CHAPTER 2 CONTEXTUAL INFLUENCES
2.9 INTERNATIONAL TRENDS IN MANAGEMENT THEORY The current trend in management practices can be described as the movement
phenomena and individuals, whereas for Durkheim, the collective phenomena or social objects are seen as antecedent and for Weber and utilitarianism, the individuals are seen as antecedent. Other authors who advocate that relations are antecedent to ontology include: Haraway (for example, 1991, 1997, 2004), Latour, (for example 1987, 1999), Bourdieu, (for example 1998) and Elias (for example in van Krieken, 1998, 2004).
2.9 INTERNATIONAL TRENDS IN MANAGEMENT THEORY
points have resulted in business largely overlooking issues of the environment and societal well-being, in order to maximise profit (Knight and Morgan, in Levy et al, 2001: 6).
Neuman and Morgan (1947 in Levy et al, 2001:6) were the first to develop modern scholarship in strategic management, drawing from the Tayloristic ideology of control and the strategic discourse of the Second World War. Their work was also a response to the increasing separation of ownership and control in Western economies. Along with this separation came multidivisional organisational structures which each needed their own plans and budgets in order to align themselves with the larger corporation (Levy et al, 2001:6).
2.9.2 Contemporary approaches to strategic management
As with the trends in education and educational research, there is much contradiction, complexity and over-lap in the different approaches to management strategy. One way to make sense of the complexity is to outline two major controversies which have coloured much of the strategic management literature; namely, the controversy of decision-making as either a linear or a non-linear process; and the controversy of the degree to which managers have agency or the capacity to adapt (Levy et al, 2001).
2.9.2.1 Linear vs. non-linear process
Levy et al. (2001:7) point to Andrew (1971) and Chandler (1962) as among the best known exponents of the view that strategy is a logical, linear process of analysis and planning. However, mainstream approaches based on game theory and variants of the positioning school also exhibit a rational, technocratic approach (Levy et al, 2001:7).
Most text books show management to be an objective process in which rigorous research into industrial conditions and company capabilities lead to an evaluation of options, followed by implementation and then monitoring and control (Levy et al, 2001:7).
One approach which disagrees with this linearity is based on a concept of
management as an art: the “art of war” (Sun Tzu, 1983 in Levy et al, 2001:7). This
approach sees strategic management as non-linear, unpredictable and paradoxical.
Another approach, prominently argued by Mintzberg (1994; 1998) in Levy et al (2001:7), emphasises the recursive processes of learning, negotiation and adaptation through which strategy is actually enacted. Thus, the planning-implementation distinction is unsustainable. In the same vein, Nelson (1991 in Levy et al, 2001: 7-8) claims that it is nonsense to presume that a firm can calculate an actual best strategy: a basic premise of evolutionary theory is that the world is simply too complicated for a firm to fully comprehend (Levy et al, 2001:8).
2.9.2.2 The degree to which managers have agency
The most common understanding of managerial agency is that core competencies develop over time; firms slowly adapt to the change incrementally with intentional resource allocation. Careful analysis and planning is required to select products and markets (Levy et al, 2001:8).
However, the evolutionary or population ecology perspective points to the relative inertia of organisations, claiming that active organisational adaptation is difficult, instead, firms evolve slowly, responding to change by a process of natural selection.
The role of careful strategic planning is reduced. An example of this approach is McKelvey and Aldrich (1983) in McKiernan (1996, internet excerpt).
A third approach suggests that changes are so rapid, that planning is futile. Therefore, organisations must be nimble and adaptable: parallels are draw between management strategy and chaos theory. Managers are encouraged to “tune their organisational networks to the edge of chaos” (Levy et al, 2001:10). Brown and Eisenhardt (1999 in Levy et al, 2001:10) are good examples of this approach.
Contemporary approaches to strategic management are largely based on the work of Mintzberg and Porter- who suggested ten schools and 5 approaches to strategy, namely, plan, perspective (strategic vision), position, pattern and ploy (Levy et al, 2001:6).
