Five reason why business management is a social science.

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Lorraine Caplan | College Teacher | (Level 1) Educator Emeritus

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I would say that business management is a combination of several social sciences, defining social sciences as those disciplines that study people in their social settings.  There is some disagreement about what disciplines constitute social science and what disciplines constitute humanities, but let's agree for the purposes of this discussion that business management entails understanding of the following: sociology, economics, law, political science, education, and psychology.  In order to manage the limited resources a business has, capital, materials, people, and information, a manager should have some understanding of each of these disciplines.

A manager can only manage capital properly with an understanding of economics and law. If a manager has no clue about supply and demand or poor understanding of interest rates, the manager is going to make poor capital investments. If the manger has no idea what regulations govern accounting principles, he or she will not know how to ascertain whether or not the capital is being managed well, turning or profit or showing a loss. 

A manager who must manage materials needs to understand economics and law as well. Economic principles govern the acquisition of materials, whether there is a shortage and a high price or a surplus and a low price, whether the interest rate on credit for materials is high or low, and so on.  Are the materials safe for the public?  Are the materials safe for the workers to work with? All of this is a matter of government law and regulation.  Will the use of these materials pollute the environment unlawfully?  A manager needs to know these things!

The management of information requires an understanding of psychology and sociology. What information is disseminated or not disseminated is an important part of good management.  Withholding information results in rumors and anxiety in the workforce. Imparting too much information results in overload in the workforce, for example, sending everyone thirty memos on new policy changes all at once, or providing too many new training materials for a new employee.  Without an understanding of how human minds and emotions work, the manager will not fare well on this front.  How information is disseminated is a sociological phenomenon.  The lines of communication both vertically and horizontally must be managed for a free flow of the information that the manager wants to flow freely and safeguards for information that should be closely held, for example, the development of a new patent or new copyright materials.  Good management will ensure a structure that will meet both goals, and organizational structure is a sociological construct.  

The management of people requires great understanding of psychology, sociology, education, and law.  How people are motivated is a matter of psychology.  Poor managers are poor psychologists.  How people interact with one another in a social system is a matter of sociology.  And a business is a social system.  How the manager structures the organization, to promote interaction or to repress interaction, is an important aspect of management.  A very rigid chain of command keeps things orderly, but it makes for an inflexible entity.  A very loose chain of command creates more flexibility and resilience.  How one trains one's employees necessitates an understanding of the principles of education.  Employees need to be trained.  A manager needs to understand how people best learn, so that training is optimized and not time and money wasted.  Learning is best accomplished not by putting a hundred people in a room to be lectured at, with no breaks for food or just to clear their minds.  Hands-on learning is the best, in small doses, allowing people to let their learning be absorbed slowly.  And no one can manage people at all today without a good grasp of the laws and regulations that govern the hiring, treatment, and firing of employees.  Without this understanding, a manager puts a company at risk for legal claims against it, sexual harassment claims, discrimination claims, wage and hour claims, just to name a few.

Finally, a manager who expects to manage anything at all must be aware of the political environment in which the company functions. It may be an over-regulated environment or an under-regulated environment.  Those are largely a function of politics.  There may be a prejudice for or against outsourcing or international trade.  What expenditures the government chooses to make or not make reflects the politics of the period, for example, with a particular administration and/or Congress that wants to spend a great deal on the military. A manager who is to some degree reliant on government expenditure, in the way of contracts, needs to have an awareness of this.  In the healthcare industry, similarly, some states have expanded their medicaid programs while others have not. The implications for this industry are staggering, and a good manager keeps abreast of the politics of this. 

While I do not think that business management is its very own social science, I do think that knowledge of many social sciences is central to good management. And really, these designations of various separate disciplines tend to put different disciplines in their own little boxes, which is dreadful for the advancement of knowledge in any area.  Every discipline can draw on and learn from the others.   

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