I. The system-based approach (Poznań 2006)

II. Enterprise and other social systems (Poznań 2007)²

Introduction

Social systems are operating entities with man (people) as one of the components. The energy of social systems is their ability to drive and execute change. Change of system status or environment status is an event, and an event is motion. Thus the energy is related to motion, which has no other “purpose” beyond that of energy transformation consistent with the laws of thermodynamics. Whether we like it or not, social systems are also subject to these laws.

Motion, whose “purposes” are given under the natural law, knows no other values or aspirations, because there is no-one “behind it”, or we are not able to define them. Social systems, as opposed to natural systems, are animated by people and serve them. People provide actions and the social systems implementing them with a teleological meaning, at the authors’ discretion, by directing motion/energy towards non-energy-related values. This leads to a natural problem: what will be the relationship – with regard to a given action – between the value of energy and other values. This is a fundamental problem also because energy is an inherent component of any action.

It is claimed here that there is only one solution to this problem, for any action and the corresponding social system: energy can be either the purpose or the restriction. In either case, however, the long-term existence of the social system requires an energy surplus. This means that all social systems without exception are, and must be, managing systems, regardless of the structure of their values and goals. However, only some of them are enterprises: those intentionally and professionally involved in creating surplus energy using the principles of self- supply. The energy surplus is for them an essential value and goal of activity, in comparison to which all other values and goals are subordinate and auxiliary.

1. Social systems and management

Paraphrasing the famous quote by H. von Ditfurth³ one might say that in the beginning was process. This rather uncreative statement is derived from one which is even more trivial, saying that nothing in this world happens as if deus ex machina. In short, the process is a necessary factor for any effect to occur.

The classic foundations of the action theory, including the definition of the process, are analysed and rendered by J. Zieleniewski, who indicated among others the significant role of T. Kotarbiński in this domain⁴. „A series of consecutive and somehow interdependent events can therefore be called a process⁵. If the status of a given thing is usually defined as the entirety of its characteristics, then a change of this status is called an event⁶. Events can take place „…as a result of the innate regularity of events …” or as „…an organisational process based on any human action …”⁷. In the former case, we cannot indicate the author of the process (spontaneous processes), while in the latter – the process has a clearly defined organiser (processes - actions).

Spontaneous processes take the direction of growth (self-organisation) or decline (self-disorganisation) in the degree of organisation of the material involved in these processes, solely due to the flow of energy. An event involving an underwater earthquake in Indonesia (2004) produced vast energy which launched the events of tsunami waves (induced energy), and this in turn caused tragic events of coastal devastation, in nearby and remote corners of the world. Without the flow of energy, no events can take place, no process will occur, a given system, with a given energy remains in static and dynamic equilibrium. The direction of the motion depends on the laws of nature and the mutual coincidence of participating components. An external observer, unless they interfere with the spontaneous system of processes, may observe sequences of events leading primarily, and ultimately, to entropies which locally and periodically may create enclaves of higher-order organisation. The fundamental laws describing and explaining these events are the laws of thermodynamics. These and other laws of nature play the causative and regulative role with regard to the processes in question, i.e. they cause these processes to take a particular and not random course. No values, other than energy-related ones, can be assigned to such processes, as they are not related in any way to any entity.

Processes referred to as actions⁸, are somewhat different from spontaneous processes. Firstly, they are authored by some entity, which means that they are not emanations of random coincidences and objective laws of nature, but instead expressions of the author’s intent (purpose) and will. Nevertheless, like in the case of natural processes, without applying and using energy, changes of status (events) will not occur, nor will sequences of events build a process taking a specific, not incidental, course. Such action, from the moment the intention to undertake it arises, calls for endless, varied involvement of the entity throughout the cycle, throughout its course. It calls for the application and utilisation of specific, and again not random, action factors (e.g. subject, method, tools, etc.) of personal, material and virtual nature. Action does not appear to be similar to the natural, solely energy-related, structure, transformation, but a continuously maintained organisation, sequence of events and other factors, to which we attribute the quality of organisation.

Energy-related values are only one element of the set describing the success criteria of the organisation which are the main determinants of its structure. The subject is the most important and organic component, action determinant. Action is used particularly to cognise and shape reality, and because it always takes place in some environment – it also has its system-based context. It should be emphasised that the outcomes of an action can not always be described as organised, however, even destruction requires that actions leading to it are to the necessary degree organised.

For practical reasons, we must treat action and the acting entity as a relatively closed system (boundaries), which exchanges matter, energy and information with the environment. For the sake of simplicity, the entire exchange between the system and the environment is reduced to energy. Exchange with the environment is necessary for two reasons: the system’s energy supply is exhaustible, and its transformation efficiency is less than 100%.

In inanimate natural systems, the factors organising exchange with the environment and transformation are the laws of nature, particularly those related to energy conversion. Motion, or events caused by the laws of thermodynamics, tend inevitably toward the state of equilibrium at the lowest energy level. It can be said to be the „value”, or „purpose” of motion.

In social systems, the subject/author causes and undertakes action animated by other values and purposes, too. By and large, these are constructive values and purposes, to a lesser extent – destructive ones, and the whole set includes values and purposes related to energy in a special sense. The conclusive factors here, however, are creation and management of actions at the acting subject’s will, and not exclusively according to the „blind” laws of nature. To accomplish the intended values and goals, though, one needs a certain structure of action, or its organisation.

Thus, an active social system as a whole must be organised to a certain extent, and to accomplish a given aim this organisation must be fixed in a given space-time. One of the problems that the subject faces is the hybrid nature of action. It makes it impossible to achieve the organisation level of a machine.

Let us consider the so-called action system (Fig. 1). We are dealing here with the following situation: the energy supply of this system is limited, because the system does not have inputs from the environment. Some of the energy gets used in the transformation process, whose efficiency is less than 100% (losses occur). These losses are subject to complete dissipation or recycling, but these consume more energy. Some other part of the internal energy is petrified in the form of the system structure and its links to the environment. Consequently, it can participate in the transformation to the extent corresponding to its consumption. At the same time, the structure (the energy contained in the structure) must be successively recreated, which also consumes additional energy. Thus, the full transformation, and ultimate emission to the environment via a system outlet is possible only with regard to the energy not built into

Fig. 1. Action as a hypothetical action system
S o u r c e: own work

the system structure, or in other words free energy in the structure. Finally, there occur spontaneous and induced changes of values and goals of the subject as well as outcomes of the system’s action. This brings about changes to the system structure, where the balance of energy is different depending on whether the system is expanding/reconstructing/reducing itself. The energy embodied in the change will not become part of the structure automatically – this requires an injection of additional energy.

As a result, the social system may influence its environment for a shorter time than one would expect judging by the simple balance of energy supporting the transformation, i.e. the lifecycle of such a system is conditioned by the above-mentioned variables.

Any way one looks at it, though, an active social system will ultimately, with the passage of time, lead to entropy. To extend its existence, one would need to assume transformation efficiency of 100% or find new sources of energy. The latter would also need to satisfy the needs for the above-mentioned additional energy.

Let us apply this model to a relatively closed social system. Let us ask whether its operational mechanism is similar, and what conditions would have to be met to extend its lifecycle, to make it exist and survive long-term, preferably indefinitely.

The relatively closed social system is not bound by the restriction stipulating no energy inputs from the environment, hence it may obtain additional, necessary or desired energy, from this source. Let us assume for the sake of simplicity that all of the social system’s own energy is confined within its internal structure and external structure (links to the environment), used for the purposes of transformation, with the structure remaining unchanged over a certain period. This means that the system has no other, free energy, and the only source of any energy it might need is its environment. Let us also assume that the system exchanges energy with its environment by means of equivalent transactions⁹ in terms of inputs and outputs, whereas only the energy obtained in output transactions can be used to carry out equivalent input transactions (self-supply). A transaction may only take place when the environment, by free choice, accepts the energy offered by the system (system outputs), and the system, by free choice, accepts the environment’s offer (at the input).

