the ethical
implications of management theory should also be considered a critical component of
the business ethics field. In addition, the failure to properly attribute business ethics
concepts to their original source, quite often consisting of management theory itself,
also needs to be addressed.
Finally, both management and business ethics professors must recognize the
necessity to better integrate their disciplines or at least acknowledge the linkages
between them if they are to have a greater impact on managers. Although many
managers are now recognizing the importance of business ethics in terms of corporate
survival, many still reject its usefulness. Stark (1993) points out a number of concerns
over the field of business ethics: too general, too theoretical, and too impractical.
Although there generally appears to be greater acceptance and use of management
theory and business ethics by practitioners, there may still be reluctance on the part of
many to accept the theory as having any practical utility. A greater merging between
the disciplines of management theory and business ethics may provide a more
comprehensive body of literature, hopefully leading to a more robust theoretical
foundation for each field, and thereby help diminish potential criticism levied towards
the business ethics field. Understanding the historical roots of management theory and
its business ethics content is necessary in order for this to take place.

References
Barnard, C.I. (1938), The Functions of the Executive, Harvard University Press, Cambridge, MA.
Barnard, C.I. (1948), Organization and Management, Harvard University Press, Cambridge, MA.
Barnard, C.I. (1958), Elementary conditions of business morals, California Management
Review, Vol. 1 No. 1, pp. 1-13.
 Beversluis, E.H. (1987), Is there no such thing as business ethics?, Journal of Business Ethics, Business ethics
Vol. 6, pp. 81-8.
Bluedorn, A.C. (1986), Special book review section on the classics of management, The Academy
of Management Review, Vol. 11 No. 2, pp. 442-64.
Carroll, A.B. (1991), The pyramid of corporate social responsibility: toward the moral
management of organizational stakeholders, Business Horizons, Vol. 34 No. 4, pp. 39-48.
Clarkson, M.B.E. (1995), A stakeholder framework for analyzing and evaluating corporate social 53
performance, Academy of Management Review, Vol. 20 No. 1, pp. 92-117.
Davis, K. (1975), Five propositions for social responsibility, Business Horizons, Vol. 18 No. 3,
pp. 19-24.
Davis, K. and Blomstrom, R.L. (1975), Business and Society: Environment and Responsibility, 3rd
ed., McGraw-Hill Book Company, New York, NY.
De George, R.T. (1987), The status of business ethics: past and future, Journal of Business
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

Ethics, Vol. 6, pp. 201-11.

Drucker, P.F. (1946), Concept of the Corporation, The John Day Company, New York, NY.
Drucker, P.F. (1954), The Practice of Management, Harper & Row, Publishers, New York, NY.
Drucker, P.F. (1981), What is business ethics?, The Public Interest, Vol. 63, pp. 18-36.
Freeman, R.E. (1984), Strategic Management: A Stakeholder Approach, Pitman Publishing,
Boston, MA.
Galbraith, J.K. (1958), The Affluent Society, 4th ed., Houghton Mifflin Company, New York, NY.
Green, M.K. (1986), A Kantian evaluation of Taylorism in the workplace, Journal of Business
Ethics, Vol. 5 No. 2, pp. 165-9.
Hoffman, W.M. and Moore, J.M. (1982), What is business ethics? A reply to Peter Drucker,
Journal of Business Ethics, Vol. 1, pp. 293-300.
Kant, I. (1988), Kants Ethical Philosophy, Hackett Publishing Company, Indianapolis, IN.
Klein, S. (2000), Drucker as business moralist, Journal of Business Ethics, Vol. 28 No. 2,
pp. 121-8.
Levitt, T. (1958), The dangers of social responsibility, Harvard Business Review, Vol. 36 No. 5,
pp. 41-50.
Lewis, P. (1985), Defining business ethics: like nailing jell-o to a wall, Journal of Business
Ethics, Vol. 4, pp. 377-83.
Nel, K., Pitt, L. and Watson, R. (1989), Business ethics: defining the twilight zone, Journal of
Business Ethics, Vol. 8 No. 10, pp. 781-91.
Nelson, D. (1980), Taylor & Scientific Management, The University of Wisconsin Press, Madison.
Romar, E.J. (2004), Managerial harmony: the Confucian ethics of Peter F. Drucker, Journal of
Business Ethics, Vol. 51 No. 2, pp. 199-210.
Royle, T. (2005), Realism or idealism? Corporate social responsibility and the employee
stakeholder in the global fast-food industry, Business Ethics, Vol. 14 No. 1, p. 42.
Schwartz, M. (1998), Peter Drucker and the denial of business ethics, Journal of Business Ethics,
Vol. 17 No. 15, pp. 1685-92.
Stark, A. (1993), Whats the matter with business ethics?, Harvard Business Review, Vol. 71
No. 3, pp. 38-48.
Swanson, D.L. (2005), Business ethics education at bay: addressing a crisis of legitimacy,
Issues in Accounting Education, Vol. 20 No. 3, pp. 247-53.
 JMH Taylor, F.W. (1903), Shop Management, Harper & Brothers Publishers, New York, NY.
13,1 Taylor, F.W. (1911), The Principles of Scientific Management, Harper & Brothers Publishers,
New York, NY.
Taylor, F.W. (1912), Testimony before the Special House Committee, Harper & Brothers
Publishers, New York, NY.
Taylor, F.W. (1947), Scientific Management: Comprising Shop Management, the Principles of
54 Scientific Management, Testimony before the Special House Committee, Harper & Brothers
Publishers, New York, NY.
Tubbs, W. (1993), Karoushi: stress-death and the meaning of work, Journal of Business Ethics,
Vol. 12 No. 11, pp. 869-77.
Vasillopulos, C. (1988), Heroism, self-abnegation and the liberal organization, Journal of
Business Ethics, Vol. 7 No. 8, pp. 585-91.
Waring, S.P. (1991), Taylorism Transformed: Scientific Management Theory Since 1945,
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

