Managerial Rationality

Conceptual and Historical Overview

Max Weber provided the first systematic and secular formulation of rationality in the social sciences. In his methodological writings, Weber differentiated between formal rationality (mainly the instrumental aspects of calculation and accounting associated with the so-called iron cage) and substantive rationality (preferences and values). In his historical writings, Weber examined different aspects of rationality (e.g., action, decision, and systematized worldviews), and observed rationalization—the cultivation of rationality in Western society in particular—in diverse spheres of life such as religion, law, economics, or music. Weber's theoretical legacy suggests that the construct of rationality should be historicized or [Page 871]examined against its intellectual biography—as he did with the concept of bureaucracy.

The notion of managerial rationality first emerged in the 1880s in the United States, with the dawn of the so-called managerial revolution. It was spearheaded by early management writers, such as John Dunlap and Alexander Hamilton Church, who aspired to inaugurate a new language that would replace the language of traditional capitalism: “system rationality” instead of individual initiative; “jobs” instead of “natural rights”; “routing,” “rational planning,” and “efficiency” instead of “free market.” Although it is a multifaceted concept implying values and maxims of thought, rationality was thus reduced to its instrumental-technical dimension. Around the time of the first surge of this discourse in 1895, American engineer Frederick Taylor (and a loose band of his disciples such as Frank Gilbert and Henry Gantt) developed a version of managerial rationality that resulted in the famous (or infamous) Principles of Scientific Management. In the context of the managerial revolution, rationality was used to legitimize management control not only vis-à-vis workers but also vis-à-vis capitalists, owners, and state agencies.

During the first half of the 20th century, the rhetoric and practice of managerial rationality were disseminated and became widely recognized in American industry and in academic writings. Rationality was understood as the complete knowledge of the consequences of choices that are predetermined by structural constraints. In decision-making theory, rational managers are portrayed as profit and efficiency maximizers. Decisions are perceived as following a logical linear sequence: identifying predetermined objectives, arranging solutions in order of preference, and assessing their potential for making an optimal choice. In human relations, a movement purportedly aimed at increasing sensitivity to psychology and emotions, managers are conceptualized once again as rational (and restrained) actors who have to face the emotional irrationality of their subordinates. During the 20th century, principles of instrumental rationality, in the form of formal rules, were disseminated in organizations by the labor unions, and later by the government, on the assumption that the adoption of formal personnel policies would increase managerial rationality and reduce discrimination against union members, women, and minorities.

...