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Journal of Management History

The relevance of management to society: Peter Drucker's oeuvre from the 1940s and 1950s
Derrick Chong,
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Journal of Management History, Vol. 19 Issue: 1, pp.55-72, https://doi.org/10.1108/17511341311286196
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Relevance of
The relevance of management to management to
society: Peter Druckers oeuvre society
from the 1940s and 1950s
55
Derrick Chong
School of Management, Royal Holloway, University of London, Egham, UK
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Abstract
Purpose The purpose of this paper is to consider the continuing relevance to management
education of the writings of Peter Drucker (1909-2005) from the 1940s and 1950s, with particular
reference to The Practice of Management (1954).
Design/methodology/approach Druckers contribution to management writing from the 1940s
and 1950s is examined via a liberal humanist perspective, which is to suggest that he attempted to
develop an educated imagination in his readers.
Findings Drucker contributes to current discussions on the role of business in society and the
nature of capitalism. His insistence on the business corporation being a social institution and
management as a social system with multiple stakeholders.
Research limitations/implications The paper is limited to examining Druckers writings.
Future research can include why Drucker has won acclaim outside of the USA (with the rise of Drucker
Societies) and why he is absent from many undergraduate and postgraduate reading lists in
management education.
Practical implications The current crisis of capitalism would benefit from Druckers perspective
of the US model of capitalism from the middle of the twentieth century.
Originality/value Though well-known as a management thinker, Drucker is also marginalized by
many academics, and hence is outside the reading lists of many business and management students.
This paper seeks to reclaim territory for Drucker as part of current discussions on the future of
capitalism and the role of the business corporation.
Keywords Peter Drucker, Management education, 1940s and 1950s, Liberal humanism,
Capitalism and society, Philosophy, Education
Paper type Viewpoint

Introduction
No management thinker was as prolific or as profound as Peter Drucker, according to
a tribute a rare honor in the Harvard Business Review (Drucker, 2006, February,
p. 145). The HBR editors noted that Druckers insights were well suited to the business
journals format: practical, idea-based essays for executives based on clear-eyed,
humanistic writing. These sentiments resonant with Drucker (1909-2005) obituaries
published in leading Anglo-American newspapers. The Wall Street Journal called
Drucker the most influential management thinker of the past century, who
developed a loyal following among many of the worlds most-famous corporate
chieftains, and became the model of the modern management guru, a craft he plied far
more modestly than many of his successors (Thurm and Lublin, 2005). Drucker could Journal of Management History
Vol. 19 No. 1, 2013
always be relied upon to provide a helping hand through the latest trend in politics, pp. 55-72
society, economics, and especially business, according to the Financial Times, which q Emerald Group Publishing Limited
1751-1348
also noted the erudition and sense of perspective which underpinned his commentary DOI 10.1108/17511341311286196
JMH (London, 2005). The New York Times recognized that for all Druckers insights as a
19,1 pioneer in social and management theory, he clearly owed much of his impact to his
extraordinary energy and skills as a communicator (Feder, 2005).
The one hundredth anniversary of Druckers birth, in 2009, was marked by various
appreciations. With reference to his birthplace, the Peter Drucker Society of Austria
with the support of the European Foundation for Management Development (EFMD)
56 devoted a conference to Druckers legacy (as memory and celebration), which
included C.K. Prahalad, Charles Handy, and Philip Kotler, on how the spirit of Drucker
can help to address management challenges of the twenty-first century. A volume of
the Journal of Management History (Vol. 15 No. 4) was devoted to Drucker, with
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particular links to non-traditional management themes including philosophy


