The Canadian Journal of Higher Education, Vol.

XXII-2, 1992
La revue canadienne d'enseignement supérieur, Vol. XXII-2, 1992

A Philosophical Approach to Business Education

JAANA WOICESHYN *

Abstract
Business education has been blamed for deficiencies in the leadership, decision-
making and ethical conduct of business managers. The quantitative and analyti-
cal orientation in business school curricula and the consequent lack of humani-
ties-based courses have been identified as reasons. The fundamental reason,
however, lies in the philosophy of business research and education which
shapes the curricula, teaching methods, and ultimately the graduates' ability to
handle various managerial functions.
The most commonly recognized philosophical basis of business research is
empiricism. The argument presented here is that pragmatism, which shares ele-
ments with empiricism, has also significantly shaped business education. This
paper is an attempt to show why empiricism, together with pragmatism, are the
root causes of the above deficiencies. Supplementing business school curricula
with humanities courses, a strategy often recommended to correct for the defi-
ciencies, is not sufficient. As an alternative solution, an objective philosophical
approach is evaluated, along with its practical implications for business educa-
tion.

Résumé
La formation en administration est souvent blâmée pour les lacunes rencon-
trées chez les gentionnaires en regard des habiletés de chef de file et de prise de
décision, et par-rapport à l'éthique professionelle. On attribue généralement
ces lacunes à l'orientation strictement quantitative et analytique des pro-
grammes d'études et à l'absence de contenus provenant des disciplines des let-
tres et des sciences humaines. Cette communication, cependant, suggère que
ces lacunes s'expliquent avant tout par la philosophie sous-jacente à la
recherche en administration et en éducation sur laquelle reposent les pro-
grammes d'etudes, les méthodes d'enseignement, et utimement, les habiletés des

* University of Calgary. The author would like to give special thanks to her husband,
Glenn Woiceshyn for his encouragement and comments. Also, the author benefitted
from the feedback of the three anonymous reviewers. Finally, the author would like
to thank Gary Hull for his very helpful comments.
74 Jaana Woiceshyn

diplômés à remplir diverses fonctions de gestion.

L'empirisme est la base philosophique la plus généralement reconnue des
recherches en administration. L'argument présenté ici est que le pragmatisme,
qui partage avec l'empirisme plusieurs éléments, exerce lui aussi une influence
importante sur le développement de l'enseignement en administration. La
présente communication a pour but de montrer comment l'empirisme et le prag-
matisme sont les causes fondamentales des lacunes déjà citées. Pou les
combler, il ne suffirait pas d'étoffer les programmes d'études en administration
de cours en lettres et en sciences humaines, solution trop souvent recom-
mandée. Comme solution alternative, une approche philosophique est évaluée
ainsi que ses implications pratiques pour l'enseignement en administration.

Training of future managers in business schools has been criticized as too quan-
titative and too technical, and as ignoring qualitative, i.e., "human" and ethical,
issues (e.g., Peters & Waterman, 1982; Behrman & Levin, 1984). Business
graduates know how to calculate net present values but cannot lead and moti-
vate their subordinates or distinguish morally wrong decisions from right ones.
The graduates also have been said to prefer "analytical detachment and method-
ological elegance over insight, based on experience, to the subtleties and com-
plexities of strategic decisions" (Hayes and Abernathy, 1980, p. 70). Such pref-
erences have led to a short-term orientation in decision-making and, conse-
quently, to shortcomings in ethical conduct.
A solution to the deficiencies in business education may be achieved by
examining their philosophical basis. In other words, understanding what philo-
sophical orientations underlie business research and teaching is critical to
changing their consequences (cf. Mulligan, 1987). A full discussion is beyond
the scope of this paper but a brief overview of the philosophies most influential
on business education is provided. These philosophies are empiricism and prag-
matism. Rationalism, the dominant philosophy of the humanities, is described
briefly as a contrast. This discussion is followed by some potentially important
implications for business education and a proposal for a possible resolution.

