Abstract
We believe that the arguments of Chapter 1 are sufficient to establish that in the modern system management has considerable freedom of action. Shareholders may impose minimum constraints on, for example, investment policy, but there is no evidence that general equilibrium of the system requires these minima to become maxima. Most of the relevant markets are imperfect, and in one case, that of the capital market, this is a critical factor in the intracorporate balance of power itself. In some cases, notably those of the markets for manual labour and for products, the resulting problems have been intensively studied by both economists and sociologists, but this work has not been matched by equivalent work in relation to management. Economists have investigated management attitudes to particular problems, such as price determination, and, more recently investment policy, but there exists not one comprehensive or rigorous study of the basic motivational forces determining business decisions in general: a fair literature examines the way the office affects the home(2), little or none the way home and office life affect office decisions.
‘The Managerial Revolution is quite fatal to profit maximisation.’
— Peter Wiles(1)
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
P. J. Wiles, Price, Cost and Output, Oxford 1956 edition, p. 179. See also Preface and Chapter 11 of 1961 edition.
See, for example, W. Lloyd Warner and J. C. Abegglen, Big Business Leaders in America, N.Y., 1955. A partial exception to the remarks in the text is found in The Managers, by R. Lewis and Rosemary Stewart, N.Y., 1961.
For a bibliography, see Social Science Research on Business, by R. A. Dahl, Mason Haire and P. Lazarsfeld, N.Y., 1959, pp. 151–2. The notes to Lloyd Warner’s contribution in Mason, op. cit., are also helpful.
George Katona, Psychological Analysis of Economic Behaviour, N.Y., 1951, Chapter 9.
Kenn Rogers, Managers — Personality and Performance, London (Tavistock Publications), 1963.
See also discussion of this work in T. Barna, Investment and Growth Policies in British Firms, Cambridge, 1962, p. 54 et seq.
W. H. Whyte, The Organisation Man, N.Y., 1957.
C. Wright Mills, The Power Elite, N.Y., 1957.
David Riesman, The Lonely Crowd, Yale, 1950.
See James Duesenberry, Income, Saving and the Theory of Consumer Demand, Harvard, 1949.
See for example the account of the celebrated Bank Wiring Observation Room Study reported in Management and the Worker, by F. J. Roethlisberger and W. J. Dickson, Harvard, 1939.
For further information on the subject of of call girls see Sara Harris. They Sell Sex, A Devastating Portrait of the Pimp in the Grey Flannel Suit, N.Y., 1960. (Front cover states, ‘A noted sociologist’s documented inside story of how some of the nation’s biggest industries and corporations use … high-priced prostitutes …’.)
R. F. Henderson and Brian Tew, Studies in Company Finance, Cambridge, 1959, p. 298.
See Myron Gordon, The Investment, Financing and Valuation of the Corporation, Homewood, 1962, Table 15.1. The figures quoted in the text are adjusted to take account of differences in definition, Gordon’s leverage ratio being that of Debt to Net Assets.
To the best of the author’s knowledge the following bibliography is for practical purposes virtually complete (only articles whose results were subsequently incorporated in books listed being excluded): F. W. Taussig and W. S. Barker, ‘American Corporations and their Executives’, QJE, Nov. 1925; J. C. Baker, ‘The Compensation of Executives’, Harv. Bus. Rev, Spring 1935; J. C. Baker, Executive Salaries and Bonus Plans, N.Y., 1938; H. A. Simon, ‘The Compensation of Executives’, Sociometry, March 1957;
David R. Roberts, Executive Compensation, Glencoe, 1959;
A. Patton, Men, Money and Motivation, N.Y., 1961; J. W. McGuire and others, ‘Executive Income, Sales and Profits’, AER, Sept. 1962. The work of Roberts, op. cit., is based on cross-section regression analysis of a sample of 77 U.S. corporations, averaged data, 1948–1950, the source being SEC. Patton and MacGuire use other sources, typically data available in Fortune and Business Week. MacGuire and associates use a sample of 45 firms on which to base moving cross-section regression analyses, 1953–9. They test a variety of hypotheses, including several involving lagged relationships, and the results generally confirm the conclusions of Roberts (see text below; unfortunately the paper appeared too late for inclusion in our main argument). By contrast, the unconvincing hypothesis of Patton — that high salaries cause executives to ‘work harder’ thus leading to high profits — comes out very badly. (See MacGuire, op. cit., p. 758.) Another interesting feature of the MacGuire material lies in the inclusion of imputed stock-option profits in the definition of compensation ; that the results still show no significant partial correlation with profits tends to support our argument (text, above, p. 77) concerning the motivational significance of stock-option plans.
See ruling of Federal judge C. J. McNamee, reported in Business Week, May 31, 1958.
See From Max Weber: Essays in Sociology, ed. H. H. Gerth and C. Wright Mills, N.Y., 1946, p. 196.
For example, Barnard, op. cit., p. 145; Buchanan, loc. cit. (note 35 above); William Whyte in Fortune, Jan. 1954; J. K. Galbraith as quoted below; Downie, op. cit., pp. 63–4; Penrose, op. cit., p. 28; R. A. Gordon as quoted p. 63 above; George Hurff, op. cit., p. 90; H. F. Lydall in the Oxford Institute Bulletin May 1959, reporting an enquiry of growth-aspirations in a sample of British manufacturing firms — only a third of the respondents did not envisage further growth in the immediate future, and at least half the chief executives hoped to double turnover within the foreseeable future. There is also considerable evidence of a value system based on growth in the periodical literature. For example, see ‘One or Many Lines? Harder for Business to Base Growth on a Single Product’, Barron’s, 8th July, 1940; ‘Diversification Quickens Growth’, Barron’s, 4th June, 1956; ‘National Lead: A Study in Growth’, Magazine of Wall Street, 4th Aug. 1956; ‘Diversification: Is It Always the Answer [for companies planning growth] ?’ The Iron Age, 3rd Oct. 1957 ; ‘How Diversification Pays’, Steel, 24th Feb. 1958; ‘What New Products Mean to Companies: Growth, Longer Life, Bigger Profits’, Printer’s Ink, 13th June, 1958; ‘New Products Are Key to Future Growth’, Steel, 8th June, 1959; ‘Flintkote’s Approach: A Definite Formula For Growth’, Industrial Development, June 1959; ‘The Importance of Financial Planning To a Growing Corporation’, The Commercial and Financial Chronicle, 6th June, 1957; ‘Financial Implications of Growth’, The Controller, March 1958; ‘Enterprises Whose Growth Has Been Achieved Without Major Outside Financing’ Magazine of Wall Street, 20th Dec, 1958.
J. K. Galbraith, American Capitalism, Boston, 1952, p. 29.
Author information
Authors and Affiliations
Copyright information
© 1964 Robin Marris
About this chapter
Cite this chapter
Marris, R. (1964). Motives and Morals. In: The Economic Theory of ‘Managerial’ Capitalism. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-81732-0_2
Download citation
DOI: https://doi.org/10.1007/978-1-349-81732-0_2
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-81734-4
Online ISBN: 978-1-349-81732-0
eBook Packages: Palgrave History CollectionHistory (R0)