Management theories and the

Objective of sustainable development

A management interpretation of sustainable development

(CSTM, university of Twente, Pobox 217,7500 AE Enschede, The Netherlands)

Abstract: From classical to modern theories, the main concern of management has always been efficiency. However, efficiency is closely related to a comparatively lower level or primary status of management, which is the basic environment of theory development. Sustainable development is a somewhat modern concept, and if the future of advanced management theories aimed at sustainability can achieve sustainable development, then the policy study should concentrate on creating a correct value-orientation system.

Keywords: Management theory Sustainable development Feedback mechanism

Efficiency orientations resources scarcity

1 Introduction

Management experience predates its theories. The earliest management experience can be seen as far back as ancient Egypt in constructing the pyramids. The earliest management theory ideas are the labor allocations by Adam Smith, and labor efficiency-cost study by Charles Babbage. But the whole systemic development of management theory begins with the scientific management by Frederick W.Taylor.

From classical to modern theories, the main concern of management is always efficiency. But efficiency is closely related with a comparatively lower level or primary status of management, that is the basic environment of theory development. In the past few years, more and more theorists, policy study scholars and even governments are concerned about the issues of sustainable development. Sustainable development is a somewhat modern concept and seems, at least from the point of theatrical study, it is concerned mainly with developed countries that usually have a higher level of management. But the fact is that the issues of sustainable development are much more critical and of greater significance for the global economic system in the long run, in developing and undeveloped countries.

Today the critical problem we have to face is how to apply the efficiency-oriented theories to sustainable development, in different environments and with different economic and management levels. The developments of management theories are dependent on their environment and the properties of their experience. The exploration of the environments and examination of the properties of different stages of management experience in their development may be the direct way to approach the above problems.

2 The efficiency orientations management theory and differences with the development of the economic management system

2.1 Three stages of economic operation systems

The evolution of economic operation systems is seen by its cost formation procedure. Different cost elements introduced or consumed at different times and spaces form an integrated system with the operation process of economic systems. As a result, the features and peculiarities of the cost formation to a great extent, present the properties of its economic system. From the cost formation point of view, the whole evolution of economic systems is a high-grading trend of costing and the differences of cost utility due to the inconsistence of different cost elements. This procedure arose in the transformation from agricultural to industrial economic patterns, and will be strengthened in the further transformation to intellectual economic patterns.

The most primitive agricultural economic patterns imply the great limitation of human activities. Whether in the macro or micro economic systems, there is always an infinite resources supply. It was impossible for the participators of the economic system to be conscious of the economic efficiency, and they did not. That is the primary stage of economic operation systems. Figure 1 follows explains the exact proprieties of these kinds of systems.

Figure 1: Primary stage of economic systems


Infinite resource ecoe Finite

Supplies Outputs

In the primary stage of economic systems, confined by each system’s capability, not only the amounts of its outputs are finite, but also the possible harmful by-products or pollution can be absorbed by the greater natural ecological systems. In a word, the economic activities have hardly any effects on their environments. The primary stages of economic systems have the following significant features:

A: the economic elements are quite consistent due to their infinite nature;

B: a desire to increase the capability of output because of their finites, and the increase of capability is usually demonstrated as an increase of their input-rate;

C the structure of economic systems is simple, the whole operation is actually a linear logistics stream, or it’s overlapping.

Higher and higher industrialization levels, along with system evolution, results in the production resources gradually becoming more and more finite. The structures of economic systems become more complicated due to the inter-reactions of different economic elements. The participants in the economic system are gradually concerned about the management, and especially about the status of the their elements. That is the medium stage of economic system.

Figure 2: Medium stage of economic systems

Anticipant
Outputs
Finite
Outputs

Finite Useful

Outputs

Resource
Supplies
Harmful
By-products
Or pollution

The medium stage of economic system has the following significant features and outcomes:

A: there is a finite amount of waste or pollution emerging along with the normal economic operations, and the waste gradually accumulates so that it is difficult for the nature ecological system to absorb it, therefore the following rounds of economic operation have to allocate some extra inputs (resources) to deal with it. Since the extra inputs are because of the former operations, it can be called re-born cost.

B: the finite amount of resources leads to a difference in the scarcity of economic inputs, which is demonstrated as the differences of economic cost elements at last.

C: on the basis of scarcity differences, traditional management theories emphasize the savings of economic inputs, and promote the tech-improvement of production-efficiency significances.

D: although the so-called re-born cost is noticed, it is seldom considered as a management issue, or it is just left as a technological element outside the system.