(Kurzynski, 2009; Malcolm and Hartley, 2009) and faith systems (Fernandez, 2009;
Linkletter and Macairiello, 2009). The Journal of the Academy of Marketing Science
(Darroch et al., 2009) devoted a volume to Drucker to acknowledge his impact to
marketing. Both the HBR and People & Strategy dedicated sections. Adi Ignatius (2009,
p. 14), as editor, noted Drucker as an iconic contributor to the HBR. Ed Gubman
(2009, p. 3), executive editor of People & Strategy, addressed management education:
Drucker was an optimist, humanist and artist at heart. At the core of his teaching is an
enlightened view of organizations and the idea that effective executives must treat
their employees in rational and considerate ways to accomplish business results.
Druckers contribution as a management pioneer can be approached from various
perspectives, as he balanced teaching posts with consultancy work throughout a long
period of engagement; moreover, he cannot be compartmentalized into one particular
management function. Oeuvre as the totality of works of an author, painter,
composer, etc is not a term used in any of the prominent tributes to Drucker.
Moreover, it does not appear as part of the Drucker Institute or the growing band of
Drucker Societies around the world. Yet oeuvre is highly appropriate if we consider
that Drucker proffered a case for the relevance of management to society. In particular,
Druckers (1943, 1946, 1954) writings from the 1940s and 1950s that is at the outset of
his career as a management thinker is examined such as The Future of Industrial
Man (1943), Concept of the Corporation (1946), The Practice of Management (1954), and
associated articles in the likes of the HBR and the Journal of Marketing. This body of
work, which helped to shape Druckers reputation as a serious management thinker,
deserves reassessment for several reasons. There is a certain irony in the fact that the
main body of Druckers work, although available to wider audiences, was generally
denied a place in the education of future managers because it did not match the
conventions of an increasingly dominant behavioral trope within North American
textbooks (McLaren et al., 2009, p. 399). Academic writing on business and
management what constitutes research has become increasingly specialized (such
as organized around discrete management functions) and specialist (aimed at
communicating peer-reviewed knowledge to solve empirical and theoretical puzzles).
On the other hand, tips, formulas, panaceas, and handy hints appear to drive the
proliferation of popular business books (see critique by the Financial Timess Lucy
Kellaway (2000)). Current debates on the future of capitalism not least of all the
so-called occupy movement advanced by Adbusters (2011)[1] would benefit from
Druckers emphasis on a socially responsible management.
A chief objective of this paper is to assert Drucker, who promoted the relevance of Relevance of
management to society in the 1940s and 1950s, as a public intellectual. His writing on management to
the role of business in society is central to current debates on the future of capitalism. A
liberal humanist perspective, to help shape the educated imagination, is adopted to society
advance the case for Drucker. This paper draws, in part, on experiences of designing
an introductory management course to MA/MSc students in the UK[2]. Excerpts from
The Practice of Management (Drucker, 1954), both an accessible and an original source, 57
served as an instructive point of entry for the new course. For example, The Practice of
Management was cited based on a poll of the Fellows Group of the Academy of
Management as the third most influential management book of the twentieth
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century (Bedeian and Wren, 2001, p. 222). By influential, we mean those books that
had a major impact on management thinking at the time of their publication; they
serve as heirs to an inherited intellectual legacy (Bedeian and Wren, 2001, p. 221).
The Practice of Management is a grand vision for management as a field, a vision that
we should cherish (Zahra, 2003, p. 22). It is refreshing to return to Druckers most
well-known publication to encounter central questions about management not least
of all relationships between business and society as they are perceived by a mature
and civilized mind. The historical development of management binds various
specialities that compose modern management, yet this is often not made explicit to
historical perspective can help to illuminate a contemporary situation.
This introduction proffers Drucker as being relevant to current debates on the role
of the business corporation. Drucker viewed management as a social system with the
business corporation having moral imperatives to address economic and social goals.
This invites a liberal humanist perspective, developed in the second section, to consider
Druckers contribution to management. Precursors to Drucker, including Mary Parker
Follett and Chester Barnard, developed in the third section, help to position him within
the field of management writing. Druckers oeuvre from the 1940s and 1950s is
examined in the fourth section, with reference to three key strands of thought: free
enterprise and entrepreneurial activity serve to counter tyranny and totalitarianism;
the business corporation is a representative social institution; and the responsibilities
of management include maintaining good stakeholder relationships. The weight of
Drucker is considered in the fifth section. As a complement the weakness of Drucker, in
the sixth section, focuses on the US model of capitalism he championed. The
concluding remarks in the final section posit the relevance of Drucker to current
discussions on the future of capitalism.

Drucker and liberal humanism in management education


It has been suggested, as part of centenary appreciations, that Drucker adopted a very
European approach, rooted in humanities-based general education and an open mind
(Straub, 2009, p. 4). In thinking of Druckers mission as a management thinker
arguably one of the few from management education who can claim to be a public
intellectual we are reminded of the CBC Massey Lecture delivered by English
professor Northrop Frye (1963, pp. 65 and 66):
No one can enter a profession unless he makes at least a gesture recognizing the ideal
existence of a world beyond his own interests: a world of health for the doctor, of justice for
the lawyer, of peace for the social worker, a redeemed world for the clergyman, and so on.
JMH My subject is the educated imagination, and education is something that affects the whole
person, not bits and pieces of him. It doesnt just train the mind: its a social and moral
19,1 development too.
Frye believed that literature might encompass the human condition; indeed that
literature might be a force for good. Drucker has also pursued such an educated
imagination. For example, The Legitimacy of Management is the title of Druckers
58 conclusion in Management:
What managers need to be accepted as legitimate authority is a principle of morality. They
need to ground their authority in a moral commitment which, at the same time, expresses the
purpose and character of organizations.
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It is the purpose of organization and, therefore, the grounds of management authority: to


make human strength productive. Organization is the means through which man, as an
individual and as a member of the community, finds both contribution and achievement
(Drucker, 1973, pp. 809 and 810; emphasis in the original).
Frye (1963, pp. 59 and 59) ended his lecture series using language and adopting a
perspective that could have come from Drucker by reminding us that individual
choices have moral ramifications as they help to shape the society we inhabit:
The end of the process is not to reject all advertising, but to develop our own vision of what
we want of whats offered to us and let the rest go. What we choose is what fits that vision of
society.
The principle holds not only for advertising but for most aspects of social life.
An affinity between an avowed liberal humanist like Frye and Drucker is not unusual.
Both shared a sensitive preoccupation with the whole quality of life, namely the human
experience. Liberal humanism believes in the transformative, self-determining human
agent (see, for example, a dialogue between Taylor and Gray (2006) in the New
Humanist). This includes a narrative of progress and the notion of stages of
development. There is a commitment to the human being, whose essence is freedom
and cumulative development in human well-being.
There is a case that the quality and performance of managers, crucial to the success
of organization, may be linked to having an educated imagination. Hannah Arendts
(1982) Lectures on Kants Political Philosophy, namely her interpretation of Kants
world citizen, has been cited in relation to Drucker (Malcolm and Hartley, 2009). The
imagination is the faculty which allows us to put ourselves in the place of another,
according to Arendt (1982, p. 42): To think with an enlarged mentality means that one
trains ones imagination to go visiting. But to be able to visit that is to be at home in
the world, as Kants world citizen requires the ability to move outside of the
singularity of ones conscious experience and develop an empathy with others.
Harvard Business Schools Clayton Christensen (2010) asks, How will you measure
your life? Focus on individual people you touch is Christensens (2010, p. 51)
guidance to his MBA students.
Does Druckers contention of the business corporation as a social institution with
moral imperatives help to counter a claim that liberal humanism has a contradictory
relation to modern capitalism? There is a charge that obsessed individual choice,
through products offered by consumer culture, has consequences. The danger of losing
compassion for fellow human beings is one. In Liberal Arts as Training for Business, Relevance of
a mid-1950s contribution in the HBR (Pamp, 1955), the presence of Drucker looms
large. Attention is drawn to Druckers emphasis that management decision-making
management to
requires judgment and a deliberate choice between values. As such the experience and society
criticism of the arts are direct preparation: Men who must deal with situations above
all in terms of values must be prepared by being exposed to those disciplines which
admit that they are the stuff of all human life (Pamp, 1955, p. 48)[3]. Indeed, according 59
to the president of the Peter Drucker Society of Austria, [Drucker] saw management in
its many dimensions and facets (and in particular its fundamental social role) as a
Liberal Art (Straub, 2009, p. 5).
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Precursors to Drucker in management education


