Leicht and Lyman forthcoming). Indeed, one can see this development placing professionalized managers on par with physicians and lawyers in their ability to establish and maintain independent, fee-for-service practice delivery to corporate clients. In this sense, personnel management under neoentrepreneurialism may be headed in the same direction as auditing services in accounting.
Our explanation of the development of managerial paradigms also has implications forWilliamson’s (1975)transaction-cost perspective of the de- velopment of hierarchies within firms. In Williamson’s perspective, hierar- chies and bureaucracy develop because of the high transaction costs involved in monitoring contracts in situations where actors have incentives to act opportunistically or where the ability to negotiate favorable contracts is impaired by small numbers bargaining. From our perspective transaction costs are a form of firm-specific dependence that affects managerial auton- omy. Managers act to reduce these transaction costs by altering the makeup of the human capital they use in their firms. Attempts to lessen dependence on skilled human capital may be viewed in this light.
However, the attempt to reduce this dependence occurs at the same time as the ability to monitor transactions is drastically improving (largely through the development of computers and information technology). Given that the ability to measure individual and group performance in a timely fashion has risen drastically, and that flexible manufacturing technologies and relatively short, specialized production runs have reduced asset specificity for firms, markets can now more easily discipline deviant per- formers. In short, we envision the Williamson process of hierarchy creation
‘‘running in reverse’’ because many of the original conditions that led to the gradual creation of hierarchies are disappearing.
How does our perspective compare with prior perspectives on changes in management ideas and behavior?
PROFESSIONAL AUTONOMY IN CONTRAST TO
differs significantly from functionalist approaches to management change (seeChandler 1977;Barley and Kunda 1992). Though our perspective has much in common with these, it differs on a number of issues. These past approaches to paradigm change either down-play the role of certain stake- holders in favor of others (e.g.Braverman 1974), dismiss the actions of all stakeholders as pre-determined moves in the face of macro-sociological forces (e.g. Barley and Kunda 1992) and/or view process control and ef- ficiency as the only motives governing managers (cf., Chandler 1977). We believe that these assumptions limit the explanative power of their theoret- ical models. Our approach to management paradigm change relaxes these assumptions by granting greater agency to organizational actors.
Critical Approaches Compared to the Professional Autonomy Perspective Critical writers from neo-Marxist perspectives focus on theincrease in man- agerial controlas the central thrust in the evolution of management action (see Burawoy 1985; Edwards 1979; Marglin 1974). Here, managers act as agents of capital to extract profits from the disciplined labor of workers (see Marglin 1974).Edwards’ (1979) historical descriptions of the evolution of managerial control correspond to different solutions to the problem of dis- ciplining workers to the rhythms of the factory. Entrepreneurial control produced compliance through personal loyalty and leadership through the entrepreneur. This solution was satisfactory when firms were small, but became impractical as manufacturing interests grew in the early 20th cen- tury. Hierarchical control attempted to reproduce the conditions of simple control through the use of foremen and assistants. This solution was or- ganizationally conservative but otherwise quite explosive since there were few constraints on the behavior of foremen and personal identification with foremen and managers (the glue of entrepreneurial control) was lacking.
Technical control linked productivity to machine-paced production, com- bining principles of scientific management with de-personalized leadership.
Finally, bureaucratic control linked evaluation and performance to formal rules. Satisfactory work was associated with the internalization of rules and compliance to them. Edwards’ explanation leaves off at approximately the time that human resource management becomes the dominant rationale for managerial activity.
Burawoy (1985) develops the same themes by linking the employment relationship to two core concepts, theproduction of consent and thefactory regime, that describe managerial behavior and the context where it occurs.