The Philosophical Foundations of Business Education

Philosophy is a study of the fundamental nature of existence and of human
beings. The three basic branches of philosophy are metaphysics, epistemology
and ethics. Metaphysics is a study of the nature of existence, epistemology, a
study of how knowledge is obtained and ethics, a study of how human beings
 A Philosophical Approach to Business Education 75

should live. Ethics rests on metaphysics and epistemology; knowledge of

human nature, of existence, and of human means of knowing existence are pre-
requisites for determining how human beings should live.
Historically, the two opposing views in metaphysics have been the "primacy
of existence" and the "primacy of consciousness." The primacy of existence
view, first advocated by Aristotle, maintains that the universe exists indepen-
dently of consciousness; i.e., "there is no mental process that can change the
laws of nature or erase facts" (Peikoff, 1982, p. 329). In Francis Bacon's
words:" Nature, to be commanded, must be obeyed." On the other hand, the pri-
macy of consciousness view maintains that consciousness creates or controls
existence (cf. Mulligan, 1987). Strong advocates of this view were Plato,
Augustine, and later, the German idealists, particularly Kant and Hegel.
These metaphysical views have corollaries in epistemology. In the history of
philosophy, the defenders of the primacy of consciousness have rejected reason
as the human means of knowledge and substituted faith or intuition. On the
other hand, advocates of the primacy of existence have been advocates of rea-
son. Reason is "the faculty that identifies and integrates the material provided
by man's senses" (Rand, 1964, p. 20)'
To identify and integrate sense data, reason requires concepts. "A concept is
a mental integration of two or more units possessing the same distinguishing
characteristic(s), with their particular measurements omitted" (Rand, 1990,
p. 13). For example, the concept of a table is formed by observing various
tables, distinguishing them from other entities such as chairs and book cases,
and integrating them on the basis of similarities into a new unit. The concept
subsumes all tables, no matter what their size or material, and we recognize
them as tables as long as they have characteristic features; i.e., a flat surface
with support(s).
The validity of concepts is perhaps the most important issue in philosophy.
Concepts are valid if they refer to reality and are formed by an objective
method, i.e., logic (Peikoff, 1982, p. 330). Concepts are also practical: they
allow us to hold vast knowledge of reality, which would otherwise be impossi-
ble. Concepts enable us to hold knowledge of facts by subsuming numerous
concrete entities under a single label, such as "table", "business firm" or "prod-
uct market strategy." Without concepts, the world would be a complex, uninte-
grated chaos. Those who reject reason also reject the idea that reality is the basis
of concepts; mystics (e.g., Plato, Augustine) believe that the basis of concepts is
in some supernatural realm; skeptics (e.g., Hume) deny the possibility of
76 Jaana Woiceshyn

conceptual knowledge altogether. The approach to concepts is a fundamental

issue in the philosophy of business education, as will be shown in this paper.

Empiricism and Pragmatism

In the history of philosophy, the dividing issues between different schools of
thought have always been the views on reason (particularly concepts) and reali-
ty, and the approaches to ethics are mere corollaries of these views. The schools
of thought that underlie today's business research and education, empiricism and
pragmatism, are both anti-reason. 2
The empiricists reject reason in that they discard as meaningless any ques-
tions that cannot be verified by sense data.3 Questions that require abstraction
from sense data — What is the nature of business firms? What should their goals
be? - fall into this category (Mulligan, 1987). This view underlies the culture of
sciences and has had a significant influence on business research by determin-
ing what the appropriate questions for study are, and how answers should be
sought. This research philosophy has affected teaching in the selection of sub-
jects in business schools; many courses are science-based and rely on quantita-
tive methods of analysis (Mulligan, 1987; House, 1975).
The empiricists attack reason also through skepticism. The early empiricists
(before Hume) claimed that only sense data count as knowledge, and concepts
are merely arbitrary labels for sets of sense data. Integration of sense data, or
observations, into universal concepts is impossible because verification of uni-
v e r s a l would require an infinite set of observations. So the early empiricists
emphasized direct sense data, but abandoned reason (and concepts) as the inte-
grator of the sense data. The modern empiricists (from Hume onward) are thor-
ough skeptics; they reject altogether the possibility of objective knowledge, and
thus concepts.
The rejection of reason by pragmatism (see Dewey (1958) and James (1955))
is based on its view of reality: reality is not objective. Its nature is determined
by people, by whim or by majority vote. In essence, there is no distinction
between an external world and the consciousness perceiving it. Pragmatism has
been mostly influential on business education (although it has had some impact
on certain notions of theory, as discussed later). Case study guides emphasize
that there are no right answers to cases (e.g., Thompson & Strickland, 1984,
p. 275); and the discussion method introduced by John Dewey centres around
polling opinions and consensus rather than finding objective solutions (cf.
Peikoff, 1984, p. 13).
Their view of reality led pragmatists to skepticism: certainty is impossible
 A Philosophical Approach to Business Education 77