Precursors to Drucker in management education are instructive to help situate him.
Key writers in the formative years of management as a discipline were active between
1900 and 1940 (Bluedorn, 1986). Fredrick Taylor (1865-1915) and Henri Fayol
(1841-1925) loom large if only because they continue to be cited in management
textbooks. Taylor, who promoted so-called principles of scientific management, based
on his time and motion studies to determine optimal work methods, remains a point of
origin. Fayol is best known for his rationalistic theory of the organization (namely the
basic managerial functions of planning, organizing, coordinating, commanding, and
controlling); at the same time, Henry Mintzbergs (1973) critique of it, in The Nature of
Managerial Work, has accentuated Fayols prominence. However, Mary Parker Follett
(1868-1933) and Chester Barnard (1886-1961) deserve a fuller examination.
Both raised issues in management further advanced by Drucker, yet are little read.
Follett (Metcalf and Urwick, 1941, p. 22) was a political and social philosopher who
examined business management as a significant part of the wider field of human
government, thus not only of significance to those interested in competitive,
profit-making enterprises. For Follett, the individual and human relationships formed
the bedrock foundation of business organization and business organization as simply
a part of the whole human organization which makes up society (Metcalf and Urwick,
1941, p. 21). Follett produced no books during a relatively short period of writing
between 1924 and 1933, so we rely on the posthumous collected papers by Metcalf
and Urwick (1941). In Why I am studying business management from the
Rowntree Lecture Conference at Oxford in 1926 (Metcalf and Urwick, 1941, p. 17)
Follett adopted evocative language to make her case:
I like to do my thinking where it is most alive;
Industry is the most important field of human activity, and management is the
fundamental element in industry;
Business has a definite and vital contribution towards the building of the new social order
which is the legitimate preoccupation of every thinker.
Folletts attention to business as making a vital contribution to society is one that
resonates with Drucker; moreover, a description of Follett as a truly creative, intensely
vital mind with a desire to write in a simple, straightforward and easily
understandable manner (Metcalf and Urwick, 1941, p. 9 and foreword) are qualities
attributed to Drucker. Barnards (1968, original 1938, preface) The Functions of the
Executive, which drew on his senior management experience at AT&T and Bell, is a
revision and expansion of a manuscript prepared for a series of eight lectures at the
JMH Lowell Institute in Boston in November and December 1937, under the same title.
19,1 (Kenneth Andrews wrote an introduction to the thirtieth anniversary edition, however,
The Functions of the Executive is no longer in print.) Barnard proffered a
comprehensive theory of cooperative behavior in formal organizations an exposition
of a theory of cooperation and organization is followed by a study of the functions and
methods of executives in formal organizations such that the business organization is
60 viewed as a social system. There is a need to be effective in the sense of achieving
organizational purpose; at the same time, to be efficient is about satisfying individual
motives. The executive functions are to provide a system of communications, to
maintain the willingness to cooperate, and to ensure the continuing integrity of
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organizational purpose, according to Barnard, essentially to create and maintain a


system of cooperative effort.

Druckers oeuvre from the 1940s and 1950s


Three key strands of thought against tyranny, the business corporation as a social
institution, and stakeholder relationships can be discerned from reading Druckers
key texts from the 1940s and 1950s. It is instructive to bear in mind the assessment of
Alan Kantrow (2009, p. 80), first aired in 1980: Drucker is so deeply concerned about
the profession of management because he is profoundly afraid of what might happen if
the major institutions of western society fail in their responsibilities. First,
particularly as presented in The Future of Industrial Man (Drucker, 1943), there is an
ideological position that free enterprise and entrepreneurial activity serve to counter
tyranny and totalitarianism. Druckers social and political thought was shaped in part
from his experience in Austria and Germany, namely the rise of totalitarianism in
Europe (Schwartz, 2001, 2002; Straub, 2009). This included acquaintances with
Austrian economists Joseph Schumpeter (1883-1950) and Friedrich Hayek (1899-1992):
Schumpeters theory of capitalism valued private initiatives, where the enterprising
manager is both the justification and motivating power of the system; Hayek posited
the virtue of the free market in opposition to government control of the economy.
Second, Druckers enduring perspective, that the business corporation is a
representative social institution, is first advanced in Concept of the Corporation
(Drucker, 1946), which also represents his first engagement (of many to come) as a
consultant to help an external stakeholder solve a problem. Third, maintaining good
stakeholder relationships are developed in The Practice of Management (Drucker,
1954) as part of the responsibilities of management.

