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The relevance of management to society: Peter Drucker's oeuvre from the 1940s and 1950s
Derrick Chong,
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Derrick Chong, (2013) "The relevance of management to society: Peter Drucker's oeuvre from the 1940s and 1950s",
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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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.
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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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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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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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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Drucker, P.F. (1952), Management and the professional employee, Harvard Business Review,
May/June, pp. 84-90.
Drucker, P.F. (1955), Integration of people and planning, Harvard Business Review,
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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