because reality changes all the time. An idea is considered true if it works, but
whatever works today may not work tomorrow. According to pragmatism, there
cannot be any permanent concepts or principles because of this constant
Heraclitean change. 4 The only way to gain knowledge according to pragmatism
is to conduct public polls and take majority votes. Reason is invalid, and con-
cepts are not possible.
The ethical views of empiricism and pragmatism are derived directly from
their stands on reason and reality. Empiricists dismiss ethics as meaningless
since direct sense data cannot provide answers to moral questions. They main-
tain that one cannot derive values from facts. Pragmatists do consider ethics but
fail to provide any objective guidelines for conduct because there is no standard
these guidelines could be based on; everything is constantly changing, and
observations are interpreted subjectively, either by an individual or a group.
This means that each circumstance is unique and people's conclusions about it
are different. The only guidance that remains are the immediate feelings or
instincts for what works in a given circumstance. 5 Pragmatists take ends and
goals as given, since they can be whatever one would like, and therefore any
means can be justified. Faulty products could be introduced to the market if
short term profit were the goal.
Table 1 summarizes the empiricist and pragmatist views of existence, con-
cepts, and ethics, along with their implications for business education. (To con-
serve space, rationalism and Objectivism are also summarized in Table 1,
although they are discussed later).

Rationalism
The contrasting philosophical view to empiricism and pragmatism is rational-
ism, the dominant philosophy of the humanities. Since most of the proposed
solutions to the deficiencies in business education are based on rationalism, it is
discussed here as well. The rationalist view of reality, reason and ethics is
opposed to empiricism. Rationalism has influenced pragmatism but there are
some crucial differences. Despite its name, rationalism is anti-reason.
The basis for the rejection of reason by rationalism is its view of reality. The
rationalists, in the tradition of Plato, Augustine and Kant, maintain that the uni-
verse does not exist independently but is created by consciousness, either
human or divine. The argument is that there are two realities: the one that we
perceive and the "true" reality created by consciousness, such as Plato's "world
of forms", Augustine's "supernatural" or Kant's "noumenal world". This is the
Table 1
Comparison of Empiricism, Pragmatism. Rationalism and Objectivism

IMPLICATIONS TO
METAPHYSICS EPISTEMOLOGY ETHICS BUSINESS
(view of reality) (view of concepts) (view of moral choices) EDUCATION

Primacy of existence: Knowledge is gained through Ethics is meaningless - science-based

reality exists independent of empirical observation only because direct sense data courses
EMPIRICISM consciousness. Most Concepts are arbitrary labels cannot provide answers to - quantitative
empiricists hold this view. for sense data, i.e., concepts moral questions methods
not objective

Primacy of consciousness: Knowledge is a matter of Ethics is subjective: what - the case method:
PRAGMATISM no distinction between an majority opinion works or feels right is right "no right answers"
external reality and Concepts not objective - class discussion
consciousness

Primacy of consciousness: Knowledge is gained through Ethics is dogmatic or arbi- - business ethics
RATIONALISM human or divine conscious- intuition or revelation trary: rules for right conduct courses, mostly
ness creates reality Concepts not based on reality, given through intuition or based on altruism
i.e., concepts not objective revelation by a supernatural
consciousness

Primacy of existence: Knowledge is gained through Ethics is objective: a neces- - courses in philoso-
OBJECTIVISM reality exists independent of reason: empirical observation sary moral code for human phy (Objectivism)
consciousness - things are and mental integration survival and happiness, - lecturing to teach
what they are Concepts mental integrations based on reality concepts and prin-
of empirical observations i.e. ciples of motivation,
concepts objective integration, structure
 A Philosophical Approach to Business Education 79

metaphysical view underlying many of the humanities, reality created or con-

trolled by consciousness.
Since the rationalists believe that one of the realities is superior, "real"
knowledge is knowledge of the other, "true" reality. The "true" reality is sup-
posedly the source of all concepts. Thus, sense data of the perceived reality are
not the starting point of concept formation, and neither is reason the tool. The
"true" reality is reached through intuition or "awakening." Thus, the emphasis is
on the mind acquiring knowledge, independent of reality, through some mysti-
cal intuition or revelation from a divine consciousness. 6 (The pragmatists state
that the collective or democratic consensus determines knowledge.) Knowledge,
and concepts, are important to the rationalists, but the faculty acquiring them is
not reason, and concepts are not objective.
Rationalist ethics follow from the rationalist views on reality and reason.
Since reason is not the source of knowledge, norms for right conduct are not
determined by reason, but, instead, are given through intuition or mystical reve-
lation. These norms or rules tend to be arbitrary or dogmatic since humans do
not have any rational means of assessing them or adjusting them to a given con-
text. Kant's ethic of altruism is an extreme example of strict, dogmatic norms
and rules.