A fully equivalent exchange of energy with the environment means that the system receives energy compensation only for the energy actually submitted to and received by the environment. Thus, the system will not be compensated for losses incurred inevitably – let us assume through no fault of its own – during the transformation. Still, the energy needed in the transformation was obtained from the environment input in quantities including also the potential transformational losses. In terms of pure energy, there are no reasons why the environment at the output should accept the necessity to recreate the energy of the system structure as well as the additional energy necessary for the system to make changes. This is how the energy deficit emerges. It is the difference between the energy obtained by the system at the output, and the energy expended by the system at the input and in performing the entire transformation process: input – internal transformation - output.

Essentially, the balance of energy will be even only when the environment at the output accepts all the necessary energy expenditure of the system, such as: transformational losses and potential spending on recycling; outlay on replenishing the energy of the internal and external structure; outlay on changes; additional expenditure to perform all the above operations. With equivalent energy exchange this is impossible: there will always occur an energy deficit. The social system may level the energy deficit and possibly work out an energy surplus only through one of two ways: increasing operational efficiency and obtaining energy from the environment.

The problem with that is that energy exchange at system inputs and outputs does not happen automatically, the way it does in inorganic natural systems, from the higher to the lower energy level. The exchange takes place consciously, in the course of valuations and transactions, it is a social relationship. The social system loses energy in the transformation process, but for the purposes of the transformation it has acquired energy from the environment, the quantity of which it estimated according to the needs and expectations (value estimation). This value estimation also takes into account how the system anticipates the environment to valuate its output offer and the anticipated transformational efficiency. Then, in the course of negotiations with the environment at the input, the parties build the transaction, taking into account the conditions present in the environment, and if the transaction comes to pass, they agree the price and the terms of the transaction. The same process takes place at the system output, only in this case the social system is being evaluated by the environment¹⁰. The transformation is essentially a process of organising, wherein the social system expends energy, but also tries to add some value to the value acquired from the environment, so that the total value of the output offer aimed at the environment is estimated as highly as possible by this environment.

Every social system operates in a specific space-time, surrounded by other systems and social relationships more or less related to its field (domain, industry, sector). This environment accounts for the super-system operating in a broader space-time, within which the conditions of transactions concluded are shaped dynamically. These conditions must be considered when entering into transactions, regardless of acknowledging the specific conditions of the place and time of a given social system. If we assume that over the short term the social super-system comprises only the described category of social systems, and the total energy of the social super-system is constant¹¹, tthen essentially the global energy balance of transactions is a zero-sum game. This means that the emergence of social systems producing energy surplus is inevitably accompanied by systems incurring equivalent energy losses.

The attitude of the social system to energy surplus/losses stems from internal factors and external relations. The internal factors include, firstly, the accuracy of the energy offer aimed at the environment at the system output (adequacy to the needs and expectations of the environment), and its quality. Secondly, the level of transformational efficiency of internal transformations and those linked to the environment (volume, quality and structure of the energy involved compared to the outcome of applying and using it). The transactional conditions shaped in external relations of the social system include demand for the system’s energy, access to resources and transactional partners, possibility of choice, freedom of choice, information level and competition level. In general, the more liberal and complete conditions for concluding transactions (complete access to resources, complete information, etc.), the stronger the pressure for concluding transactions at a more objectified and lower energy level. This in turn puts pressure on increasing the value of the offer and raising transformational efficiency. There emerges a trend towards negative feedback stabilising the super-system, coupled with a relatively high use of its total energy.

Consequently, the social super-system consists of three groups of social systems with regard to their attitude to energy surplus:

•    capable of producing surplus over the long term (surplus systems),

•    systems of the transition zone, bordering on surplus and loss, probably incapable of maintaining the surplus/loss over the short and long term (labile systems),

•    systems remaining in the deficit zone over the long term and permanently incapable of producing a surplus (deficit systems). 

Fig. 2. Categories of social systems with regard to their attitude to the surplus 
S o u r c e: own work

The arrangement of those groups is presented in Figure 2. Profit-making systems are located in such an action domain, in a given space-time, that the combination of internal factors and external relationships brings about transactions with the environment at the output which exceed the total energy expenditure in the chain: transaction with the environment at the input, transformation, transaction with the environment at the output. Labile systems oscillate between profits and losses in this respect, whereas deficit systems experience permanent energy deficit.

It is possible to have systems not linked to the environment via transactions or transactional only to a certain degree, both at the input and output. Complete self-supply is a situation where the energy obtained in a transaction at the output is the sole source of the social system’s total energy requirement, in the above-mentioned transformation chain and links with the environment. In other words, a fully self-supplying social system has no other energy sources. There may be social systems which supply their environment at the output fully unreciprocally (there is no transaction), or partly unreciprocally. A similar situation may occur at the system input – the environment may supply the system partly or fully unreciprocally (lack of or limited energy transactions and expenditure). Examples of social systems of completely non-transactional nature, with fully external energy supply, impacting the environment in a completely unreciprocated manner, are charitable institutions.

Regardless, however, of the supply principles and scope of transactions, every social system, aspiring to exist over the long term, must have surplus energy, produced by itself or supplied by the environment.

The way that the social super-system is shaped depends solely on the entities managing it. The social super-system may, without interfering in some areas at all, bring about the evolutionary development of the systems operating within it. Their structure concerning their attitude to surplus/loss and energy supply will then be shaped in an independent, objective manner. Systems in the deficit zone must collapse and fall into entropy. Some collapsed entities and other systems from the remaining two zones will take all or some of this energy (recycling), to re-organise it. The super-system may also, being the maker, the creator, build and maintain social system under different principles. In that case, however, it must always, depending on their anticipated lifecycle, provide them with the energy surplus.

The first conclusion, stemming from the above assumptions, is clear: every relatively closed social system must sooner or later fall into entropy, collapse, if we assume purely energy-based, equivalent exchange with the environment.

The second conclusion, based on the above assumptions, is equally self-evident: the capacity for long-term survival, longevity, can only be achieved by such social systems which are capable of producing, or which are supplied with, energy surplus.

The energy surplus is therefore a necessary prerequisite for the social system to survive, and for the same reason a key value and purpose of every action, regardless of who, when, under what circumstances and on what principles, undertakes and conducts such action.

The fundamental questions regarding every action concern the position and role of the energy surplus in the structure of values and goals of each action. The consequences of this statement are far-reaching for the action systems both individually and collectively.

2. Synthesising the attributes of the enterprise

The enterprise has all the characteristics of a relatively closed, active social system. The enterprise is a highly complex dynamic organisation, comprising various activities. The leading role is played by its core operations, shaped into a vertical process chain of added value. The process identity of the enterprise is also constituted by managerial and auxiliary activities.

Imbuing all the processes of the enterprise with operational factors makes it object-oriented. The object-oriented constitution provides the whole with certain energy and allows for valuation in the form of enterprise value.

For the purposes of social relations, including defining laws, obligations and responsibility, the object-based entity provides the basis for defining the institutional identity of the enterprise. The latter constitutes its structural autonomy and affects its social identity in internal relations and those with the environment.

The essential characteristics of the enterprise include:

1. The enterprise is a social system isolated in terms of economy, organisation and law, interacting with the elements of the social super-system, including other enterprises.
    
2. The enterprise is created and shaped egocentrically on the entrepreneur’s behalf, account and responsibility.
    
3. The enterprise is a system which is created and shaped directly because of the economic surplus (motive) and for it (principal value and goal). Under the conditions of the commodity economy, the energy surplus takes the form of  economic surplus. For this reason, another principal value and goal is the intention of maintaining and multiplying its energy potential (enterprise valuation). This means that the bundle of intrinsically business-related goals of the enterprise must also include a return on invested capital. Considering the principle of self-supply, this bundle also includes a positive cash flow balance (for systems operating under the transactional conditions of the commodity economy).
   