The medium stage of economic system made use of its resources with a greater degree of efficiency, but the economic system in itself is definitely not sustainable, for the flow of its resources is lineal. As the amount of resources available decreases, there is an increase in the amount of “wastes”. Under these circumstances, it is unwise to distinguish resources and wastes, for if the wastes cannot be absorbed by nature, then subsequent economic operations must allocate a definite resource to treat it, not just wait and let it worsen. In the view of economics, resources and wastes have just the same meaning. Actually, if each economic unit of the society can be operated in this way, then the whole objective of sustainable development of the society will be achieved. That is the situation of advanced stage of economic system that demonstrated in figure 3, which is also forever the target of an ideal industrial society.

Figure 3: the advanced stage of economic system

Unfortunately, most of our economic operations are still in the medium stage, and the theorists are mainly concerned about the management problems there. Sustainable development and its related studies may be a great chance for our economic system to advance.

The future advanced stage of economics has an outstanding property in that it does not deal with wastes as economic outputs or outlets anymore, but as a extra-resource allocation, a self-generating input of the system. This transmission of classification has great benefits to measure the scarcity of different resources, and to the defining of their utility differences. Hence the output of future advanced stages of economics is surely an optimum output.

2.2 Three stages of economic management systems and the related theories

Management practices influence the development of related theories, and vice versa. With the development of the three stage economic system, though there should be a three stage management theory, and the theories here before are developed in such a way, advancing of the most advanced stage is still at a loss in the modern economic society.

At the primary stage, management experiences are actually meaningless; for the direct effects of management are just to enlarge production scale. And the management theories’ concern of efficiency is directly displayed as speed. Figure 4 explains the procedures of the situation.

Figure 4: Theprocedures of primary management theories

Tool inventions led human beings from savagery to civilization. Tools mean speed; tools mean scale, and enlarged inputs and outputs. That is the scene of the agriculture economic status, and it’s beginning to transfer to the industrials. The management theories at this stage mainly constructed a feed back mechanism to speed up logistic flows. New tools and technology emerged as a result of this feedback mechanism lead in a more intense feedback process, and that cause an even higher speed of flows, but most of its significance is offset by resource abundance.

The progress of industrialization is a long era of human history, more and more resources have begun to become scare, and waste from the economic systems has gradually worsened. [1] The management theories at this stage divided into two different branches: one devoted to the feedback mechanism to achieve its effective objective; the other is based on the properties of resources and the re-born elements, constructing a negative feedback mechanism. The former branch led management practice to automatic and mechanic; the latter performed in practice as though a set of methods like value engineering, project-diagram, etc. to optimize the economic operations. Those two branches of theories formed the distinct properties of the medium stage of management theories, which is shown in figure 5. Those are the shared characters of the transfer from agriculture to industrial society.

Figure 5: Medium stage of management

The most outstanding properties of the medium stage of management theories are not that they provide both feedback and negative feedback mechanisms, but that they found the differences of inputs as a result of the difference of resource scarcity. The differences of resource scarcity are closely related with sustainable development, but surely not the same. Walter Stahel (a Swiss consultant expert) is one of the theorists in sustainable study. The four-circle-operation [2] is his key contribution in this field. Although it is aimed to achieve sustainability, the four-circle-operation will be also classified as medium stage, for as all the mechanisms in the stage, its feedback and negative feedback are unrelated. It is difficult for them to really deal with scarcity differences, and re-born elements, to say nothing of the sustainable development. The only way out of the predicament naturally became an unshirkable duty of the advanced stage of management theories.

Figure 6:Four-circle-operation

a - b -c -d

a: re-using

b: maintaining

c: restoring of function

d: material retrieving

3 What is the sustainable development and what should management theories do?

3.1 What is the sustainable development?

Sustainability and sustainable development are quite modern concepts that appear in different books and papers frequently and are discussed to different degrees in dissertations. Though they have been of much special concern in the past few years, most of them fall in the scope of general analysis in policy study. In fact, the very definition and its true contents are still a mater of debate. But to conduct a technical study so as to lead to its practical application, a scientific definition of distinct properties is the first step, and a virtual basis for advanced stages of management theories.

Although there is diverse opinion, the most common and maybe most influential definition is that proposed by the world commission on environment and development (WCED) of the United Nations in 1987. Sustainable development is to answer “the needs of the present without compromising the ability of future generations to meet their need.” Like most subsequent efforts to characterize the idea of sustainability, the implications are conceptually ambiguous. And it is not difficult to recognize that all policy studies, especially policy studies in the developing countries, which usually lack of sufficient theories support, are ambiguous.

