By Dr. Hassan Shirvani—Much of the recent management research deals with the presumed growing business competition, the increasing roles of entrepreneurship and technological progress in economic growth, the deepening appreciation of corporate social responsibility, and the rising importance of globalization. As a matter of fact, however, there is considerable evidence that (1) businesses are becoming more concentrated and less competitive, (2) most recent tech startups seemingly contribute more to leisure than to productivity and growth, (3) unethical business conduct is still rampant, and (4) many businesses are operating in environments that are becoming more protectionist and less global.
Such contradictory evidence once again highlights the enduring chasms between perception and reality in management research and between the academically acceptable scholarship and the actual needs of business practitioners. Thus, while many academic scholars keep patting themselves on the backs for the high qualities of their research, many managers consider much of this research to be out of touch and irrelevant.
Role of Psychology
One important reason for the growing gap between management theory and practice seems to be the rising popularity of psychology in management research. This is partly evidenced by the large number of behavioral models now regularly appearing in many management books, journals, and conferences. Many of these models, however, are based on highly simplistic assumptions regarding managerial motivations and attitudes. As a result, the dramatic fluctuations in the fortunes of many businesses are now directly related to the psychological characteristics of their managers, employees, and even customers.
In the process, many of these models have gratuitously coined new terms and phrases for familiar concepts and theories. Thus, forward-looking, flexible, experienced, decisive, and gregarious managers are now routinely rebranded as anticipatory, feline, intuitive, alpha, and socially intelligent individuals. Likewise, managers lacking in these same qualities are dismissed as reactive, canine, rational, beta, and socially impotent. In a similar vein, unethical managers are no longer deemed to be the inevitable products of their materialistic and permissive professional surroundings, but rather the innocent victims of their own “congenital dishonesties.”
In addition, in their eagerness to produce original research, many management scholars have developed a multitude of theoretical models which are mostly belaboring the obvious. It is hard, for example, to find any management theory which sounds both true and not obvious. As a result, while much of management research is routinely presented as scientific, in reality it is no more than a motivational training exercise for managers and their employees. At the same time, by focusing too much on individual emotional and personal traits, researchers run the risk of neglecting the truly important outside factors affecting business performance, including the economic, institutional, political, and social environments in which many businesses operate. Of course, many management scholars do acknowledge the presence of these factors in principle, but they often have a hard time incorporating them in their models in practice.
Rigor versus Relevance
On the other hand, and in an attempt to give a scientific air to their published work, many management researchers are now making increasing use of highly rigorous quantitative and statistical techniques. While such an approach makes sense in finding optimal solutions to specific quantitative problems, it often fails to provide adequate theoretical and empirical justifications for essentially non-measurable behavioral issues. This situation is further exacerbated by the frequent application of regression analysis to document the empirical validities of the proposed models.
To the extent that many of these regressions are often performed without exercising due diligence as to the distributional properties of the underlying data (or the suitability of the causal or functional forms used for the estimated equations) many of the results may simply be spurious and, thus, unreliable. At any rate, and for what they are worth, many of these tests regularly tend to give passing grades to the theories they are supposed to objectively evaluate. This means that the indiscriminate application of statistical techniques to largely mis-specified equations may be more of a smokescreen than a genuine attempt at scientific discovery.
As the preceding indicates, while the field of academic management may have originally started as a serious study of business organizational structure and performance under different market and regulatory environments, at least some branches of it have now gradually degenerated into mere branches of applied psychology. In the process, instead of concentrating on such important management issues as deteriorating corporate governance standards, excessive business risk-taking and leverage, flawed managerial compensation arrangements, and dereliction of business stakeholder interests, a significant part of modern management theory has increasingly chosen to focus on the personal traits and emotional characteristics of business managers as the ultimate driving forces behind modern business developments.
Thus, having made significant inroads into economics, finance, law, and marketing, it seems that psychology has now turned its determined gaze upon the field of management. While, judging from the experiences of other academic fields, the application of psychology to management decision-making should be taken with a grain of salt, many management scholars seem to favor it, as it provides them with a new publication gold rush in this age of academic publish or perish. Therefore, to return to its former glory days, management research will need a major overhaul to render it more accessible, less quantitative, more practical, and, ultimately, more relevant. In the meantime, by engaging in largely irrelevant research, management academicians run the risk of gradually losing ground to the less academically qualified but more practical business consultants.
Hassan Shirvani, Ph.D.
Professor Cullen Foundation Chair in Economics