   These direct, attribute-like values and goals are situated among other values and goals. Other values and goals are always subordinate to the purely business-related goals, if the enterprise aspires to longevity. Diverging from this principle inevitably leads to the situation wherein intrinsically business-related goals restrict other values and goals.
    
4. The enterprise is a fully self-supplying system which in contemporary world bases its relations with the environment primarily on transactions and contracts. It is intentionally, professionally involved in producing energy surplus, which is the key domain of its operations.
5. The principal process of the enterprise is economy. Economy describes the objective scope of the enterprise’s operations, the essence of which is acquiring, accumulating, allocating, applying and utilising the limited energy supply among various goals, so that the total benefit, and particularly the operational efficiency (effectiveness, beneficiality and economy), meets the entrepreneur’s expectations.
    
6. The material scope of the enterprise’s operations is discretional within the limits of social and legal acceptance. At its core is a generically defined vertical process chain of these operations. It accounts for core operations and the enterprise’s domain. Thus, the material scope of the enterprise is not solely production.
    
7. The temporal scope of entrepreneurial activities covers a whole spectrum of operations, starting from undertakings (projects), through short- and long-term actions, defined by the entrepreneur. The spatial scope of the enterprise’s operations is not limited, either, from strictly local to global activity.

The core, attribute of the enterprise comprises characteristics described in points 2 - 5. This means that any social system which can be attributed with the whole set of combined characteristics, belongs in the category of enterprises. These characteristics define the enterprise’s specialisation in the social division of the tasks of the social super-system. It involves transforming the energy of social systems on the above-mentioned key principles.

All the other categories of social systems comprising the social super-system are shaped by any entities on other principles, permitted or not forbidden by the law¹². Such systems can also be run by entrepreneurs, for example foundations without business goals, but they are usually run by the state and local governments. Some of them include segments operating on the principles of enterprises, usually serving to support the core activities of the system. Certain enterprises enter into business relations with local or state government bodies (for example, public-private partnerships), or get involved in the so-called public interest activities. Typically, in such cases they are subject to special provisions, both restrictive and protective in nature. Importantly, in this case these provisions somehow alter the formula of the „pure” enterprise.

The problem of categorical „purity” of the enterprise certainly exists, seen as the abundance of forms of activity in the social super-system cannot be decreed in advance. For example, the household is an economising system, but it is not an enterprise. The role of economic surplus and household valuation in the overall structure of its motivations, values and goals is considerably different than in the case of the enterprise. Also, the members of a household can hardly be called entrepreneurs.

Nevertheless, if the conditions of energy deficit persist, the household will collapse in the long term. The same applies to the social super-system, that is the national economy.

3. Selected consequences of the presented approach to the attributes of the enterprise

It would be impossible to address all the key consequences of the presented approach. Only selected effects are described below.

1. Enterprises need not be invented. They do exist as a category of profit-oriented social systems (economic surplus), operating on the principle of self-supply. Enterprises originate solely by necessity (the social system will not survive long term, unless it has economic surplus) and intent (someone wishes to be an entrepreneur). The lifecycle of the enterprise is a necessity resulting from the law of entropy, the law of economic surplus and the principle of self-supply. The fact that the enterprise can be revitalised does not prejudice those laws. The material scope of the enterprise’s operations is nominally unlimited. Its regimentation depends on the social contract, e.g. by law or social values.
    
2. That the enterprise is rooted in its environment and relates to it, in all respects, will always be a prerequisite to longevity. This also applies to the respect for and protection of the environment. Still, the limits of the enterprise must be defined for the purposes of its economy. The most natural method of economy is expansion by absorbing the environment (through cooperation or combat).
    
3. The problem of homo oeconomicus, the problem of rational economy will always remain at the core of the problems faced by the enterprise, surrounded by other problems, particularly of social nature. Rationality is a natural and important principle of behaviour in any social system, as long as it values longevity. The sole source of economic surplus, under the conditions of self-supply, is the energy of the environment. Nevertheless, rationality has a role to play in producing economic surplus. When resources are limited, it can contribute to increasing the surplus, or reducing it if the actions are irrational. This is significant for the above-mentioned deficit systems or labile systems (survival), and also for the surplus systems due to competition. Increase/decrease of the surplus as a result of more or less rational behaviour may for such systems mean achieving/loss of longevity or competitive edge. Only in this sense, can rationality be treated as a vital source of the surplus, and thereby, an important goal of the enterprise’s operations.
    
4. Inherently business-related, key values and goals for enterprises operating in a commodity economy include:
   
   

   • enterprise value (effectiveness in behaviour and increasing the energy potential),
   • profit (beneficiality),
   • cost-effectiveness (economy),
   • positive cash flow balance (permanent surplus-oriented flow of energy between the system and the environment).

   The intrinsically business-related goals of the enterprise are surrounded by other goals (bundle of goals). In terms of longevity, other goals will always remain subordinated to the intrinsically business-related goals. This does not preclude subordinating the intrinsically business-related goals to other goals, considered superior. It may take place only: 1) after the goal of longevity is recognised as inessential; 2) if the surplus level is sufficient to ensure the longevity of the system; 3) after securing economic surplus from other sources.
    

5. The socioeconomic super-system of the country is an essential component of the enterprise’s environment, and as such it will not survive over the long term, either. The state is not an alternative to the market, but a necessity from the point of view of the super-system. The state is an integral part of the super-system, its management system. If we assume that socioeconomic Darwinism is out of the question, the state is a necessary component managing a given super-system. The final frontier of the development of all social systems is the Earth’s natural environment and space. What we refer to as the capitalist system is a natural and most efficient form of organisation of the super-system.
    
6. The role of the enterprise in the social super-system is fundamental. Firstly, it is primarily enterprises that rationalise the utilisation of the existing energy of the super-system. Thus, they ensure its high utility and make sure that entropy is reined in (e.g. dispersed and inactive resources). It is particularly enterprises that, in search of new areas to increase value and energy surplus, penetrate the natural system. Consequently, they directly boost their own energy, and – largely indirectly – the energy of the super-system. They are a significant source of energy for the activities of local and state government entities (taxes). Therefore, they are able to fulfil management functions with regard to the subsystem. Thanks to entrepreneurship and enterprises, there is a strong motivation for citizens to get involved in economic activities across the social super-system. It significantly increases the chances if activating individuals and communities, particularly on the local scale. Finally, they undertake public responsibility in support of the environment. It is linked to the expectation of reciprocal gain (e.g. sponsoring in the hope of promoting and strengthening one’s brand), or takes place in a way defined as fully altruistic.
   
   Therefore, in the national economy enterprises should encompass all material spheres of activity, except for those which under the given circumstances belong in the zone of deficit systems. Exploration of the transition zone and determining the criteria for verification of the deficit zone is a theoretical and practical challenge, also for the enterprises themselves and the state. The gaps between the zones can be bridged by public-private partnership.
    
7. There is a need for enterprise studies, elaborating on the current state of knowledge. The interdisciplinary approach to enterprise studies is a natural consequence of the enterprise’s hybrid nature. Indeed, it is necessary to synthesise enterprise science at the level of enterprise as a category, that is at the meta-theoretical level.




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¹ On the system-based approach see: H. Witczak, Przedmiot zarządzania strategicznego, in: E. Urbanowska-Sojkin, P. Banaszyk, H. Witczak, Zarządzanie strategiczne przedsiębiorstwem, PWE, Warsaw 2004, pp. 23-34.