Implications of Philosophy of Business Education

The predominant philosophies shaping business education have been empiri-
cism and pragmatism. The influence of empiricism on research and teaching in
business schools is easy to understand. Empiricism has been the dominant phi-
losophy of science, especially since its modern version, logical positivism,
flourished between the 1920's and the 1940's. Management studies, as a young
discipline, has been anxious to seek legitimation as a science and therefore has
turned to empiricism or positivism (Susman & Evered, 1978; Behling, 1980;
Whitley, 1984). This has shaped both research and teaching, which are often
data-driven rather than theory-driven, emphasizing methodological sophistica-
tion and dismissing metaphysical and ethical considerations.
The influence of pragmatism in business schools is due to its cultural domi-
nance in North America. Its impact can be seen mostly in teaching but to a cer-
tain extent in research as well. Pragmatism is often prevalent in case teaching:
students go over particular decision situations case after case, without necessari-
ly integrating the particulars into principles. (This does not, of course, apply to
all schools and all instructors but is nevertheless a recognized problem in many
80 Jaana Woiceshyn

places (Kirkpatrick, 1989; Cohen, 1982).) Pragmatist ethics are relativistic and
thus practically contentless and, when taught, have left students without any
guidelines for conduct. The influence of pragmatism on research is evident in a
certain theory notion. The so-called contingency theory, which became popular
in the 1960's, maintains that there are no general principles of managing or
organizing, i.e., no theory is really possible (Kast & Rosenzweig, 1972; Wood,
1979).
Both empiricism and pragmatism have left business education lacking and
have given rise to the accusations of a "quantitative" and short-term orientation
of business graduates. Providing students with specific decision-making tools
by teaching the "sciences," the pragmatist method of problem-solving and the
pragmatist ethics do not help them to understand the long-term consequences or
moral implications of their decisions, nor the principles involved.
One of the popular recommendations for solving the problems of short-term,
quantitative orientation in managerial decision-making has been to supplement
business school curricula with humanities-based courses, and particularly with
ethics (Gandz & Hayes, 1988; George, 1988; Hosmer, 1988; Mulligan, 1987).
However, inserting a few ethics courses into the curricula is likely to be ineffec-
tive as long as empiricism and pragmatism remain the dominant philosophies of
business education. Ethics and other humanities courses are at odds with busi-
ness courses because they often are based on a different philosophy, rational-
ism. Rationalism is at conflict with the underlying philosophies of the sciences
and business, a situation eloquently referred to as the "two cultures" (Snow,
1956). This conflict requires a resolution before the humanities courses can
truly complement the business curriculum or help to solve the problems plagu-
ing business education.
Although rationalism differs from empiricism and pragmatism in its
approach to sources of knowledge, it shares one apparent shortcoming with
empiricism and pragmatism: a non-objective view of concepts. Concepts are
non-objective if they are not based on systematic observation of reality; they
are merely convenient or arbitrary labels given to entities or ideas. Rationalists
sever the link between concepts and reality. They believe that concepts are
intrinsic in some other dimension.
The argument made in this paper is that, as long as the non-objective view of
concepts prevails, the deficiencies in business education cannot be corrected.
These deficiencies influence the way business graduates acquire knowledge and
their views on ethics. As long as the method by which knowledge is acquired
 A Philosophical Approach to Business Education 81