We understand the meaning of sustainability in the generic sense that Daniel Mazmanian and Michael Karft describe “as a practical matter, sustainability can mean any important change values, public policy and public or private activity that moves communities, and individuals, toward realization of the key tenants of economical integrity, social harmony, and political participation. ”. We assume that as a matter of public policy, sustainable development embraces public policies, at whatever governmental level, intended to achieve some combination of these general purposes. We insist that policy studies should always incorporate substantial ecological components that policies intend to protect and preserve ecological processes and natural resources for future generations. [3] But we still cannot be sure how can we achieve these objectives, to say nothing of what the practical economic operation should be, because we still do not have a systemic theory and techniques—the advanced management theory to support it.

3.2 What are the advanced management theories like?

Since the advanced management theories aim at dealing with sustainable development, the most important and critical things are how to scientifically utilize natural resources, for that means “the ability of future generations to meet their own needs. ” We must realize that to scientifically utilize natural resources is also related to the “present need of efficiency.”

Fortunately the medium stage of management theories has developed all the components that the advanced theories need. From the point of systems, the medium stage of management theories had been well developed, for it does not only considered resource scarcities, and the finites of outputs, but also deals with the re-born elements. Theoretically, their feedback and negative feedback mechanisms can be used to optimize the economic systems. However, it is very difficult for them to achieve their systemic objectives, and the management practices are also faced with a stern economic status and ecology.

Considering the properties of advanced economic systems, it is easier for us to see that the fatal flaw in medium management theories are that although they take into account of the differences of resources scarcities and re-born elements in their management models, the feedback and negative feedback mechanisms are not coherent or related, and eventually lead to their efficiency objectives lost a relevant bases. According to the above analysis, the future advanced management theories, which aim at achieving present efficiency objectives as well as sustainable development, should be:

A: on the basis of sufficiently utilizing both feedback and negative feedback mechanisms, scientifically define all the resources and re-born elements with their corresponding properties.

B: respond with sustainable development, which is surely different among different areas, nations, and economies, to measure the utility differences of the above elements.

C: a general structure or hierarchy or order of utilities that lead every economic operation to make its own choice of elements input (includes three dimensions: Quantity, location and timing). The basic properties of future advanced management theories are demonstrated in figure 7.

Figure 7: the structure of advanced management theories

3.3 The advanced management theories should be more as an idea, not just management techniques or tools.

In an economic sense, scarcity is the only motive for management theory development, and sustainability is its final objective. At the primary stage of management practice and theories (if there are any), the direct objective of management is more production speed or logistics flow speed than production efficiency. Many new production and management methods and tools are a clear display of management. At the medium stage, management has to take into account the utility differences, because of scarcity and re-born elements. The management theories at this stage constructed both feedback and negative feedback mechanisms, and many concrete techniques emerged into management practices. Although it is still difficult for them to deal with the downcast status of management practices, and though they fail to provide a guarantee to sustainability, they have noticed scarcity and try in many ways to confirm utility differences.

The medium stage management has developed over quite a long time and in many fields of management practice and theories it may last for longer into the future. In these long time scales, the medium stages provide us a lot of useful techniques and tools like program diagram, OR, and ABC. And more importantly it also provides us with all the compounds needed for advanced management theories. If only we can overcome the flaws in the medium stages, then it is not difficult for us to achieve sustainability. In a sense, the advanced management theory is an optimization of its medium.

Comparably speaking, primary management does not have a definite economic objective, only to be a maximum output oriented operation; the objective of medium stage management is not coherent with its economic environment, and only for the advanced management can the utility be defined, measured, evaluated, and true sustainability concerning scarcity can be achieved. It is not difficult for us to understand that, in advanced management, the most important things are not to find and invent more management tools and techniques, but to set up a utility idea. If only we have a scientific utility idea, we can construct a utility differences definition and hierarchy system. And of course, most former management techniques can still be used in future management practices.

4-Policy study should help to select a correct value-orientation on utility instead of only principles and rules

Scientific policy study must be based on a systemic theory, and the application of actual policies need the guidance of proper theories. The policy is just a representation of theories in management practices. That is the relationship of practice with theory in economic operations. The advanced management with a goal of sustainability uses a utility analysis mechanism to realize optimization of the whole economic system. However, as we discussed in the first paragraph, there are no constant utility objectives in the economic development, not only among different nations and areas, but also among different degrees of development. Scales, speed, profit and economic value, all had been our utility objectives, and now sustainability. Therefore, future policy study should help to set up clear utilities, and concretize them in every economic field. But not just a concept of sustainable as “the needs of the present without compromising the ability of future generations to meet their need.” Or “intended to achieve economical integrity and social harmony”. And then leave the management to tell what to do.