² More on this issue in: H.Witczak, Przedsiębiorstwo - system gospodarujący, in: K. Zimniewicz (ed.), Współczesne problemy organizacji i zarządzania, Zeszyty Naukowe 79, Wydawnictwo Naukowe AE w Poznaniu, Poznań 2006, pp. 31-49.

³ H. von Ditfurth, Na początku był wodór [In the Beginning Was Hydrogen], PIW, Warsaw 1978.

 

⁴ Cf.: J. Zieleniewski, Organizacja zespołów ludzkich, 4th edition, PWN, Warsaw 1972. J. Zieleniewski, Organizacja i zarządzanie, PWN, Warsaw 1969. Cf. also J. Gościński, Zarys teorii sterowania ekonomicznego, PWN, Warsaw 1977, p. 103 and subsequent pages.

⁵ J. Zieleniewski, Organizacja zespołów…, op. cit., p. 42.

⁶ Ibid., p. 41.

⁷ Ibid., p. 85.

⁸ J. Zieleniewski, Organizacja…, p. 29 („…action”, which regardless of how we (…) define it, is a process, that is a sequence of some events.”)

⁹ The ensuing reasoning refers to social systems conducting transactions solely through the process of trade at its inputs and outputs.

¹⁰ Other transactions, e.g. with employees, are omitted here.

¹¹ In actual fact, in the long term the total energy of the social super-system gradually, cumulatively increases thanks to obtaining energy from the natural system (structural changes, investments). On this principle, the global balance of transactional energy is not a zero-sum game.

¹² For example, it is quite common that law does not tolerate mafia-like behaviours and systems

 

III. Management studies vs. economic studies (Poznań 2007)

Introduction

We assume that action is a primary concept. Nothing happens in the social life without people and beyond them. Action is a category of processes helping control reality (the original), describe it according to our knowledge (representation models) and shape it according to our ideas and desires (master models, oriented towards values and goals). In nature, processes are not intrinsically actions, they occur randomly (probability) or according to relatively constant relations among the variables (principles).

The problems of economising in action are handled by economic studies, whereas the problems of driving – by management studies. Both economic problems and management problems are present in every action. Let us then consider and try to determine the relationship between economy and management.

1. Domains of the studies in question

1.1. The economic domain

Actions are performed by social systems, which have hybrid structures, are open and variable. In every action, and every social system respectively, we are dealing with the problems of economising and driving. Thus, the material scope of economic and management studies is materially unlimited – it concerns all the activities and social systems.
The problems of economising play a different role, depending on the attitude of actions and social systems to the economic surplus and self-supply. Social systems, intentionally oriented towards economic surplus in the conditions of self-supply, are referred to as enterprises. Economising is a fundamental process for them, hence economic problems and questions come to the fore. Without producing economic surplus and supply from the environment, no social system will be capable of longevity¹³. Thus the problems and questions of economising are important for every action and social system, also those intentionally oriented towards values and goals other than economic surplus, for example the household, country, armed forces, school, etc. They, too, must have economic surplus (to cover operational losses, reconstruct operational potential or maintain capability of change) and be supplied from the environment. Nevertheless, intentionally or objectively, they are not capable of producing economic surplus nor do they cover their costs solely from their revenues (i.e. they do not self-supply themselves fully).

Thus, the objective scope of economy is economising, i.e. acquiring, gathering, allocating, applying and utilising the limited energy of the action system to realise selected, various values and goals, in such a way as to effectively achieve the total benefit and economy of the action system as a whole consistent with the expectations¹⁴. In terms of subjectivity, economising does not restrict its domain solely to the interior of the action system, whatever it might be. The action system must manage its own (internal) energy, as well as the available energy of the environment.

The material and space-time scope of economy is universal – it is not limited. Each identified category of activities and social systems is the object of economy. Thus, in terms of their attitude to economic surplus and supply, there can be profit-oriented systems, non-profit systems and mixed systems. In terms of their size, there are small (simple) systems and activities and large (highly complex) ones. In terms of space, economy deals with local and global activities and systems, while in terms of time – past activity, present achievements and shaping the future.
Predictably, such values and goals as beneficiality and economy must be somehow related to and situated among the overall values and goals of the action system.

In light of the above-mentioned characteristics of social systems (hybridity, openness and variability), the varied technical, social, natural, etc. issues are strongly related to economic processes. To sum up, it makes sense to use the term „economic science” (ES), „economics” or „economic studies”.

1.2. The management domain

The situation is analogous with management. Driving behaviours of the action system consistent with the will and goals of the managing entity calls for shaping the psycho-social energy, that is authority. The objective scope of management is therefore causing (deciding), modelling, organising, directing and linking the action system, also in its relations with the environment, ensuring effective action. Deciding signifies authoritarian judgments and settlements. Modelling is shaping representation models and master models. Organising means shaping organisations, and therefore bringing about a situation where all the components of the action system and its environment contribute to its success¹⁵. Directing means driving human behaviours, without which no activity would be undertaken, and no other resources would be activated, applied and used. Linking is supervising and controlling the consistency of intentions with facts (implementation), but also adjusting, modifying, learning through feedback and feedforward, etc. All these activities comprising the nature of management make it possible to control the condition and situation of the action system, i.e. drive behaviours.

The material and space-time scope of management – like in the case of economics – is universal. We manage the whole of any activity and its system both in a specific situation (location in a given time) as well as the situation in a given space-time (the ratio of own potential to the potential of the environment). Like with economics, management is strongly related to other issues inherent to social systems. To sum up, it makes sense to use the term „management science” (MS), „management” or „management studies”.

2. The scientific system

2.1. Foundations of the scientific process

Of key significance is the attitude of the subject of the scientific process to its object. The subject may perform three kinds of scientific operations with regard to the designated object. It may cognise it (cognition and as a result – cognisance), assess it (rating and valuating, and the result – assessments and evaluations; axiology) and decide about it (act with regard to it in a normative, directive manner). Principally, the object of these operations may be anything, however taking into account the relationship with reality, these objects may be referred to as originals (objects existing as components of reality) and models (representations of originals). This arbitrariness is, nevertheless, restricted by the scientific nature of the process: not every cognitive, axiological and normative operation with regard to a given object carries the attributes of scientificity [the criteria of scientificity and components of the scientific system in social sciences are discussed in more detail in: 2) Witczak H., (2006), pp. 135 - 151; 3) Witczak H., (2006), pp. 605 - 615].

One needs to know what (cognisance - knowledge) and know how (capability of applying knowledge) in order to be able (fitness to shape the object, i.e. apply knowledge). Being able to do something means having the ability of evaluating cognitive knowledge, against other knowledge and practicability, as well as capability of valuating this knowledge in terms of the possibility, purposefulness and feasibility of using it. This requires axiology, starting from defining the problem of applying cognitive and axiological knowledge. Only having laid that foundation (cognitive and axiological) can we move on, if we wish to be scientifically consistent, to shaping reality (the normative scientific process). The starting point of this process is defining the shaping objective, solving the problem of shaping the original using scientific principles.

At the root of the scientific process lie scientific doctrines, of economics and management respectively. A doctrine is a decision of the subject of the scientific process to take up a position on the principles of conducting the scientific process. This doctrine is also a function of the existing paradigms, the subject’s culture and other variables.

Can, therefore, management science and economic science have the status of complete sciences, combining the dimensions: cognitive, axiological and normative?

2.2. Outcomes of the scientific process

It is quite commonly believed that economics and management discover and formulate laws regarding economising and driving. It is also thought that economics is a complete science, whereas management is normative only.