and views on ethics are considered subjective or arbitrary, the business gradu-
ates will have trouble thinking beyond the concrete of a given moment. This
leads to short-term decision-making, a lack of concern for ethical consequences
of decisions, and a lack of understanding of human nature, which is essential for
developing leadership skills. A possible resolution is discussed next.
An Alternative: An Objectivist Philosophy
An alternative philosophical view claims to overcome the conflict between
empiricism, pragmatism and rationalism by recognizing reality as the sole
object of human perception and the mind as capable of integrating percepts into
concepts. This view is called realism.7 One particular and recent version of real-
ism, Objectivism, is discussed here.8 The major advocate of realism in the histo-
ry of philosophy was Aristotle, followed by Aquinas, Rand (1990)9 and a very
few other contemporary philosophers (e.g., Sellars, 1963; Harre, 1970).
As stated earlier, many of the solutions offered for the problems in business
education have to do with supplementing science-based courses with humani-
ties so that the two underlying philosophies would peacefully c o - e x i s t .
However, Objectivism appears to make collaboration between empiricism and
rationalism unnecessary, since it claims to overcome their metaphysical, episte-
mological and ethical conflicts and deficiencies, and also avoids the problems
caused by pragmatism.
Objectivism maintains that there is only one reality, the world we perceive,
not two distinct Platonian worlds of concepts and physical phenomena.
Objectivism futhermore maintains that the human mind is capable of obtaining
knowledge of reality by means of reason, i.e., through sense perception and
concept formation, independent of the field of inquiry, whether it be sciences or
humanities. According to Objectivism, it does not matter whether we are trying
to understand a certain biochemical process or the nature of human beings—we
still need both sense data and conceptualisation to reach that understanding. The
sciences cannot rely on empiricism, and neither can the humanities rely on
rationalism.
Only one philosopher, Ayn Rand (1990), has explicitly solved the false
dichotomy of mind vs. reality posed by rationalism and empiricism. With regard
to concepts, Objectivism does not suggest that concepts exist in some other real-
ity incomprehensible to the human mind (as most rationalists would argue).
Neither does Objectivism maintain that concepts are arbitrary labels we give to
certain concrete phenomena (as most empiricists and pragmatists would argue).
82 Jaana Woiceshyn

The Objectivist view is that concepts are mental integrations of particular exis-
tents. In other words, there is no split between mind and reality; concepts are
formed by a person's mind, based on the facts of reality. Therefore, concepts are
objective.
According to Objectivism, concepts are cognitive tools in that they enable
humans to classify and organize cognitive material; and therefore they make
possible the acquisition of knowledge on an unlimited scale. Concepts are a
means for keeping order in the mind and they make thinking possible (Rand,
1990:69). This view of concepts is unique. If adopted, it could drastically
change business education.
The Objectivist ethics (Rand, 1964) is based on its views of reality and rea-
son. It begins with life as the standard of value and each person's own life as
one's purpose. Unlike altruism, Objectivism maintains that one should neither
sacrifice oneself to others nor others to oneself. This view is called rational
self-interest, i.e., based on reason, as opposed to the popular notion of
self-interest as involving the violation of the rights of others to serve oneself.
The political implication of these ethical premises is that people must be free to
exercise their reason, i.e., the principle of individual rights.
Unlike animals, a human being must discover the knowledge necessary to
achieve the values required to sustain one's life. This knowledge is held in the
form of principles. For example, honesty and justice are principles governing
how one should deal with others. These principles condense vast amounts of
concrete information and thereby allow us to consider the consequences of our
decisions and to act in the long range (Peikoff, 1989). For example, if a person
understands the principle of honesty, he or she does not have to start from
scratch every time when trying to resolve whether to "fake reality a little" by
lying in order to gain a value. The principle would give the answer quickly.
Table 1 summarizes the key differences between Objectivism, empiricism,
pragmatism and rationalism.
Integrating Objectivism into Business Education
Business schools are trying to train future managers and business experts. A
crucial skill they need is problem-solving and decision-making, the ability to
foresee and evaluate both short- and long-term consequences of their decisions
(House, 1975; George, 1988). In order to make complex decisions and to act
long-term, one needs to integrate particular perceptions into concepts and to
identify principles (see also House, 1975, p. 325). In Objectivism, thinking
 A Philosophical Approach to Business Education 83