The University of North Carolina Press, Chapel Hill.

Wren, D.A. (1972), The Evolution of Management Thought, The Ronald Press Company,
New York, NY.

Further reading
De George, R.T. (1986), Theological ethics and business ethics, Journal of Business Ethics,
Vol. 5, pp. 421-32.
Friedman, M. (1970), The social responsibility of business is to increase its profits, The New
York Times Magazine, September 13.
Macdonald, J.E. and Beck-Dudley, C.L. (1994), Are deontology and teleology mutually
exclusive?, Journal of Business Ethics, Vol. 13, pp. 615-23.
Solomon, R.C. (1992), Corporate roles, personal virtues: an Aristotelian approach to business
ethics, Business Ethics Quarterly, Vol. 2 No. 3, pp. 317-39.

Corresponding author
Mark Schwartz can be contacted at: schwartz@yorku.ca

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints
 This article has been cited by:

1. Madeline Crocitto. 2015. Learning from the past to envision the future: a five-year review 2005-2009.
Journal of Management History 21:4, 453-493. [Abstract] [Full Text] [PDF]
2. Logan M. Steele, Tristan McIntosh, Tyler J. Mulhearn, Logan L. Watts, Heather J. Anderson, Desiree
Hill, Li Lin, Samuel H. Matthews, Alisha M. Ness, M. Ronald Buckley. 2015. The reestablishment
of the Journal of Management History. Journal of Management History 21:4, 439-452. [Abstract] [Full
Text] [PDF]
3. Issam Kouatli. 2014. A comparative study of the evolution of vulnerabilities in IT systems and its relation
to the new concept of cloud computing. Journal of Management History 20:4, 409-433. [Abstract] [Full
Text] [PDF]
4. Mehdi Shami Zanjani, Hossein Dabbagh, Roshanak Rouzbehani. 2013. Success of Public Knowledge
Management in the Light of the Rossian Ethics. Information Resources Management Journal 24:10.4018/
irmj.20110401, 61-75. [CrossRef]
Downloaded by University of Arizona At 05:00 31 January 2016 (PT)

5. Derrick Chong. 2013. The relevance of management to society: Peter Drucker's oeuvre from the 1940s
and 1950s. Journal of Management History 19:1, 55-72. [Abstract] [Full Text] [PDF]
6. Susana Fernndez. 2010. Rediscovering Barnard: the functions of the leader?. Journal of Management
History 16:4, 468-488. [Abstract] [Full Text] [PDF]
7. Jawad Syed, Abbas J. Ali. 2010. Principles of employment relations in Islam: a normative view. Employee
Relations 32:5, 454-469. [Abstract] [Full Text] [PDF]
8. Jennifer D. Oyler, Mildred Golden Pryor. 2009. Workplace diversity in the United States: the perspective
of Peter Drucker. Journal of Management History 15:4, 420-451. [Abstract] [Full Text] [PDF]
9. Susan B. Malcolm, Nell Tabor Hartley. 2009. Peter F. Drucker: ethics scholar par excellence. Journal of
Management History 15:4, 375-387. [Abstract] [Full Text] [PDF]
10. CarolAnn Tetrault Sirsly. 2009. 75 years of lessons learned: chief executive officer values and corporate
social responsibility. Journal of Management History 15:1, 78-94. [Abstract] [Full Text] [PDF]
11. Mehdi Shami Zanjani, Hossein Dabbagh, Roshanak RouzbehaniSuccess of Public Knowledge
Management in the Light of the Rossian Ethics 124-137. [CrossRef]