Laws express relatively permanent and unambiguous relationships between variable data. As a result, by resorting to laws we can undertake and conduct scientific and non-scientific operations¹⁶, for example shape the reality of enterprises. According to this latter approach, laws (used as master models to shape reality) are of normative nature, they determine the rules which decide which variables govern other variables. In social systems, the variables are, or include, people. They set the direction of actions, and thereby direct change, by shaping relationships among the variables. That is why we are talking about the laws of behaviour or laws of human action or system operation. The laws of behaviour and action (the laws of social mobility) are in actual fact such arrays of variables which represent directed change, including the flow of energy and resources. They are assertions referring to how the dependent variable (-s) is/are driven by independent variable (-s) in social systems. Whereas in natural systems, the components of which are not people, we are dealing with the laws of natural mobility (nature), in other words: specific relations among the variables whose subject we do not know. However, in our actions we must respect these laws (comply with them) and use them skilfully.

There is only a tiny, but exceedingly important detail: we must know all these laws, be able to apply and use them. Without such potential at our disposal, we are doomed to shaping reality on pre-scientific or non-scientific principles.

Cognitive and axiological studies on a given subject are, therefore, key sources of normative science on this subject. Without the knowledge of „what, where, etc. was, is, will be” (scientific procedure and cognitive knowledge) as well as the knowledge of „what, where, etc. was, is, will be valuable – i.e. has value” (scientific procedure and axiological-cognitive knowledge), it is impossible to shape reality in a scientific manner (scientific procedure and normative knowledge).

2.3. Cognitive, axiological and normative processes of science

2.3.1. Cognitive scientific process

The first step in cognition and cognizance is exploration, that is discovering that „something exists” („it is”), acknowledging that there is an object-based existence (desigants) [A similar approach is presented by T. Parsons and E.A. Shils, differentiating four levels of theory: ad hoc classification systems; taxonomies; conceptual structures; theoretical systems. See: Frankfort-Nachmias Ch., Nachmias D., (2001), pp. 53-56].

Man, treated as the scientific subject equipped with a definite cognitive repertoire (personal and supportive), placed in an environment which is by all means isotropic, cannot perform any recognition and cognitive determination within it. His cognitive power equals zero precisely because of the perfect homogeneity, no information comes from the environment, none of its objects can be designated, as it is not distinguishable from among the others. When a component of the environment changes, with regard to the previously complete isotropy, its fluctuation will occur and it will differentiate itself from the environment. Such change can be registered by the subject (if it is capable thereof), there will emerge information received by the subject, „something” or „it” will be designated at the macroscopic level¹⁷(Fig. 1).



wherein: O – environment;
P – designated object.
Fig. 1 An object emerging out of the environment
Source: own work.

The first type of cognitive operations (designation – interactions marked 1 in the figure) involve referring the object to its environment. Registering any change in the hitherto perfectly uniform environment of the observer (the subject of the scientific process), carries information for the observer but also calls for changes of energy in this environment.

The observer’s cognitive capacity would be complete, if they were able to recognise any changes. The observer exploring a black body (complete isotropy in terms of radiation) would perceive such change, provided that they had an appropriate registration system, that is a radiation detector, and they were aware of it¹⁸. A change of radiation in a given space-time of the environment would be noticeable against, or in reference to, the radiation of the rest of the environment. In other words: if a given fragment of the environment changed in terms of radiation, and were recognised as such, it would only be through differentiation. „If a fragment of the environment is distinguishable in terms of radiation (A) from the rest of the environment, it means that there is an electromagnetic change (B) taking place there”. Such designation and determination results from concluding through relations between variables: if A (explanatory variable), then B (explained variable). Still, we have only grasped the macroscopic existence, we know nothing more. To move on in the defining process, we need to perform more extensive scientific operations than just designation, it is necessary to identify, which is impossible without taxonomy and explanation. It is necessary to perform scientific auxiliary operations in mode 1 (see figure 1), full exploration in mode 2 (examining the interior of the object) and explore feedback and feedforward mechanisms in the relations between the object and its environment.

Not all assertions concern the relations between dependent and independent variables in the sense of causing motion, so they are not all laws of motion. With regard to the material scope, we can talk about assertions concerning components, structure and systems, which makes it necessary to make assumptions on the initial scope of the object under examination. The initial component of the scientific process may for example be the enterprise, links between enterprises create a structure, while the market is considered the socioeconomic system. Some other time, man is a component of the enterprise, his links with the objects of work create the structure of the labour process, while the job position is the labour system.

2.3.2. Axiological and normative scientific processes


The above-mentioned laws, provided that they meet the criteria of a definition, have the status of cognitive laws, binding explanatory variables with explained variables. In laws of normative nature, on the other hand, we are dealing with relations between variables on the principle: dependent variable – independent variable in the meaning of causing motion (a different function). Wishing to cause changes in a chosen object of reality (original) in a scientific manner, we must first determine what they should be (a postulate regarding the master model of change – a normative postulate). Initially, this postulate may also be of a macroscopic nature: „it should be, it should happen” (a conceptual master model). It provides a differentiation between what is (the original, the current status) and what should exist (the postulate, the desired status). How do we know what the desired status should be? We ascribe a certain value to it, preferred out of the possible, purposeful and feasible values. This value must be higher not only from the other values, but also from the threshold value, capable of knocking the subject out of its equilibrium (the threshold motivational value).

The normative procedure is, therefore, impossible without assessments and evaluations (axiology)¹⁹. Some believe that axiology may not be the subject of scientific consideration with regard to social systems, due to the extreme subjectivity and the psycho-social nature of cognition, meta-axiology and deciding on assessments and values (normative axiology). Such an approach effectively means that the research field is arbitrarily closed for science. What is more, it is also tantamount to accepting that solely pre-scientific and non-scientific principles of cognition, axiology and deciding on the social systems should be used²⁰.

The third (not in any particular order) category of laws are the laws of axiology. They determine, as long as they meet the criteria of a definition, the relations between evaluating variables and evaluated variables. In the axiological and cognitive approach, the formula will take the following form: If A (evaluating variable), then the value of the given object is B (evaluated variable).

3. The essence of the relationship between economics and management

Summing up, we will say that the category domains of the scientific process with regard to the subject’s attitude to the object of the scientific process (here: management and economics of social systems) are as follows:

1. cognitive process – knowledge regarding the object,
2. axiological process – values related to the object,
3. normative (decision-making) process – control over the object, particularly over the original (reality, practice of social systems).

Using the above scheme, we can interpret the completeness of economics and management as cognitive, axiological and normative sciences.

Scientific processes in economics concern energy and resources in terms of the material scope, whereas in terms of the objective scope – the economic processes of action systems. For example, cognition and cognizance in economics involve reaching the following categories of cognitive scientific economic knowledge.

1) About energy and resources, as well as economic processes in action systems. Cognition includes discovering such regularities as shaping the relation between the marginal cost and average cost in the enterprise.

2) About assessments and values related to resources and economic processes in those systems. The consequences include cognising such values as: utility value, exchange value, value gained (income), value lost (cost), goodwill.

3) About master modelling and master models related to energy and resources as well as economic processes within those systems, i.e. scientific transformation of already existing action systems into postulated ones. Economics, here, cognitively indicates on what principles the master models of energy, resources and economic models should be constructed, what the content of those master models should be and how to realise them.

Let us examine the assessment process and values in economics using the example of the meta-assessment of cost (recognised as value lost). It consists in determining the significance, role of cost and, ultimately, ascribing a meta-value to the cost (a value itself) in a given object, given situation or – if at all possible – the enterprise as a category. It is expressed in assessing cost as a universal meta-value, in such categories as: superior value, priority, equivalent value, subordinate value. Finally, the examples of master modelling and materialising the master models of energy, resources and economics include the scientific determination of the postulated outlay models; how to optimise and realise them as application models, as well as implement them so that the originals of the outlay system (the actual expense) are consistent with the master model. The problem here stems for example from: 1) determining the desired master model in space-time (tp)0, and implementing it in (tp)n; 2) the emergence of new opportunities for and pressure to implement the master model in the period between (tp)0 and (tp)n; 3) the prerequisite of having cognitive knowledge on the specific implementation principles or developing it while it is being shaped. All this requires specific scientific knowledge on shaping expenses as well as the practical skills to apply and use it²¹.