Against tyranny
The Future of Industrial Man, written and published during the Second World War, as
a companion to The End of Economic Man, is a cogent reminder of how Druckers
interest in the intersections of economics, politics, and society first emerged:
This war is being fought for the structure of industrial society its basic principles, its
purposes, and its institutions. It has one issue, only one: the social and political order of the
entirely new physical reality which Western man has created as his habitat since James Watt
invented the steam engine almost two hundred years ago.
Nothing shows this more clearly than the fact that this is the first war really to be fought as
an industrial war as a war in which industry is not an auxiliary but the main fighting force
itself (Drucker, 1943, p. 1).
Druckers (1943, p. 204) consistent belief in a free enterprise system and entrepreneurial Relevance of
activity is evident in the final chapter, A Conservative Approach, that also serves as management to
the books subtitle:
society
We need new political organs to manage consumption and production. But there is no reason
why these new political tasks must necessarily be carried out through centralized,
bureaucratic government agencies.
61
There is a continuity of thought over decades. The Alternative to Tyranny the
preface of Druckers 1973 tome is answered by the books title, Management.
Tyranny lurks:
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Tyranny is the only alternative to strong, performing autonomous institutions. Tyranny


substitutes one absolute boss for the pluralism of competing institutions. It substitutes terror
for responsibility. It does indeed do away with the institutions, but only by submerging all of
them in the one all-embracing bureaucracy of the apparat.
However, Drucker (1973, p. x) offers a tangible solution in managers and management
that make institutions perform and performing, responsible management is the
alternative to tyranny and our only protection against it. There is an ideological
stance that as more people acquire the knowledge of responsible management under
liberal democracy, the lives of these people would improve.

Business corporation as social institution


Being embedded in the business corporation, as a consultant to help solve a
management problem, is a working method first used by Drucker in Concept of the
Corporation. It is based on a detailed examination of General Motors, in close contact
with president and chairman Alfred Sloan. However, Drucker (1946, p. 12) did not offer
what we would, now, consider a conventional business case analysis: The questions
we shall deal with in this book are traditional questions of politics and political
analysis. What is new in this book is their application to the large corporation. Thus,
at the outset, Drucker (1946, pp. 3-4) advanced the case for the business corporation,
according to free enterprise tenets operating in the US: the productive resources of the
country are to be owned privately; profit as motivating and controlling business
actions; the consumer decides what he wants to buy, and that prices are based on
supply and demand in the market rather than politically determined; and
privately-owned, independently-managed corporations produce for-profit goods to
be sold on competitive markets.
At the same time, Drucker was cognizant that corporate management must learn to
balance social needs, else face robust government intervention via business legislation
or regulation. Any social and political analysis of an institution has to proceed on
three levels, according to Drucker (1946, pp. 13 and 15), which are equal in weight
and importance. The corporation as an autonomous institution represents the first
level of analysis: it includes issues of leadership and objective yardsticks by which to
measure the success of the corporations policies and of its leaders. The second level of
analysis perhaps the most difficult and most important (Drucker, 1946, p. 14)
addresses the corporation as a representative institution of US society which must hold
out the promise of adequately fulfilling the aspirations and beliefs of the American
people. The stakes are high: A conflict between the requirements of corporate life and
the basic beliefs and promises of American society would ultimately destroy the
JMH allegiance to our form of government and society (Drucker, 1946, p. 14). The
19,1 relationship between corporate purpose and social function is the focus of the third
level: The central problem lies in the relationship between profit, which is the purpose
of the corporation as an autonomous unit, and the maximum production of cheap
goods, which is the purpose of the corporation from the point of view of society
(Drucker, 1946, pp. 14-15).
62 Can the self-interest of the corporation be harmonized with the interests of society?
In an industrial society in which the large corporation is the representative social
institution, it is equally important and equally essentially that the corporation be
organized in a way as to be able itself to function and to survive as an institution, as to
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enable society to realize its basic promises and beliefs, and as to enable society to
function and to survive (Drucker, 1946, p. 15; emphasis in the original). In The Practice
of Management, which draws on the cases of Sears, Ford, and IBM, themes of
management as a social system and the business corporation as a social institution are
presented in a developed form. Consider the conclusion chapter, Responsibilities of
Management: Modern industry requires the business enterprise, which is something
quite different and quite new; by this Drucker (1954, p. 382) means concentrations of
power that imposes upon the business and its managers a responsibility which goes
far beyond any traditional responsibility of private property but is altogether
different. A high moral hurdle was set for corporate managers:
It requires of the manager that he assume responsibility for the public good, and 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 (Drucker, 1954, pp. 382-383).
Drucker (1954, p. 3) opened The Practice of Management with brio, highlighting the
social role of the manager:
The manager is the dynamic, life-giving element in every business. Without his leadership
the resources of production remain resources and never become production. In a
competitive economy, above all, the quality and performance of the managers determine the
success of a business; indeed they determine its survival. For the quality and performance of
its managers is the only effective advantage an enterprise in a competitive economy can have.
The emergence of management as an essential, a distinct and a leading institution is a
pivotal event in social history.
This helps to account for a characterization that Drucker helped to make the corporate
manager the cultural hero of the twentieth century (Beatty, 1998).