More simply, McKiernan (1996) has suggested that strategic management has past through four stages:
1. Planning - based on Tayloristic assumptions of simple cause and effect and a strict locus of control.
2. Learning - based on several theories, perhaps held together by the idea that planning is not as simple to achieve as earlier thought. Decision-making therefore becomes a more complex, contingent exercise.
3. Positioning - is a shift away firm the logic of the business portfolio towards the idea of positioning individual business units so as to take advantage of niches of reduced competition. In other words, business success comes less from selling a high quality, trusted product and more from finding under- exploited market segments.
4. Resource-based view - sees the resource endowment of a firm as the principal source of strategy options rather than constant repositioning in the face of shifts in the external environment. The resources of the firm will provide the basis for its survival and success through time as external conditions in the environment change. Thus,tangible assets, such as a product which is in high demand is seen as less of a competitive advantage than intangible assets, such as management skills. Unlike the positioning school, which sought to find market niches, the resource-based view advocates actively building and sustaining monopolistic structures. “It was not without some justification, perhaps, that Microsoft argued in its anti-trust suit defence that is was merely pursuing the precepts of good business strategy” (Levy et al, 2001:7)
Of these four approaches, Levy et al. (2001) go so far as to claim that the resource- based view is currently the dominant view in business, although they may be referring to ‘big’ business in developed countries. However, Connor (2002:6) disagrees that the resource-based view is dominant, even in developed countries. He suggests that managers in smaller businesses that are not ‘big names’ or industry leaders normally operate in a fashion that is typically: operations and cost focused; customer driven;
reactive; concerned with short-term results; and planned within a steady-state industry model. In these circumstances the stimulus for management decision making is usually provided by external pressure which, in combination with a probably price-
elastic demand function, would suggest that for small businesses the idea of strategic assets with their concomitant of market power is inappropriate.
Klein (2000) gives an account of the trends in strategic management in ‘big business’
using brand names as her foil. She describes how the use of brand names began as way to identify products as trusted and high quality. Later companies learned to keep their brand name as a symbol of quality, rather than signifying an actual product. In the positioning trend, new branded products were chosen to fill market niches, and later, within the resource-based paradigm, new branded products were used to create market niches. For Klein (2000), the multi-national corporations have become so focused on intangible rather than tangible assets that they do not make the products themselves, but have become ‘virtual’ companies with work contracted out and none of the actual production work being a part of the firm’s core business.
2.9.3 Critical approaches to strategic management
Up to now, I have been discussing approaches and issues which do not seek to question some of the basic assumptions of management, or try to address the societal inequalities which, it might be argued, business-as-usual approaches tend to entrench.
I will now, following Levy et al (2001), elaborate on three critical approaches to strategic management, all of which draw on a ‘constructivist’5 perspective to varying degrees. Elements of all of these approaches can be found mainly in management approaches based on organisation or institutional theory, which has become increasingly prominent in management thought. Strategic management discourse, although it occasionally contains ‘constructivist’ elements, has remained “remarkably immune” to the spread of constructivism, perhaps because strategy is more rooted in the positivist tradition or perhaps because the field is so closely related to
management practice (Levy et al, 2001:9).
5 I here define ‘Constructivism’ as an approach to epistemology which denies a simple, transparent relationship between the referent (the object of discussion) and the signifier (the word used to signify
2.9.3.1 The processual school
Although several strains of the processual school are discernable, all the proponents agree that strategy is not a logical, rational process in which optimum strategies can be derived from rigorous analysis. Instead, the processual school examines the process by which strategy is actually developed in organisations. According to Levy et al (2001:9), there are three approaches within the processual school: the
constructivist perspective which questions the objectivity of strategy by
demonstrating that strategic assumptions and practices are socially constructed in institutional contexts; the political bargaining approach which suggests the strategy is a result of negotiation between rival in-house corporate factions; and, the emergent approach which posits that strategy is an emergent phenomenon, a consequence of complex organisational processes.