Management can be subjected to similar analysis. The object of cognition and cognisance, here, involves driving the action system, assessment and values related to driving this system as well as shaping the driving process. It refers to all the activities which together constitute driving: causing, representative and master modelling, organising, directing as well as feedback and feedforward linking. One can develop similarly the other scientific processes in management: valuation as well as master modelling and implementing master models.

Management focuses on any outcomes, or rather on all the outcomes anticipated by the acting entity, including the economic outcomes. This means that from the manager’s point of view economic outcomes constitute a subset in the set of outcomes. An economically-oriented manager aims at bringing about a situation whereby action of the system is primarily beneficial and economical. With such focus, the beneficiality and economy of the action system are key, or superior, goals for the manager. Therefore, the manager chooses such activities and systems of causing, modelling, organising, directing and linking (thereby shaping the management subsystem in a given social system) to effectively achieve beneficiality and economy of action.

Economising has a narrower objective scope and effective scope. Firstly, it applies to the energy- and resource-related dimension of any action system, being but one of the overall set of dimensions. Secondly, it focuses on the beneficiality and economy of the action system, selected outcomes of the set of outcomes. The economist examines each action from this point of view, including management. This is because management, as a process and subsystem in the action system, can also be beneficial and economical to a higher or lesser degree.

This concept is illustrated by a four-field matrix, applying two variables: scope of focus within the action dimension continuum (from the energy- and resource-related to any dimension – the Y-axis), and the scope of focus within the outcome continuum (from beneficiality and economy to any outcome – the X-axis). Moving clockwise from the beginning of the coordinate system (zero), we get four fields (Fig. 2).



Fig. 2 Domains of management and economics
Source: own work

1. Field 1.1. – energy and resource-related focus of the action dimension /focus on beneficiality and economy of the action outcomes. This marks the core of economic processes, or the domain of economics.
2. Field 1.2. – focus on any action dimension /focus on the beneficiality and economy of the action outcomes. This marks the domain of managing the economic processes.
3. Field 1.3. – focus on any action domain /focus on any action outcome. This marks the core of the driving process, or the domain of management.
4. Field 1.4. - energy and resource-related focus of the action dimension / focus on any action outcome. This marks the economics of any action, including management.

Let us consider the relationships in question in the form of a matrix intersecting management and economy (tab. 1). Decisions (causative processes) concerning the acquisition of energy and resources for the action system sum up in a non-simple way with the decisions concerning other economy-related activities. As a result, we obtain the decision-making subsystem within the management system of economy as a whole. The appropriate approach to the remaining management activities will make it possible to determine the subsystems of modelling, organising, directing and linking, and ultimately – the management system of economy as a whole, in the action system as a whole. This table may also be read in reverse order. For example, acquiring resources for modelling processes, etc.

Tab. 1
Management and economy

Management       Economic activities	Causing	Modelling	Organising	Directing	Linking	Synthesis of managing individual economic activities
Acquisition	Causing acquisition	Modelling acquisition	Organising acquisition	Directing acquisition	Linking acquisition	Synthesis of managing acquisition
Accumulating	Causing accumulation
Allocating	Causing allocation
Applying	Causing application
Utilising	Causing utilisation
Synthesis of individual management activities in economy as a whole	Synthesis of causing in economy					Economic management

 

Source: own work

The hybrid nature, openness and variability of social systems determine the fact that scientific processes apply both to ephemeral conditions and events, as well as those of permanent nature. It is, therefore, natural that economics and management pertain to the continuum: they attempt to assert and shape individual processes and phenomena (cases); discuss activities and systems constituting their subsets (assertions and shaping whose scope is limited to the subsets); and explore categories of activities and systems (the universal scope of the scientific process). Such categories include for example the enterprise, national economy, household. Assertions concerning the enterprise X are consequences of a case study, those concerning the industry Y – are assertions about a subset, while those referring to any enterprise – are assertions about a category.

All the values and goals of the action system, including beneficiality and economy, must be designated, cross-referenced and situated against each other in a specific way.

4. Economics and management vs. other sciences

The relationship between economics and management vs. other sciences can be analysed in any number of ways, depending on the assumptions we make. For the sake of this study, we shall divide those sciences into: related social sciences, natural sciences and other sciences.

Related social sciences are those which formulate assertions necessary to develop the assertions of economics and management (primary functions). They include particularly those referring to people and communities, such as: psychology, sociology, anthropology, political science, history, etc. Other sciences include those which play a supporting role to economics and management, for example mathematics, systems theory, logics. Finally, natural sciences perform a primary function (for example, chemistry for the chemical engineering industry) and a supporting function (for example, astronomy).

A broader examination of the relationship between economics and management and those sciences exceeds the scope of this study. Let us just note that the starting point for these analyses should be defining of the object of the scientific process as accurately as possible. The action (functioning) of an „area of natural beauty” is a different expression from the action of the „Wielkopolska region”; the functioning of a „school” differs from that of an „enterprise trading in chemical products”, which in turn differs from that of an „enterprise producing and trading in handicrafts”. In any of these objects, management and economics must try to solve distinct industry-related problems at various levels [management or economics of the area of natural beauty calls for additional „nature-related” knowledge and skills in the category-based sense (nature as a whole), and not just the local one].

The sciences under analysis cover the largest scope when considered at the category level. In this case, we are talking about economics and management with regard to any social system. There is a problem, applicable to both management and economics, of how to transcend from the level of an individual action system to the category level. For example, the economics of a „plant cultivation enterprise” calls for allocating, applying and utilising the resources of fertilisers or pesticides. It should comply with the laws of biology and other natural sciences, and take into account the technical and economic factors of resource outlay in a specific agricultural situation, but also the specific market situation of the enterprise. How to link the laws of economics applicable in this situation with the universal laws of economics at the level of any action system, i.e. those which apply regardless of the industry characteristics? Can we resort to the hypothesis used in physics and cosmology which refers: the laws of cosmology to the universe, the laws of classical mechanics to the macroscopic world, wherein the physicist functions, and the laws of quantum physics to the microcosm? The existing division into singular „economics” and „macro-economics” and „micro-economics” is a step towards universalisation, though an imperfect one. Further exploration into the subject is needed. There is a role to be played here by meta-studies: meta-economics and meta-management.

It will be quite to the point here to mention that scientific processes also need to be managed and subordinated to economy. If these processes take place in scientific enterprises, then by nature economy will come to the fore (as the superior goal overriding the merit-related outcomes of the scientific process). The manager’s main goal will be to ensure the success of such an enterprise (the economic processes within a given branch of science), according to the expectations of the main stakeholders. In other cases, economics plays a restrictive role with regard to the scientific processes involved. Management in that case aims primarily at realising the merit-related outcomes of the scientific process (as the superior goal with regard to other values) and staying within the adopted economic constraints.

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¹³ Supplying the system from the environment may take place on various principles, depending on its causes and the links between system inputs and outputs. Self-supply means that at the only energy at the system input is that obtained through energy exchange that the system performs with the environment at its outputs. In the commodity economy, the only source of energy available to the enterprise at the input is the sale of goods and services at the output. Apart from self-supply, there are also other potential supply sources, such as non-returnable subsidy or appropriation.

¹⁴ These expectations can be expressed in various ways, for example as maximisation, optimisation, minimisation, satisfaction.

¹⁵ Organisation is the opposite of entropy, it is a necessary prerequisite for the efficiency of a given action. Without a certain level of organisation, the action system will not achieve any goal. Organisation means restricting the freedom of behaviour of the individual components in favour of the whole, consolidating and stabilising the whole. It is one of the things which make it at all possible to conduct the scientific examination of such systems in categories other than stochastic and statistical ones.