Stakeholder relationships
Shareholder value re-evaluated was a recent editorial comment in the Financial
Times (2009) as part of series on the future of capitalism. It was acknowledged that
good business results often require long-term relationships based on trust between
managers, employees, customers and suppliers. This is to suggest that if the business
corporation is to survive it needs to put the shareholder in context. For example,
Drucker stressed the importance of relationships with various stakeholders including
customers and employees, more than five decades earlier, in The Practice of
Management; at the same time, he addressed topics like profit and innovation that
continue to be pressing. Such range was the result of focusing on basic but instructive
questions. In responding to his question what is a business? Drucker (1954, pp. 34 Relevance of
and 35) emphasized two key points: a business enterprise is created and managed by management to
people; and a business cannot be defined or explained in terms of profit. Profit was
contextualized as not the explanation, cause or rationale of business behavior and society
business decisions, but the test of their validity, which is to say, it is the result the
result of the performance of the business in marketing, innovation and productivity. It
is at the same time the test of this performance [. . .] (Drucker, 1954, pp. 35 and 46). 63
In developing his thesis on business purpose, Drucker (1954, p. 37; emphasis in the
original) secured a place in the annals of marketing:
There is only one valid definition of business purpose: to create a customer.
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It is the customer who determines what a business is.


The customer is the foundation of a business and keeps it in existence.
Such sentiments have become naturalized. Fredrick Webster (2009, p. 20) described
Drucker as the first [to] offer a distinct view of marketing as a central management
discipline. The customer was core to answering the title of Chapter 6, What is Our
Business And What Should it Be? which led to supplemental questions associated
with market segmentation and target marketing. Who is the customer (actual and
potential)? What is value to the customer? What will our business be? Are we in the
right business or should we change our business? Webster (2009, p. 23) acknowledged
that Drucker understood the role of marketing as dominated by customer-orientation
and innovation, that is the fundamental notion of customer value, a very old idea
which has recently gained new prominence in marketing theory. On the other hand,
there is a case that consumerism has led to the overuse of marketing (Yani-de-Soriano
and Slater, 2009).
Fashionable rhetoric about the employee as an organizations most valuable asset
would benefit from Drucker (1954, p. 263), who offers a corrective:
But we must also consider man at work as a human being. We must, in other words, also put
the emphasis on human. This approach focuses on man as a moral and a social creature, and
asks how work should be organized to fit his qualities as a person. As a resource, man can be
utilized. A person, however, can only utilize himself. This is the great and ultimate distinction.
There is also earlier recognition of the so-called knowledge worker, as someone who
can withhold part of his or her labor capabilities:
Man is distinguished from all other resources in that his development is not something that
is done to him; it is not another or better way of using his properties. It is growth; and growth
is always from within. The work therefore must encourage the growth of the individual and
must direct it otherwise it fails to take full advantage of the specific properties of the human
resource. This means that the job must always challenge the worker (Drucker, 1954, p. 266).

The weight of Drucker in management education


Druckers oeuvre from the 1940s and 1950s remains significant. It recommends
Drucker as vital to current discussions on the relevance of management in society.
Weight as importance, convincing effort, or influence is a good term in relation to
Druckers contribution. Six complementary points are posited that require us to reflect
on the role of the business corporation in society.
JMH Liberty, as the freedom of individuals to make choices, is important to Drucker, and
19,1 unites the three strands against tyranny, the business corporation as a social
institution, and stakeholder relations of his oeuvre. In the first instance, these
individuals are citizens who make choices by casting votes in democratically held
elections. Citizens are also free to lead private lives. In terms of commercial exchanges,
citizens-individuals can have dual roles as both consumers and employees.
64 Competition amongst autonomous institutions is key to help manage consumption
and production in a free-market economy. Consumers make choices amongst
competing firms offering goods and services. Inter-firm rivalry for the hearts and
minds of consumers is fundamental to an appreciation of marketing. At the same time,
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employees enter into voluntary contractual relations with business corporations as


