Business Theories of the 21st Century
Business Theories of the 21st Century
The paper discusses four major business theories including learning theory that discusses how information is processed and retained by the beholder and how he absorbs the information in the first place. The theory builds on the assumption that employees in an organization learn when motivated by self-gains and eventually deliver better output to the organization. The systems theory builds on the assumption that organizations are like mechanical bodies that when provided with certain required inputs generate and deliver desired output. This theory deals with the functional aspect of management. The Organizational theory assumes that there are certain principal beliefs that absolute rules that are historicallt proven and based on empiricism that organizations must adhere to in order to succeed. Lastly, the paper discusses ethics theory that states the importance of beliefs system and norms in a function environment and how adherence to the desired norms results in the positive during the otherwise has drastic results. There has been conducted extensive research to prove the legitimacy of these theories and the reason why it has been done is due to their perceived utility in performance enhancement in organizations. Literature reviewd elaboration of the theories is as under.
Jones and George (2015) stated that learning theories are those that focus on raising motivation and performance by employees. The employers must link outcomes that employees get to the performances of their behaviors to obtaining their goals. According to Jones and George (2015) learning is defined as a permanent change in a person’s knowledge that results from practicing or experiencing something new. Employees learn when they apply certain behaviors to receive certain outcomes (Jones & George, 2015). When there is a motivator, such as a pay raise, an employee tends to work harder and learn more quickly to achieve their goals. Positive rewards are not the only way to motivate employees to learn new tasks, on occasion economic hardship, can have the same effect. Employees strive to learn a new skill or become more skilled in their current positions to be able to keep their jobs or advance within the company (Jones & George, 2015). According to Jones and George (2015) operant conditioning and social learning are the two learning theories that give better guidance to companies to motivate their workers.
Operant Conditioning is known as the theory that employees learn to perform behaviors that achieve what is desired and also learn not to perform behaviors that will achieve the opposite of what is desired (Jones & George, 2015). Lineros and Hinojosa (2012) stated that B.F. Skinner believed that all the behaviors within an individual person were a result of constant rewards or punishments. Operant conditioning does not use a stimulus to create a new conditioned response. Operant condition instead gives a reward or punishment when a certain behavior has been learned (Lineros & Hinojosa, 2012). People tend to avoid learning behaviors that lead to outcomes that are not desired. Managers can create a linkage between certain behaviors and certain outcomes to obtain the desired goals (Jones & George, 2015). The operant conditioning theory has four tools that can be used to create high performances and stray away from employees being absent or any other negative behaviors (Jones & George, 2015). The tools are positive and negative reinforcement, extinction, and punishment. Positive reinforcement is given when an employee performs the desired behavior correctly. The desired outcome is referred to as a positive reinforce, and they include outcomes that an employee desires (Jones & George, 2015). Negative reinforcement will also motivate an employee to perform desired behaviors but by taking away the desired outcome. Threating to fire an employee because of poor behavior is a negative reinforcement. The employee will change the performance that is being given in order to keep the position (Jones & George, 2015). Some managers find that the easiest way to change behavior is to take away the factor that is causing the issue, this is called extinction. Instead or reinforcing the behavior the opportunity for the behavior to occur is taken away from the employee so thus causing a change in the outcome (Jones & George, 2015). The final component of the operant conditioning theory is punishment. Punishment happens when an employer gives an undesired consequence when an undesired behavior is performed. Jones and George (2015) stated that punishment can sometimes cause unintended effects within the company. An employee who has been punished can feel resentment or even loss of self-respect. According to Jones and George, (2015) punishment should only be used when completely necessary.
Social learning is a more recent way to addressing employees in need and applying it to human issues with a social context. The social learning theory is focused on learning that happens within a social context where people learn from each other; however, this theory tends to add a social element to it, as citied in (McCullough, 2011). Jones and George (2015) believed that the social learning theory suggests that motivation comes from a personal experience and also from a person’s thoughts and beliefs. Vicarious learning, also known as observational learning, is when a learner is motivated by watching another person perform a certain behavior (Jones & George, 2015). Much like how babies learn to walk and talk from watching others around them. Self-reinforcement occurs when a person rewards themselves for a good behavior. When behaviors are controlled by the employees, managers do not have to take the time out to motivate or control certain behaviors within the company (Jones & George, 2015). Finally, self-efficacy is a person’s belief about their ability to perform a certain task in a successful manner. Jones and George (2015) stated that a person with a large amount of self-efficacy will have higher motivation and better performance than someone who has low self-efficacy.