Management Paradigm Change in the United States 143
Early capitalism is labeled the ‘‘despotic regime’’ because factory discipline on the shop floor and labor market discipline in the community are rein- forced by negative sanctions and force. More recent capitalist efforts (20th century capitalism after the Depression) are labeled the ‘‘hegemonic re- gime.’’ This regime is based on consent and effort bargaining. The purpose of the management system is to get the requisite amount of effort from the workforce by securing active consent. This consent is secured through a range of benefits provided to employees and implicit effort bargains that provide a measure of autonomy on the shop floor without fundamentally disrupting production. Overall, the major goal of hegemonic system is smooth production at pre-specified levels in an environment with little eco- nomic competition.
Burawoy’s arguments regarding the future development of capitalism point in the direction of our arguments here. As globalization and capital mobility increase, Burawoy talks about the development of ‘‘hegemonic despotism’’, a factory regime where discipline is enforced through the ability of capital to move from place to place looking for the least resistance and the best investment climate. Central to this ‘‘good climate’’ are compliant and inexpensive workers and compliant communities that allow firms to operate with impunity. Recalcitrant workers, and their communities that fight back, are punished by the logic of the global market as they are re- placed by those willing to let managerial capitalists to do as they please.
Our approach differs from past critical approaches not so much in the emphasis on autonomy and freedom of action, but with regard to the terms and conditions of their use. The managerial autonomy perspec- tive suggests that managers are (1) a distinctive interest group whose interests diverge from those of non-supervisory employees and investor/
capitalists, and that (2) solutions that advance the managerial and profes- sional autonomy of managerial incumbents are preferred over solutions that either wantonly abuse employees as members of the working class or increase investors’ profits. If controlling and de-skilling employees will lead to these ends, managers will do those things. If controlling and de-skilling employees will not serve those ends (as the neoentrepreneurial paradigm suggests) managers will ‘‘surrender’’ direct control over emplo- yees in order to garner greater absolute control in other areas. In this case, the ability to hire and discard specific human capital for specific purposes, and the ability to claim distinctive expertise in combining what the labor market will provide to produce a specific product, overrides whatever advantages can be gained by permanently employing workers whose working lives can be extensively controlled. In this way managerial
autonomy is increased while managerial responsibility for workforce wel- fare is displaced permanently.
Functionalist Approaches Compared to the Professional Autonomy Perspective
The functionalist approach has two main variants. The first involves the use of the transaction cost perspective as a lens for viewing change in managerial paradigms. For example, in his analysis of the rise of the managerial class, Chandler (1977)suggests that scientific management was the result of man- agement’s desire to decrease coordination costs associated with human capital (i.e. transaction costs). With the industrial revolution under way and with the growth in consumer markets, firms found it more economical to internalize a large number of previously external functions. These large investments in plant and machinery required governance structures that would reduce the costs associated with the coordination of the work process.
As a result, foremen, who were once independent contractors, were hired as line workers and their power of coordination and control was relegated to a growing class of managers.
A second functionalist approach that addresses management para- digm change is the business cycle theory articulated by Barley and Kunda (1992). Incorporating theories from sociology and economics, they pro- pose that paradigmatic shifts in managerial ideologies are the result of cultural shifts occurring within economic long waves. The movement of the economy through long waves of growth and decline causes vacillations be- tween rational and normative rhetoric which lead to shifts in managerial paradigms.
There are important similarities and differences between the managerial autonomy perspective and the functionalist perspectives as well. We have already suggested that transaction costs are declining in importance. This not only lessens demand for middle managers who communicate directives up and down a managerial hierarchy, it also eliminates many incentives to internalize employment relationships in hierarchies rather than markets.
The market now occupies a distinctive role in advancing managerial control.
Managers can be viewed as people with the expertise to bring together distinctive skills and competencies from the external market, figure out ways to employ them and maximally utilize them for the exact length of time necessary to execute specific projects, and then discard them so that firm expenses are minimized and output and profits are maximized.
Management Paradigm Change in the United States 145
Our perspective shares with Barley and Kunda the idea that conditions external to specific firms affect managerial ideas and paradigm development.
