previously, we had discussed the importance of this course, the more i read, the more interested i become. Research indicates that compared to students from other fields, business and economics students are more likely to engage in free-riding, less likely to seek cooperative solutions, more accepting of bribes, more prone to cheating on exams, and place less value on knowledge, understanding, justice, and developing a meaningful philosophy of life. Furthermore, there is a positive correlation between the frequency of large firms engaging in criminal activity and the proportion of MBAs in their top management teams. Therefore, there is a pressing need to introduce management students to a more nuanced understanding of human nature, one that is not based solely on the simplistic economic model they are often exposed to in their courses.
Another significant issue arises when management and economic theories go beyond their role of modeling, predicting, and explaining, and venture into the realm of prescription, advising practitioners on how they should act. This is particularly true for popular formulations of these theories. However, since the economic model of man used in these theories is not a comprehensive and accurate depiction of actual human behavior, the advice offered may be unsound.
For example, agency theory is a prominent management theory that relies heavily on the economic model of man. It has had a significant impact on corporate governance, organizational design, and executive compensation. Agency theory suggests that there is typically a significant divergence of interests between shareholders and managers, which should be curbed by imposing control structures on managers and other business firm staff. Without such controls, agency theory suggests that managers and staff may prioritize their own interests, such as power, income, prestige, and perks, at the expense of the organization they are supposed to serve.
However, the reality is that many people are not solely self-serving opportunists, and they are not genetically programmed to act in that way. Their behavior is influenced by their experiences, environment, and choices. Therefore, the idealistic employees who are eager to do their best for their firms may become self-serving opportunists if they are consistently managed according to agency theory’s prescriptions. Even the most committed employees are likely to lose their enthusiasm if they are under tight control, always mistrusted, and constantly curbed in their initiatives.
The problem with agency theory is that it can become a self-fulfilling prophecy for such individuals. It assumes that people cannot be trusted, and therefore recommends that they be managed in ways that make them untrustworthy, thereby validating the prophecy. By studying a more complete and realistic conception of human behavior, managers can protect themselves from accepting impractical advice contained in some versions of these theories.Top of Form
Lastly To ensure consistency among the different courses taught in a business school, it is important to have a shared understanding of human nature that underpins the teaching in all courses. Without this common foundation, students may become confused by conflicting ideas presented in different courses. For instance, what is taught in Finance may contradict what is taught in Organizational Behavior, while ideas presented in Marketing may be at odds with conclusions reached in Business Ethics. The Lagos Business School has adopted a more complete and realistic view of human nature as the basis for all its courses, making it easier for students to understand and integrate ideas across the program.
on my next post we would talk about Man as a Higher Animal.
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