System Theory
Many theories have been advanced in the 21st century to explain the functionality of management in various business organizations. The management theories and concepts in workplaces are implemented as a means of increasing the productivity of the organization and quality of services delivered. Commonly used approaches include contingency theory, systems theory, and chaos theory (Adams, Hester, Bradley, Meyers, & Keating, 2014). Further, the theory of X and Y addresses strategies employed by the management in motivating the workforce. The management can use the principles independently or a combination to increase productivity.
System theory is a prominent theory regarding administration in this century. This approach treats the whole organization as one system. A system may refer to a collection of different parts that work together to accomplish certain objectives. From this approach, if one part of the system fails then the whole organization can longer work. Feedback loops are important components of the open system (Adams et al., 2014). They will provide information by connecting mechanisms from input to the outputs. Management can thus recall a product from the market if they observe a negative feedback loop. Positive feedback loop identifies the products that have attained good market reception. It will show the effectiveness of particular marketing strategies. The confirmed success will guide the management to making more decisions that align to the methods used to obtain that success.
The approaches to the system are either open or closed. An open system makes allowance for interaction with the organization`s environment by mainly way of inputs, mechanisms, and outputs. This open system will apply in a case where the organization has to move or make other changes due to changes in consumer demand. The closed system will refer to that organization that adopts a system that remains independent of the environment. It mainly applies to high-tech products having limited input sources and has consistent products.
Management systems arise from complexity in social organizations. Systems are constituted of information communication. The differential in communication quantity within a system, and the communication between it and its external environment will define the management system.
Management via these systems helps foster the conceptual way of thinking that dissolves some of the complexity (Adams et al., 2014). On the other hand, it will help the manager to identify the nature arising in complex problems and thus operate within appropriately perceived environment. It is necessary to recognize integrated nature posed by various systems. The systems theory advanced by philosophers denies any possibilities of absolute knowledge. All knowledge is thus subject to regular revisions in the face of new information. There are quantitative and rational grounds for comparing and evaluating propositions.
The overall advantage of management`s application of the system theory is that it allows the managers to examine events and patterns in the workplace. They use the means to identify links to different occurrences within the organization. Managers can determine what actions led to what results, creating a link of interrelated events. Preventive measures can thus be put in place to avoid catastrophic occurrences within the organization`s system. The system theory helps organizing managers to coordinate a program that will work as a collective whole towards attaining the company`s objectives (Adams et al., 2014). Research has shown that management that follows the organized system rather than isolating its entities into isolated departments stands better chances of success. System analysis will help a decision maker in identifying, reconstructing, control and necessary optimization of the system. The theory has been widely applied in modern times to improve on organizational productivity.
Organizational Theory
Organizations have to utilize principals that will help them manage an efficient business with strategies that will provide them with the competitive advantage needed to be profitable in this 21st century era where technology and innovation are soaring to higher heights. Managers have to find ways to compete with other organizations and so facilitate management programs that allow creativity. For years, various theories have been implemented to provide structure. Organization theory is the study of organizational designs and organizational structures, the relationship of organizations with their outer environment and the actions of managers and technocrats within organizations. It provides ways which an organization can cope with rapid change. Within the organizational theories is management structures and three most popular structures are functional, divisional, and matrix (Writing, 2013).
The functional structure is formed when an organization departmentalizes according to the activities performed by individual groups within the organization. Some common used departments are finance and administration, planning, and human resources. Finance and administration departments provide shared services that include finance, budgeting, procurement, contract administration, information technology, and any other specialty service needed to support all company needs. Planning departments provide organizations with layouts, projections, and document management of data collected for future use or need. The planning department makes recommendations to upper management regarding research and information that is important in order for managers to make major decisions. Human resources departments focus on people, human capital. They are concerned with the skills, knowledge, and abilities people have to accomplish the expectations of the business. Human resource departments manage the welfare of the employees.
Managers in the 21st century have to create a working environment that fosters employee creativity and observe the behavior of employees to maximize their potential by tapping into the resources employees bring to the company. Communication is constant and bi-directional, and participation in decision-making must include both management and workers. The human resource department performs six functions: recruitment, workforce development, safety, manages a company’s compensation rules, employee relations, compensation, and benefits, negotiates salary and health group coverage, manage compliance, and the training and development of employees.
Divisional structure departmentalizes according to geographical areas, markets, and the products and services offered by the organization. Each division operates as an autonomous business. Division managers had decision-making power which allows them to make changes when needed. Managers organize geographic structures in other countries to meet cultural needs. Market structures allow managers flexibility in meeting the needs of a diverse group of people. Product structures place distinct product lines in self-contained divisions. Managers are able to appropriate business-level strategies which allow divisions to compete effectively in its industry or market.
Matrix structure allows managers to group people and resources in two ways; function and product. Functional groups encourage employees to learn from one another in order to become more skilled and productive. Product teams are functional groups where employees work together to develop a specific product.