However, the professional autonomy perspective views alternative manage- rial choices as more activist than Barley and Kunda’s response to cultural shifts and economic long waves. Long waves also leave the impression that managerial change returns to old ideas and that economic change produces no permanent change in how firms are organized. It seems unlikely that the current shift toward arms-length, market mediated, and subcontracted net- work relationships is going to reverse itself any time soon, even if there is a prolonged recession that ends the current economic long wave.
In summary, our perspective differs from functionalist perspectives and critical approaches by attributing distinctive interests to managers as an occupational group (managers represent themselves, not capital), down- playing the role of class domination as an overarching goal of managerial action, and by suggesting that many of the current changes in firm organ- ization that are a product of neoentrepreneurialism are permanent and un- likely to shift backward as the present economic long wave comes to a close.
CONCLUSION
There have been numerous attempts to describe historical changes in man- agement paradigms over the course of the 20th century. Our perspective ties together transaction cost theories, resource dependence theories, principal/
agent models, and research on the development of professions to explain changes in management paradigms. Our perspective is distinctive because it discusses changes in paradigms from the perspective of managers them- selves. It also acknowledges that managers have distinctive interests that result from their unique locations in firms that mesh with the desired de- velopment of management as a professional project.
The professional autonomy perspective suggests that each management paradigm took a different approach to increase or maintain managerial autonomy. Scientific management accomplished this by reducing depend- ence on skilled workers and substituting unskilled workers in their place.
Human relations management attempted to tie the loyalty of employees to firms so that newly found rights to organize and unionize would not lead to excessive disruptions in production. Human resource management sought to regain the professional autonomy of managers by viewing human capital as a portfolio investment, acquiring and discarding such capital as firm’s profitability increased and decreased. Finally, neoentrepreneurialism takes
advantage of the pressures of global competition and new developments in information technologies to eliminate reliance on specific people for specific tasks. Human capital is outsourced so that reliance on specific employees is nearly eliminated. All of these actions served to increase managerial power and autonomy, two central goals of most professionalization projects (see Abbott 1988).
Our theoretical endeavor has just scratched the surface of the possibilities for examining changes in managerial paradigms and the managerial incen- tives for instituting these changes. Our analysis is limited in scope. But there are a number of broader social scientific implications that can be pursued by scholars interested in developing a sociology of managerial knowledge;
(1) Where do new management ideas actually come from?
(2) What roles do business schools play in shaping the environment for management paradigm change rather than passively reacting to changes suggested by environmental stakeholders?
(3) Will the current wave of well-publicized business scandals lead to new challenges to the professional autonomy of managers? If so, what are those challenges likely to be and will they work to limit corporate man- agement malfeasance?
(4) What are the career and larger social implications of a new entrepre- neurial economy where skilled human capital works in a fee-for-service, subcontracted environment? Can stable communities and social ar- rangements be sustained in an environment where economic rewards are so variable and short-term?
(5) How can the growth of managerial professional autonomy in the neo- entrepeneurial economy be squared with ever increase in the attempts to limit the professional autonomy of long-standing professionals (lawyers and physicians) through bureaucratic interventions and the end of fee- for-service practice? (see Leicht and Fennell 2001; Leicht and Lyman forthcoming).
(6) More philosophically, if ‘‘everyone becomes an entrepreneur’’ what are the social, ideological and political implications for cultures like the United States that glorify entrepreneurial activity as distinctive, path breaking, and novel? Can politicians and others continue to endow the entrepreneur with distinctive social virtues if (in effect) ‘‘everyone’’ is doing it?
We hope that this preliminary exploration inspires others to develop more elaborate theories of managerial behavior that can be applied to the growth and change in the emerging global managerial class.
Management Paradigm Change in the United States 147
ACKNOWLEDGMENTS
The authors wish to thank Dan Wren, Charles Wrege, Martin Kilduff, Dan Brass, Lisa Keister, and the faculty of the Penn State Labor Relations Department and the Sociology Departments at Vanderbilt University and The University of Iowa for comments on an earlier draft of this paper. An earlier version of this paper was presented at the Academy of Management meeting in 1997 in Boston, Massachusetts.
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