¹⁶ Non-scientific operations – activities undertaken and conducted outside of the realm of science.

¹⁷ The macroscopic level – information about the object as a whole treated somehow superficially, without the information about its interior (unrecognisable without additional cognitive operations directed at the interior).

¹⁸ M. Skłodowska – Curie’s body received radiation, of which she was initially unaware, although, certainly, this can hardly be considered a case of scientific detection.

¹⁹ We are not discussing here other-than-scientific sources and principles of assessment and evaluation, for example those based on will (whim). Assessments and evaluations are performed in every scientific process (cognitive, axiological and normative), but the domain of science dealing directly and mainly with assessments and evaluations is axiology. Hence, we can talk about axiological-cognitive, meta-axiological and axiological-normative studies.

²⁰ It is hard to accept this viewpoint. The assessment whether a given price is higher or lower is a necessary precondition for the evaluation, whether it is good or bad from a certain point of view (axiological-cognitive decision). This, in turn, forms the basis for generating a postulate with regard to the desired master model of the price level, i.e. a decision about the price, etc. When making this decision, we are not moving in the sphere of alchemy, or mysticism, or any other domain whose existence is debatable (one of such issues is how many devils one can fit on the head of a pin – do they fit, or do they not fit? Are there fewer, or more? etc.).

²¹ Cognitive knowledge about a factor blocking or eliminating the gene responsible for breast cancer does not in any way mean that we can do it for prophylactic or therapeutic purposes in a living woman. Likewise in social systems, the knowledge about the link between the marginal cost and the average cost does not automatically lead to being able to achieve the desired relationship in the enterprise in a complete and reliable, prophylactic and therapeutic way. Variability, openness and hybrid nature of this system pose additional problems for the science of economics and management.

 

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Bibliography

Frankfort - Nachmias Ch., Nachmias D., (2001), Metody badawcze w naukach społecznych [Research Methods in Social Sciences], Wydawnictwo Zysk i S-ka, Poznań.

Witczak H., (2006), U podstaw twierdzeń nauki o zarządzaniu, [in: Sławińska M. (ed.), Podstawy metodologiczne prac doktorskich w naukach ekonomicznych, Wydawnictwo AE w Poznaniu, Poznań].

Witczak H., (2006), Problem naukowy jako podstawa aktywności naukowej w nauce o zarządzaniu, [in: Zimniewicz K. (ed.), Instrumenty zarządzania we współczesnym przedsiębiorstwie. Analiza krytyczna, Zeszyty Naukowe 81, Wydawnictwo Naukowe AE w Poznaniu, Poznań].

Zieleniewski J. (1972), Organizacja zespołów ludzkich, 4th edition, PWN, Warsaw.

 

IV. Approaches to management (Poznań 2008)

1. The enterprise vs. management

One must take into account that the enterprise exists in an environment and can be shaped through the integrated and organised structure of various activities. First of all, there are core activities, comprising the vertical process chain aimed at creating the added value. These activities lead to the emergence of the portfolio. It is complemented by all sorts of auxiliary activities, i.e. supporting, conditioning, facilitating, supplementing, catalysing, etc. with regard to all the others. Further, there are the activities of executive and managerial drive ensuring the efficiency of the whole content and form of action, control over the enterprise and its environment. Another group of activities involves communications, producing knowledge, and its highest form - wisdom. Finally, without economising the enterprise would not survive over the long term.

2. The current paradigm of enterprise management

The consistency and organisation of this paradigm was once defined by H. Koontz (1961) as the Management Theory Jungle. This condition has not changed to date, and what is more the dynamic growth of management studies had additionally clouded the picture. These days, this paradigm has distinct points of gravity. By far, the prevailing view is that normative functions prevail among the potential cognitive, axiological and normative functions of management studies. It is generally believed that management science is directive in nature, i.e. it formulates principles dictating how to manage a given social system, including the enterprise, successfully. Sometimes, management studies are denied their cognitive and axiological status^[1], by claiming that they are exclusively normative and derivative of economics.

One cannot agree with such a viewpoint, for a number of reasons, primarily because it is based on misunderstanding the nature of management itself. The above approach stems from identifying management with running a business successfully. It is a double misunderstanding. Firstly, the domain of management is being practically reduced to the so-called business activity. This would mean that the objective scope of management should exclude the vast realm of social systems of a non-profit nature. Are they not managed? Secondly, how are we to know how to manage, or run e.g. an enterprise successfully, if we do not have the scientific foundations, cognitive and axiological, concerning management? Are we to assume that economics supply those? Then why do we talk of management at all, why not stop at economising? Why did management science not develop alongside economics, but instead it originated over a hundred years later?

3. Premises shaping the approaches to enterprise management

The concept promoted herein stems from the above-described understanding of every action, as an integrated structure of activities among which we can differentiate both driving behaviours (domain of management) and economising (domain of economics). In other words, any action includes the elements of management and economics related to it.

The conclusion is as follows: management and economics do not exist as self-contained activities, as in that case they would not have an object of their own. They exist solely as an element of a given action, thanks to which they have their own object. As such, they can also be the object of the scientific process.

Action is an inseparable whole comprising core and supporting activities, managerial and executive driving^[2], economising and communicating. What does it mean in practice, in the above-mentioned context of changes, with regard to management?

Firstly, management is subordinated to the results, course and circumstances of action as a whole, and necessarily and predominantly to the core activities. This is because the latter designate the essence of a given action. The values and goals of core activities are superior to the management activities.

Secondly, the links between management and the other activities of every action and social system are necessary and inevitable. Of particular importance are the links between management and economy. They are bilateral and reciprocal (“managing the economy” and “economy of management” or better: “economy in management”). The highest degree of correlation takes place in enterprises (profit-oriented systems). The enterprise’s core processes are economic activities in a given field, hence these activities as well as beneficiality and economy are the superior values and goals for management. The enterprise’s manager is obliged to drive beneficial and economic activities above all others (superiority, priority), but they must also determine and shape their role among the non-economic values and goals. In non-profit or mixed systems (where some activities are oriented towards the economic surplus while others are not) economising is a necessary activity, but it is subordinated or of equal rank to other values and goals. In no social system is economising ever a marginal activity, it is always a key one, because of the necessity for every social system to achieve the economic surplus. In non-profit systems, repeated action or longevity are not achieved through self-supply, unlike in the case of enterprises.

Likewise, one could analyse the relationship between management and communications. Both „managing communications” and „communications for management” are possible options. Managing communications involves bringing about such communication processes and systems to convey specific messages and achieve a certain level of knowledge, whereas in turn the efficiency of management itself is strongly dependent on communication systems.

Thirdly, management must be sufficiently consistent and organised internally (as a complex structure of activities, a system) as well as in relation to other activities of the action and the social system. When there is a fire, we cannot apply the democratic management style and deliberate on the methods of extinguishing it. Such an approach would be a sign of evident maladjustment and failure to subordinate managerial activities to core activities. Another example, adopting the zero-based planning model and then implementing incremental planning is an evident inconsistency. The effects of such inconsistencies are more visible in the process of human resources management: declaring that remuneration is based on the quantity and quality of work (model of motivating activity in management), while actually rewarding loyalty or seniority, may lead to tension, reducing the effectiveness or causing a breakdown of the social system. Change of management and its system may not take place without reference to the activity that the management is related to or contrary to the principles of management cognition science.

Finally, the assertions of management science and economics regarding social systems are unambiguously and organically related to the characteristics and circumstances of the actions of these systems. In other words, they are components of the system of assertions about these systems as a whole, in combination with the assertions:

1) about core and supporting activities and their systems;

2) about communication activities and their systems;

3) about executive driving activities and their systems.