paid labor, not through some mystical and indissoluble bond (Drucker, 1954, p. 387).
Freedom remains, as used by Drucker, important to protect and develop the common
good and the well-being of society.
Druckers view of management as a practice, and managers as dynamic, life-giving
element in every organization deserves attention. Managers need to make a productive
enterprise out of human and material resources, which includes managing workers and
the organization of work. It recognizes that the quality of management and the
integrity of managers are instrumental to the success of organizations. One is drawn to
Henry Mintzbergs (2004) Managers Not MBAs: engaged management is posited to
offset both calculating and heroic management (two prominent and dysfunctional
styles). This recognizes that the practice of management is characterized by ambiguity
so that, according to Mintzberg (2004, p. 10), There is no one best way to manage; it
all depends on the situation. By engaged management Mintzberg (2004, p. 274) means
closest to craft, engaging managers connect on the floor; they are less inclined to deem
from detached offices. The spirit of reflection, according to Mintzberg (2004), helps to
develop an engaged manager. Drucker (1954, p. 161) recognized that development is
always self-development, yet he added that every manager in a business has the
opportunity to encourage individual self-determination which includes helping to
focus, direct and apply [the] self-development efforts [of subordinates] productively.
The moral aspect of the business corporation is central to understanding Drucker,
according to Kurzynski (2009). Fernandez (2009, p. 416) adds that for Drucker social
responsibility requires people to acknowledge their moral dimension. Schwartz (1998,
p. 1685) notes, All of Druckers books display his deep preoccupation with morality,
as part of a quest for a new socio-economic reality. What is necessary to produce the
proper spirit in management must therefore be morality. It can only be emphasis on
strength, stress on integrity, and high standards of justice and conduct, according to
Drucker (1954, p. 126). It is a moral duty on Druckers part to act as if the business
corporation could, in the aftermath of the Second World War, help to generate peace
and prosperity (see Kantrow, 2009). A key to a healthy society may be effectively
managed, ethically led organizations. This is a point echoed by Rosabeth Moss Kanter
(2009, pp. 69-70) who, writing in the HBR, invokes Druckers spirit: To restore trust in
business, he would call on managers to become self-regulating rather than stand by
and risk over-regulation.
In the Practice of Management, Drucker indicated the importance of leadership and
yardsticks to measure the success of the corporations policies and of its leaders. For
example, in Chapter 13, The Spirit of the Organization, Drucker emphasized the
critical role senior managers play in giving the organization its character and defining Relevance of
its culture. Organizations are only as good and moral as their leaders as management to
decision-making requires a choice between values. Ethical insights are required.
Organizational leaders need to carefully reflect upon the ethical values that they owe society
their employees and create organizational systems that empower all employees, that
invest in employees as valued assets, and that treat employees with dignity and
respect, according to Caldwell (2011, p. 352), who adds that transformational leaders 65
build trust and create sustainability in building a moral community. Barclays chief
executive Bob Diamond (2011), partly in response to the Occupy London movement,
talks of rebuilding trust by using the lessons learned from the banking crisis to
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become better and more reflective citizens.


For Drucker (1954, p. 381) moral-practice reasons demand that the business
corporation is a social entity: But society is not just the environment of the enterprise.
Even the most private of private enterprises is an organ of society and serves a social
function. Politics and morality coincide. Thomas Sattelberger (2009, p. 7), board
member of Deutsche Telekom, identifies the value of Drucker to senior managers:
society and community served as the starting point for Drucker, so attention is devoted
to a common and core question, namely what is managements effect on the common
good? Treating the business corporation as a social entity with multiple goals
enabled Drucker to explore the role of business in society. What is the relationship
between corporate purpose say profit as an economic metric of value to shareholders
and the social function that requires a consideration of public interest discussions.
Striking the correct balance is a pressing concern. For example, according to Porter and
Kramer (2011, p. 64): Companies are widely perceived to be prospering at the expense
of the broader community. Porter and Kramers (2011, p. 75) term shared value is
promoted by the editors of the HBR as a so-called big idea that extends beyond
corporate social responsibility:
Not all profit is equal an idea that has been lost in the narrow, short-term focus of financial
markets and in much management thinking. Profits involving a social purpose represent a
higher form of capitalism one that will enable society to advance more rapidly while
allowing companies to grow even more.
In a not dissimilar tenor, OToole and Vogel (2011, p. 73) assess conscious capitalism in
the California Management Review, noting that the singular fresh contribution [of
conscious capitalism] is its philosophical squaring of free-market principles with
progressive business practices by stressing the profit-making potential of responsible,
ethical, and sustainable corporate behavior.
Druckers craft of lucid writing with practical relevance needs to be recognized.
Insight is nothing without clear language and easily understandable presentation
(Sattelberger, 2009, p. 7). John Kay (2002), writing in the Financial Times, characterized
Drucker as one of the few business writers who aim high that is to say writes well
and for grown-ups. Drucker is a link to management writers such as Henry Mintzberg
and Michael Porter. This also acknowledges that management consultancy, as a
working method, can influence writing and teaching. Drucker is suggestive of the
benefits from wider dissemination, as opposed to addressing fellow business school
faculty. The Practice of Management and Concept of the Corporation serve students as
opportunities to read beyond a conventional management textbook.
JMH The US model of capitalism and the weakness of Drucker
The historical and ideological locations of Druckers thinking and writings on
19,1 management and business corporations bear comment. Druckers social and political
thought was formed in Austria and German (Schwartz, 2001, 2002), yet his experience
in the US, his adopted home, was significant. In particular two systems, liberal
democracy (political system) and managerial capitalism (business system), operating
66 in tandem were championed at a time when American Exceptionalism could be cited.
There is a particular ideological message, grounded in the US model of capitalism that
economic development leads to liberal democracy and westernization. This is a strong
and valid claim of progress in both living standards and degree of personal freedom
enjoyed by the majority of the human race. (It is similar to Milton Friedman (1962) in
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Capitalism and Freedom.) As a footnote in Concept of the Corporation, Drucker (1946,