For followers of the constructivist approach, there is no fixed, objective environment;
instead, organisations actively constitute and reify their environments “bringing sense and order to the tangled discursive webs in which they are located” (Weick, 1995 in Levy et al, 2002:9). The idea that organisations are embedded in their environments stems back to early systems theorists such as Emery and Trist (1965) and Trist (1983), in Levy et al (2001:9) but it was only in the 1980’s that appreciation grew for the idea that firms are not located in fixed, objective environments but rather develop
cognitive models or frames of markets and industries which channel organisational perceptions of their environment (Levy et al, 2001:9). Institutional theory, which has become increasingly important in management thought, is based on a strong
constructivist perspective with its focus on cognitive and normative pressures in determining normative practices. However, constructivism is used mostly for social engineering, rather than being seen to have implications for the status quo (Levy et al, 2001:9).
The processual approach that looks at political bargaining suggests objective ways to avoid intra-company factionalism. It questions strategies, and unmasks relations of power, amongst company elites. Pettigrew (1985 in Levy et al, 2001:10) refers to the way that the existing structures and cultures within an organisation can be actively mobilized by the dominant groups to legitimise existing definitions of core strategic
concerns and delegitimise new, threatening definitions. Whittington (in Levy et al 2001:10) extends this to include the existing external courses of power that managers can draw on such as “the political resources of the state, the network resources of ethnicity, or, if male, the patriarchal resources of masculinity” (Levy et al 2001:10).
However, the political bargaining approach concentrates mainly on managerial factions rather than labour and external stakeholders and therefore loses some of its critical potential for the wider socio-economic context (Levy et al, 2001:9).
The most mainstream style of processual management is the emergent approach. This draws on complexity theory, networks and organisational learning literature, such as Brown and Eisenhart (1999 in Levy et al) and Senge et al, (1994). Strategy is seen as a craft, rather than a science and it is given a ‘personal touch’ (Mintzberg, 1987 in Levy et al, 2001:10). The managerial motivation for this approach is that it allows for more perspectives to be added to the melting pot of managerial options, and it results in greater ‘buy-in’ or ‘ownership’ of ideas amongst the employees. Levy et al, (2001:10) argues that this can be described as tapping the creative energies of the workers whilst suppressing insurgent strategies. He also argues that the emergent approach to management does not examine the factors which systematically prevent free communication; instead it allows management to wrap up their interests in participatory discourse. “Empirical evidence suggests that despite the popular discourse of networks and empowerment, there is no discernable trend towards increased decentralisation of strategic decision-making” (Levy et al, 2001:12).
2.9.3.2. The deconstruction approach
This approach is more radical than the processual approach. Strategy talk is itself questioned and is seen as ideological. Managers’ subjectivities are considered by this approach to be produced by socio-economic and political structures that extend well beyond the company. Deconstruction asks how managers retain their positions and suggests that strategy constitutes not only the strategists and the implementers of strategy, but also the problems for which it claims to be a solution. In other words, the language that the strategists use to understand problems actually constructs those problems, and constructs the identities of the strategists. For example, the use of
the employees (the soldiers) to sacrifice individual needs to the greater glory of the firm; thus military connotations reinforce a patriarchal orientation to the organization of work (Knights and Morgan, 1991 in Levy et al, 2001:12-13).
In a landmark paper, Shrivastava (1986) in Levy et al, (2001:11) used five operational criteria derived from Giddens (1979) to analyse the strategy field and suggested the following ways in which strategic management legitimises existing power structures and resource inequalities (the examples following each point are my own):
• The factual under-determination of action norms – for example, a certain management method is used simply because it is how things have always been done.
• Universalisation of sectional interests – for example, it is claimed that overall corporate success will ensure the best advantages for all of the workers; the
‘trickle down theory’.
• Denial of conflict and contradiction – for example, an individual worker’s emotional argument for a pay increase is ignored as ‘unprofessional behaviour’, indicative of their individual personality, rather than being interpreted as a sign of a wider restlessness; the charge of low pay is then ignored and it is claimed that the workers are being paid wages commensurate with the industrial norm.
• Normative idealisation of sectional goals – for example, it is assumed that the managers’ goals are the goals for all the different employee groups.
• Naturalisation of the status quo – for example, it is assumed that is natural for certain people to be paid more than other people; it is thus natural for men to earn more than women as they are naturally the primary wage earners in a family and wives should naturally not be expected to carry this burden to too great a degree as they have to bring up the children.