For example, a system of such assertions about a profit-oriented social system in the conditions of self-supply would comprise the domain of enterprise studies. In terms of the spatial scope, social systems have a hierarchical structure. Going up the hierarchy, we are dealing with systems of assertions about the national, regional, international and global economy. On the other hand, social systems in the material sense have a sector-based/functional nature, for example the agricultural system, which also differs in terms of the attitude to economic surplus and self-supply (enterprises, non-profit systems and mixed systems). At the same time, the agricultural system may be an agricultural enterprise or an agricultural system oriented solely towards social utility[3]. This directs our attention towards social systems as a system category as such, which we differentiate from e.g. natural systems. Assertions at the level of social systems as a category would be the most universal, with the broadest scope of validity and highest scientific merit. This calls for considering the admissibility and scope of convergence and consilience[4].

Social systems are capable of self-changing all their elements as well as internal and external relationships, which sets them apart from animate systems which are genetically programmed and are organic systems. Changes in the regulatory subsystems of animate systems (nervous, humoral, and others) cause somatic changes consistently and directly, and affect the effectiveness of the animate system. This takes place depending on such factors as their specific flexibility (local deformation and restoring the original state) and elasticity (speed and limits of the repertoire of responses to changes). Exceeding the response limits activates ultra-stabilisers restoring the equilibrium or damages/destroys the system.

In social systems, the relationships between changes in the management subsystem and changes in the system as a whole are far more complex, also because the collapse of the social system stops at the level of individuals. Individuals, through independent or collective efforts, can reconstruct the appropriate social systems and their management subsystems, usually with at least subtle changes. The level of consistency and organisation of social systems and their management subsystems never reaches the level of the machine, at most the imperfect forms of integration exceeding federation[5].

Actions and the social systems implementing them are by nature imbued with chaos, paradoxicality and dialecticality. Thus, continuity and change are natural, too.

4. Management in the broader sense

Driving a given process and the social system executing it under the conditions of continuity/change is currently identified with, let us coin the term, management in the broader sense. Its attributes are as follows.

a) Management is identified with the holistic structure of all the activities comprising the way that a given action is driven (management = driving).

b) The manager (driver) of the social system is expected to make sure that the whole succeeds. Management (driving) is to take place according to specific regulations (norms), providing success. Management is omnipotentially responsible for the success of the action and the social system.

c) Management is identified with economising, in view of the essential role of energy and resources in the success of social systems. For the same reason, it focuses particularly on economic systems, even to the extent that management of other social systems is negated or considered a separate research trend. On the other hand, this leads to “management” inflation – whereby nearly everything is subject to it: risk, value, relations…

d) The normative management philosophy consists in first determining the master model of action and social system. Then, this model is realised so as to arrive at the original (an actually existing action and social system) as close to the master model as possible. Throughout the period, the manager makes sure that the original is derivative of the master model, as close and as consistent with it as possible.

In the above approach, management does not have a sufficient cognitive foundation (the cognitive trend in enterprise studies), and it borrows it, subordinates to or identifies with particularly economics.

5. Management in the narrower sense

Management in the narrower sense has different attributes.

a) It is one of the functional components of action as a whole (driving action and social system). All activities, including management, are inseparably integrated into a higher-order entity (action as a whole). Management does not exist as an autonomous action. Management is not omnipotentially responsible for the success of the action and social system.

b) In this approach, management is responsible in a given action for driving behaviours of the components and the action as a whole, which always takes place through people, and effectiveness. Management has to play a driving role, because social systems, unlike natural systems, develop through creation first, and only then through evolution.

c) The core of management is authority, that is controlling the action and social system as well as the circumstances. Recognising the essence of driving behaviour and the nature of shaping and utilising authority is crucial to the success in management.

d) The management system is a subsystem in the social system and influences the success of its action as a whole. This is thanks to driving behaviours involved in all the other activities as well as the action and social system as a whole, i.e. shaping and utilising power. However, people directly using and shaping the energy and resources in core, auxiliary, communicative and economic activities (executive driving), are only more or less likely to respond to management consistently with the will and intention of the managing entities (managers). Hence, the effectiveness of management is positively correlated with the success of the action and social systems, but it only one of the variables affecting the direction, likelihood and extent of the success.

e) The inflation of management theory stems from the prevalence of the normative approach. Nevertheless, shaping the management subsystems of social systems in the cognitive sense, including enterprises, must not disregard the nature of the enterprise, the circumstances surrounding its operations, the stakeholders’ doctrines (especially the managing entities). This also applies to the movement of social systems between the boundaries of determinism and chaos, opposing conditions, situations and tendencies (dialectics) as well as solving intrinsically contradictory problems (paradoxes).

6. The relationship between the broader and narrower approach to management

In the above approach, management has its own cognitive foundation, which allows us to assess and evaluate it, as well as postulate and realise the original of management and its effectiveness. Management science is therefore complete: it generates cognitive, axiological and normative assertions.

Table 1. Scientific processes and approaches to enterprise management

 

Scientific processes related to management   Approaches to management	Cognitive	Axiological	Normative
1. Management is identified with running the enterprise	Processes producing knowledge about running the enterprise successfully (domain of enterprise studies, currently underdeveloped)	Processes producing assessments and evaluations regarding running the enterprise successfully (domain of enterprise studies, currently underdeveloped)	Processes shaping and realising master models of running the enterprise successfully (domain of enterprise studies, currently most intensively developed)
2. Management is one of the activities comprising running the enterprise	Processes producing knowledge about the management process and shaping the management subsystem and their effectiveness in the system of running the enterprise (domain of management studies - currently underdeveloped)	Processes producing assessments and evaluations regarding management and management subsystem as well as their effectiveness in the system of running the enterprise (domain of management studies - currently underdeveloped)	Processes shaping and realising master models of management and management subsystem as well as their effectiveness in the system of running the enterprise (domain of management studies - currently underdeveloped)

 

 

Source: own work

 

 

There is, however, a strong relationship between running the enterprise (management in its broader sense) and management in the narrower sense.

a) The manager is generally responsible for running the enterprise, as they are the cause and author (driving). At the same time, they are locally responsible for the effectiveness of narrowly understood managerial activities, same as the executive driving entities are separately responsible for the effectiveness of their own actions. In other words, the general responsibility of the entities running the enterprise is divided and limited among the managerial driving and executive driving. Management in the narrow scope arises out of the division of work – a manager appears when there are limitations on working on one’s own, hence management means driving the behaviour of other people, and only through them - processes, objects, institutions and social arrangements of the enterprise.

b) General responsibility is linked to general causation, which in turn is attached to the entity running the enterprise. In particular, the following questions regarding the enterprise as a whole are assigned to this entity:

- those of the enterprise’s identity by designating its status and situating the action within the environment (for example: doctrine of the action; key values and goals – directions of the action; stakeholders and satisfying their needs, portfolio of products and services oriented at satisfying certain needs);

- those of economising and its status among the other values and actions of the enterprise;

- those of causing and its nature (e.g. driving action, division of authority and responsibility among specialised managers and executors; the issue of resources - problem of ownership over things and people; the problem of informational asymmetry);

- those of informing, communicating and their outcomes as well as their status among the other values and actions of the enterprise;

c) In the case of sole (individual) action, characterised by the highest level of integration of the constituent activities (to paraphrase – all in one; consistency and level of organisation unachievable by social systems), the subject of the action is responsible for everything, that is for conducting the action and the social system. On the other hand, the division of work produces a collective manager and a collective executor – and consequently collective congruence[6] including management in the narrow sense. Management in the narrow sense must also be recognised, as its underdevelopment (independent variable) affects adversely the success of the enterprise – management in the broader sense (dependent variable).

Both approaches are historically legitimate, hence there can be no imbalance as to their development. For example, we cannot accept the imbalance involving the prevalence of management identified with running the enterprise in the normative approach, while at the same time marginalising management in the narrow sense.