p. 4) recognized the powers and duty of corporate management by drawing reference to
The Modern Corporation and Private Property by Adolf Berle and Gardiner Means,
which appeared in 1932. Berle and Means (1932) articulated a convincing thesis: the
rise of managerial capitalism as opposed to private capitalism of owner-operated
business articulated by Adam Smith was marked by the separation of financial
ownership and management control[4]. By way of context, Charles Wilson, president of
General Motors, was elected by President Eisenhower to become US secretary of
defense in 1953. Wilson responded to a question of how he would deal with a potential
conflict, as secretary of defense, between the interests of the US that would be adverse
to the interests of GM: I cannot conceive of one because for years I thought what was
good for our country was good for General Motors, and vice versa. Our company is too
big. It goes with the welfare of the country (see Reich, 2009; NNDB, 2011). It
represented a time when the fortune of GM was inextricably linked to that of the US.
There is a case that Druckers management pedagogy was influenced by his
political philosophy (Schwartz, 2001, 2004). Drucker championed the US model of
capitalism following the end of the Second World War. This is considered a weakness,
namely suggesting a singular best way perspective based on the American experience.
China at the outset of the twenty-first century is a practical example of how this is
exposed: one-party rule by the Communist Party of China namely a form of
state-controlled capitalism poses a direct challenge to the US model of capitalism[5].
Is liberal democracy, a political system that guarantees freedom of choice, the best way
to manage consumption and production? A mistake of liberal humanists, namely a
belief in the cumulative developmental nature of science, is paralleled by a cumulative
development in human well-being (including ethical behavior). History is cyclical not
progressive; reversible not linear.
Issues of sustainability are also absent in Drucker, who emphasized economic
development as both good and continuous. For example, writing in the late 1950s, as an
elaboration to his contribution to the HBR roundtable discussion on the US model of
capitalism (Hoffman, 1951, 1952), Drucker (1958, p. 253) promoted a straightforward
link between marketing and economic development:
It is in marketing, as we now understand it, that we satisfy individual and social values,
needs, and wants be it through producing goods, supplying services, fostering innovation,
or creating satisfaction. Marketing, as we have come to understand it, has its focus on the
customer, that is, on the individual making decisions within a social structure and within a
personal and social value system. Marketing is thus the process through which economy is
integrated into society to serve human needs.
Its development, above all others, makes possible economic integration and the fullest Relevance of
utilization of whatever assets and productive capacity an economy already possesses. It
mobilizes latent economic energy. management to
However, the relationship between marketing and economic development is now
society
considered more complex and contested. What about other relationships, such as
between human progress and human dignity? Is consumption a means of happiness
and well-being? There is a case that over-consumption has materialized: this includes 67
health problems associated with rising levels of obesity, waste and pollution from
production processes, and reliance on a carbon-based economy. In this regard the very
notion of progress and development, as advocated by Drucker, would appear to
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contradict the notion of human dignity. In addition, an emphasis on the maximum


production of cheap goods (Drucker, 1954, p. 15) excludes what is now considered
ethical consumption.
As a final weakness, Drucker idealized the business corporation as the
representative institution of US society with the promise of adequately fulfilling the
aspirations and beliefs of the American people. This was the case with GM in Concept
of the Corporation. In The Practice of Management a quality-of-life is envisioned for
employees:
As a human being and citizen, the worker, especially in a free market society, also imposes
limitations on the business enterprise. The enterprise hires the whole man, but it has no right
to take delivery of the whole man. Serving only partial needs to society, it must never control
more than a part of societys members, its citizens. Business enterprise must not become the
welfare corporation and attempt to embrace all phases of the individual life. It must, both in
its demands and in the satisfactions it offers, confine itself to its proper space as one, though a
basic, organ of society. A claim for absolute allegiance of the worker is as impermissible as a
promise of absolute responsibility for him (Drucker, 1954, p. 270).
Yet the idea and sense of a plant community never materialized (Schwartz, 1998, 2004,
2007; Kurzynski, 2009). The impact of globalization can be cited. First, restructuring, a
contested term used to capture a large number of processes reshaping of work and
organizations, is a theme in DiMaggios (2001) The Twenty-First Century Firm. The
causes of restructuring include technological advances whereby workers are replaced,
as opposed to increasing their productivity by enlarging their skills base. In theory,
restructuring is aimed at carving away layers of corporate fat, jettisoning
under-performing business units, and raising asset productivity. Yet there appears
to be a predictable sameness to restructuring as it is applied: Masquerading under
names like refocusing, delayering, decluttering and right-sizing (one is tempted to ask
why the right size is always smaller), restructuring always has the same result: fewer
employees, according to Hamel and Prahalad (1994, p. 6). Second, the notion of the
career as binding phases of a working life to shape a coherent narrative is fading
from view. Changes shaping organizations include job or work intensification, not
necessarily the language of participation. Some employees will have grown
accustomed to job structures heavy with unskilled positions, antiquated job titles,
and an acceptance of high absenteeism. Third, the strains and stresses of emotional
labor, as addressed by Hancock and Tyler (2004), focus on the subjective impact of
managerialism on human relations. Drawing on Parkers (2002) Against Management,
Hancock and Tyler (2004, pp. 625 and 630) bear witness to the managerial
colonization of everyday life such that there is an emphasis on performative
JMH reflexivity by employees. This means that the key to successful organizational
19,1 management is itself the rational and systematic management of all aspects of ones
own everyday, if professional life (Hancock and Tyler, 2004, p. 631).