Shrivastava draws on Habermas to suggest that communicative competence should be acquired by all the subjects to allow them to participate in discussion that will free them from constraints on interaction. He also calls on researchers to generate more
universal knowledge about strategic management that is less ideologically laden (Levy et al, 2001:12).
More recent postmodern critiques would consider that Shrivastava’s call for more objectivity betrays a modernist leaning. Instead, postmodernists abandon the search for objective truth or for autonomous individuals who can potentially recognise their
‘real’ interests. Postmodern critiques therefore interested in the constitutive power of strategic discourse, rather than reality or truth. For example, Knights and Morgan (1991, in Levy et al, 2001:12) see “corporate strategy as a set of discourses and practices which transform managers and employees alike into subjects who secure their sense of purpose and reality by formulating, evaluation and conducting
strategy”. Managers are not able to stand apart from this ideology, but are themselves entangled in the discursive webs, their sense of identity being as much constituted by their social field as that of the workers. That managers therefore often manage
without being able to explain exactly why they do what they do, which in rationalistic management models might be seen as a problem, has been interpreted by some authors from this processual tradition as desirable; their argument being that rationalistic management is not necessary, perhaps not possible, and an apparently irrational approach to management may even have competitive advantages. For example:
The reasoning is that causal ambiguity is necessary not only to prevent managers in other firms from understanding the link between resources and performance in the focal firm, but it is also necessary among managers within the focal firm itself so that knowledge of causal links cannot be exported intact from the focal firm. If this is true then it would appear to be important that successful managers are not sure what they are doing right.
(Connor, 2002:5).
For Levy et al (2001:14) the main problem with the postmodern, deconstructive approach to critique is that if discursive disciplinary power pervades every aspect of society, then agents have little room to resist or evade the constitutive power of discourse. Furthermore, it denies the ‘truth’ of strategy. Levy et al (2001:14) argue that whilst strategy is a discourse, it nevertheless has real effects in protecting
economic and social privileges. I would add that it also reduces agency by relativising
‘truth’ to such an extent that, even if actors managed to see beyond their social
are socially constructed and judging between truths would become yet another imposition of their sectional interests (Cf. Vol.1, Chap. 3.4.2).
2.9.3.3 Strategy as power: the historical materialist approach
This approach is favoured by Levy et al, (2001). They use the Gramscian notion of hegemony, based on the work of Machiavelli (Levy et al, 2001:4), to allow a place between the structural determinism of a crude Marxism and the endless slippage of meaning in postmodern discourse (Levy et al, 2001:14). They do this by suggesting an illicit dialectic between structure and agency, similar to that suggested by Giddens (1984) and Berger and Luckmann (1967) (Cf. Vol.1, Chap. 2.6). They write
“Strategy as power operates through the dialectical interplay of structure and agency”
(Levy et al, 2001:14). As I have argued in the section on agency and structure (Cf.
Vol.1, Chap.2.6), instead of avoiding the determinacy of structural accounts and the voluntarism of postmodern accounts, this illicit dialect tends to entrench both.
As is characteristic of practitioners of the illicit dialectic (Price, 2004a in Vol.2, Chap.3), Levy et al (2001) tend to contradict themselves. An example of such a contradiction is their unproblematic promotion of Gramsci’s notion of needing to adopt a “war of manoeuvre”, but critique of mainstream management approaches because they draw upon war metaphors. Another example is that they indicate that postmodernism is hindered by its inability to address the real effects of discourse , claiming that their historical materialism does not make this mistake, yet they draw from Gramsci, for whom:
…the very idea of a reality-in-itself is a religious residue, and the objectivity of things is redefined in terms of a universal intersubjectivity of persons; i.e.
as a cognitive consensus, asymptotically approached in history but only finally realised under communism…
(Bhaskar, 1989:140).
These contradictions are a result of the Machiavellian-style strategy, associated with the illicit dialect, in which strategists move between epistemologies depending on what they want to achieve. Levy et al, (2001:6) draw attention to the similarity between their Machiavellian historical materialism and the ‘ploy’ of mainstream strategic management, suggesting that perhaps this offers a strategic opportunity for