Organizational theory has helped organizations, great and small, be successful and remain competitive in today’s work where there is constant change with new ideas (Writing, 2013).
Ethics Theory
Ethics in business is more often in the news these days than in the recent past. There are three words that one thinks of when ethics in business is mentioned: morals, values, and beliefs. Morals are the believed right and wrong of our society. Values are usually understood to include descriptions such as fair, equivalent, and one’s worth. One’s own personal beliefs help to define ethics they can include: trust, sentiment, and conviction. Colleges and Universities are including more classes on business ethics because this part of the industry is so important.
The many publicized scandals in large corporations have created a need for more education before one enters the business world (Adkins, 2013). These disgraceful acts have served to compromise the public’s faith in business (Adkins, 2013). Colleges and especially undergraduate schools are focusing more on ethics in the business world (Adkins, 2013). Students need to be educated in how to handle ethical decisions they will make in the future (Adkins, 2013).
Morals are a decent accepted standard that protects the essential rights of others (Jones, 2009). Morals are the foundation for decision making (Tello, Swanson, Floyd, & Coldwell, 2013). Values describe what one is trying to attain and how one would perform (Jones, 2009). Personal beliefs are from ones attitude towards others (Tello et al., 2013). The personal attitude leads to intention and then action (Tello et al., 2013).
Values such as being fair to everyone and recognizing moral values and consequences should be stressed in the classroom (Tello et al., 2013). It is understood that an individual’s behavior is a result of how one thinks and feels about an idea (Tello et al., 2013). This will dictate one’s behavior in any given circumstance (Tello et al., 2013).
In the news, there have been more stories in regards to business executives choosing a selfish emotional attitude. Greed replaced the need to earn and maintain the trust of others. Behavior-based skills are what should be encouraged at this time in colleges and universities (Tello et al., 2013). Colleges must encourage the understanding of what is morally acceptable and teach students how to recognize this (Tello et al., 2013).
It is believed that once the ethical level of standards in college classes is raised the ethical level in businesses will be raised as well (Tello et al., 2013). The goal should be a transformation of the standards that are being taught (Tello et al., 2013). Hopefully, the outcome will be that the student will develop personal insight regarding ethics (Tello et al., 2013). The importance of learning one’s own personal values leads to a powerful individual character (Tello et al., 2013). Some teaching techniques up to this point have been able to establish the clear difference between right and wrong (Tello et al., 2013). Up to this point classroom lectures and case studies have familiarized the student with these principles (Tello et al., 2013). There is a need to make sure that the decision-making skills have been adopted by all students planning to enter the workforce (Tello et al., 2013). The largest question to date is how exactly to instill these principles (Tello et al., 2013). In recent observations, college students are admitting more frequently that they make exceptions when it comes to their own education (Tello et al., 2013). These exceptions have allowed them to get the grades they need without the amount of work that is really necessary to normally achieve these goals (Tello et al., 2013). The problem is one in which how we can convince a student that took shortcuts to achieve their goal successfully that they need to not do that in the future (Tello et al., 2013).
Each of these theories has its own significance in literature, and there has been done extensive research to back the hypothesis that all of the above-mentioned researchers put forward. The business needs the practicality of theory for it to be of any use. It is not possible to single out one theory being the absolute out performer than the others. Hence, the theory of contingency is applied which means that each of these theories holds importance and their practicality are depending on the nature of the situations.
References
Adams, K. M., Hester, P. T., Bradley, J. M., Meyers, T. J., & Keating, C. B. (2014). Systems theory as the foundation for understanding systems. Systems engineering, 17(1), 112-123. doi:10.1002/sys.21255
Jones G. R., & George, J. M. (2015), Essentials of contemporary management (5th ed.). New
York, NY: McGraw-Hill
Lineros, J. V. & Hinojosa, M. (2012). Theories of learning and student development.National Forum of Teacher Education Journal, 22(3), 1-5. Retrieved from www.ntejournal.com
McCullough, C. A. (2011). Social learning theory and behavioral therapy: Considering human behaviors within the social and cultural context of individuals and families. Social Work in Public Health, 26(5), 471-481. doi:1080/19371918.2011.591629
Schmidt, C.D., Davidson, K. M., & Adkins, C. (2013). Applying what works: A case
deliberate psychological education in undergraduate business ethics. Journal
Of Education For Business, 88(3), 127-135.doi:10.1080/08832323.2012.659295
Tello, G., Swanson, D., Floyd, L., & Caldwell, C. (2013). Transformative learning: A new model for business ethics education. Journal Of Multidisciplinary Research, 5(1), 105-120. Retrieved from www.jmrpublication.org
Writing, A. (2013, January 10). Different types of organizational structure. Retrieved from www.smallbusiness.chron.com