Concluding remarks
Of course much has changed since Drucker wrote Concept of the Corporation and The
68 Practice of Management, with his focus on the US model of capitalism at the end of the
Second World War. Yet Drucker retains value, including the role of the business
corporation in society, to guide and inspire managers and management students, both
ethically and intellectually. In (re)reading Druckers oeuvre from the 1940s and 1950s
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one senses that he was trying to respond to how a good life is to be lived in a rapidly
changing modern world, concerns that are also of interest to liberal humanists.
Druckers liberal humanist perspective at least as presented in this paper is an
attempt to reclaim him as a public intellectual. Management affects people and their
lives. What is the role of the business corporation? Who controls the business
corporation and for what purpose? These questions, of wide public concern at present,
would benefit from the perspective of Drucker.
He helped us all think broadly and deeply was the concluding statement by the
HBR editors in the 2006 tribute to Drucker. Indeed, the focus on so-called presentism
and the acquisition of technical skills in management education has been criticized,
particularly if it comes at the expense of instructing newcomers about the field and its
practice as it expounds upon and explicates our development and presents our guiding
tenets and beliefs (Smith, 2007, p. 527). Newness in management new firms, new
chief executives, new techniques, and new theories often diminishes the role of
historical context, literature sources, and wider socio-political considerations relevant
to appreciating contemporary issues in management. Drucker was advocating a
socially responsible business corporation before the Principles for Responsible
Management Education (PRME) inspired by the internationally accepted values
such as the principles of the United Nations Global Compact was established in
2007 and then adopted at leading universities where business and management is
taught (United Nations, 2010). PRME is about inspiring and championing responsible
management education, research, and though leadership globally. It may be, as
Drucker would put it, renewing the legitimacy of management.

Notes
1. Adbusters is a Canadian-based consumer advocacy group that seeks to reclaim our mental
and physical environments through culture jamming (includes the use of technology to
communicate and organize). Occupy Wall Street (OWS) a campaign initiated by
Adbusters with the strapline We are the 99% has spawned other occupy movements
globally, including the protest outside of St Pauls Cathedral in London. A system perceived
to be unfair to the 99% of the population is contested and challenged including condition
behind unsustainable inequality and unfairness. The so-called spectacle nature of the occupy
movement draws on Guy Debord (1931-1994), namely the Dada and Surrealist inspired
Situationist International movement and Society of the Spectacle (Debord, 2002, (originally
published in 1967). The Guy Fawkes masks, as worn by some protestors, are a cultural
reference to the main character in V for Vendetta, both a movie and comic book. (In many
respects, Guy Fawkes of the Gunpowder Plot of 1605 to blow-up the Houses of Parliament is
absent.)
2. Some parameters for the new course: students on the course are following a so-called Relevance of
conversion pathway so did not study management as part of their undergraduate degree; the
course is suitable to students on a variety of management programmes (covering functional management to
areas such as MA Marketing, MSc Business Information Systems, MSc International society
Accounting, and MSc International Human Resource Management and regions such as MA
Asia Pacific Business and MA European Business); the course is one term (ten weeks) in
length; a mandate not to organize the course around management functions; a desire to
address the complexity associated with decisions made by business corporations including 69
the role of vested interests and how stakeholder groups (share/stockholders, employees,
customers, suppliers, and the community at large) may be in conflict; and no single text was
deemed suitable to support the breath of the coverage. For a copy of the course syllabus,
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please contact the author.


3. A half-century later, the HBR asked literary critic Harold Bloom to offer a reading list for Bill
Gates (Coutu, 2001). Of course, Bloom starts with Shakespeare, however, he makes his stance
clear: I disagree that the study of literature will make businesspeople more moral [. . .] I am
very unhappy with any attempt to put the humanities, and literature in particular, in the
service of social change (in Coutu, 2001, p. 65) Bloom blanches at instrumentalism, yet there
has been a growth in management development of looking at how business can learn from
the arts. For example, Charles Handy (1996, 1997) likened as the British Drucker and a
champion of the UK advocacy body Arts & Business seeks to nurture spiritual wholeness
in a hostile world by exploring the transformative powers attributed to art, and what it
means to be a better person as the result of art. This desire to nurture spiritual wholeness in a
hostile world has invited an attack by Gibson Burrell (1997, p. 27): Handy pocket theory
with all its superficiality, ease of travel, liberal humanistic stance, technobabble language
and fundamentally conservative political leaning . . . [and] all that consultancy-speak.
4. The writings of business historian Alfred Chandler in the 1960s and 1970s would chronicle
the rise of managerial capitalism in the US, starting from the 1850s.
5. China is a leading country with sovereign wealth funds, that is a state-owned investment
fund composed of financial assets such as stock, bonds, real estate, or other financial
instruments often based in foreign countries that is funded by foreign currency reserves,
but managed separately from official currency reserves. It is a way to manage government
wealth in order to generate a profit (though some have raised concerns that political power is
what is being bought when investing in foreign companies).

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Further reading
Bedeian, A.G. (2004), The gift of professional maturity, Academy of Management Learning and
Education, Vol. 2 No. 1, pp. 92-8.
Drucker, P.F. (1939), The End of Economic Man: The Origins of Totalitarianism, Heinemann,
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May/June, pp. 84-90.
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November/December, pp. 35-40.
Drucker, P.F. (1959), Thinking ahead, Harvard Business Review, January/February, pp. 25-26,
28, 30, 146, 148, 152.
Drucker, P.F. (1990), Managing the Non-Profit Organization, Butterworth-Heinemann, London.
Duncan, W.J. (2004), A case for great books in management education, Academy of
Management Learning & Education, Vol. 2 No. 4, pp. 421-8.
Jacobs, D. (2007), Critical biography and management education, Academy of Management
Learning & Education, Vol. 6 No. 1, pp. 104-8.
Mandansky, A. (2008), Teaching history in business schools: an outsiders view, Academy of
Management Learning & Education, Vol. 7 No. 4, pp. 553-62.

Corresponding author
Derrick Chong can be contacted at: d.chong@rhul.ac.uk

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1. Madeline Crocitto Business Administration, State University of New York, Old Westbury, New York,
USA . 2015. Learning from the past to envision the future: a five-year review 2005-2009. Journal of
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