conceptually and grasping principles require certain metaphysical and epistemo-

logical premises, i.e., that concepts and principles are valid means of arriving at
the truth, which is the recognition of reality.
Concepts, according to Objectivism, and as defined earlier, are mental inte-
grations of perceptions or earlier-formed concepts, with their measurements
omitted. Concepts are prerequisites and building blocks of principles. "A princi-
ple is a fundamental, primary, or general truth, on which other truths depend"
(Rand, 1964, p. 144). The ability to conceptualise by integrating and identifying
principles gives humans the capacity to solve problems and act long-range. "By
organizing his perceptual material into concepts, and his concepts into wider
and still wider concepts, man is able to grasp and retain, to identify and inte-
grate an unlimited amount of knowledge, a knowledge extending beyond the
immediate concretes of any given, immediate moment" (Rand, 1975: 17).
An example of a principle, or a conceptual integration, in the field of busi-
ness is the Law of Demand which states: "Ceteris paribus, there is an inverse
relationship between price and quantity." This statement, although simple,
involves a tremendous number of integrations of concrete observations and
other concepts. Another principle borrowed from microeconomics is that the
two factors enabling the sale of goods and services are price and quality. These
two principles (which are also the basis of Michael Porter's (1980) theory of
generic strategies) serve as guidelines for managers determining their firms'
competitive strategies and enable them to make conclusions beyond the given
concrete situations.
If c o n c e p t u a l thinking is a skill b u s i n e s s s c h o o l s w a n t students to acquire,
c h a n g e s are n e c e s s a r y in both curricula and m e t h o d s o f t e a c h i n g .

Curriculum
Most of the subjects in business schools provide students with specialized
knowledge and skills, such as marketing, accounting and human resource man-
agement. While these specialized skills are important, the future managers also
need an ability to integrate the specialized knowledge. Integration is left to a
few business policy courses, and these often do not suffice because the students'
ability to think conceptually, which is essential for integration, is deficient.
Thinking skills are essential for problem-solving and decision-making, and
business schools should offer courses that would improve conceptual thinking
(cf. House, 1975).
Two kinds of courses would improve conceptual thinking. The first is to
teach c o u r s e s in p h i l o s o p h y ; this would require instructors trained in
84 Jaana Woiceshyn

philosophy, particularly in epistemology. Exposure to Objectivist epistemology

would facilitate students' thinking skills because of the views on concept forma-
tion and principles in Objectivism. The need for conceptual thinking and forma-
tion of principles is often visible in business ethics courses. A grab bag of topics
from "social responsibility" of business to employee "whistle blowing," or
worse yet, a collection of cases to which "there are no right answers"
(Beauchamp, 1983; Cavanagh & McGovern, 1988; Velasquez, 1988), may
build awareness of ethical issues but not teach a conceptual approach to ethics
(George, 1988).
The second option is to demonstrate conceptual thinking along with the spe-
cialized subjects. The application of Objectivist epistemology to specific topics
means that instructors would structure their courses hierarchically so that simple
concepts and principles lead to more complex ones. Students would be able to
identify particular pieces of knowledge, relate similar pieces, and integrate to
form concepts and identify principles based on similarities. This would enable
students to retain what they have learned, by letting them integrate knowledge
into bigger "chunks." Integration also would help students to see the effects of
their decisions by revealing cause-effect linkages and relationships among vari-
ous concepts and principles. The application of Objectivist epistemology is dis-
cussed more in the section "Objectivist principles as applied to teaching."

Methods of Teaching
Perhaps the most widespread method of teaching in business schools in North
America is the use of cases (Freedman & Stumpf, 1982; Cohen, 1982). Case
study as a sole method was criticised above for often being too concrete and
failing to integrate the abstract and the concrete. Case study as a component of a
course can, however, be a vehicle for illustrating concepts (Mintzberg, Quinn,
James, 1988). Good teaching consists of a right balance of the abstract and the
concrete, and cases can represent the concrete. Too much abstraction is difficult
for the human mind to grasp because the connection to reality is lost; but at the
same time, the mind cannot retain too many concretes either (see Rand, 1990).
The use of business cases has shaped classroom techniques. The case method
relies heavily on discussion where the onus is on the students. This can be a
tremendous waste of time from the point of view of actually learning something
unless students are mature enough, well prepared, and have reached a sufficient
level of knowledge (see also Cohen, 1982). This combination of conditions is
rarely reached until the Ph.D. or the executive program levels. Even MBA
 A Philosophical Approach to Business Education 85

students are struggling to form the basic concepts and principles. The discussion
method is widely adopted, though, because of the pragmatist position that there
are no right answers, and that everything is a matter of opinion.
Objectivism would involve more directed methods such as lecturing and the
combining of lecturing and discussion. Lecturing can be a very effective
method of teaching if it is done by a trained mind. Because it requires commu-
nicating the structure of the subject matter to the students, integration becomes
possible. Discussion is needed to monitor students' learning; and during a case
discussion the instructor must take a directive role in order to help the students
to think about the consequences of the decisions they recommend.

Objectivist Principles As Applied To Teaching

Objectivism maintains the position that there are certain principles of teaching
that facilitate conceptual thinking. In a broad integration, three principles can be
identified, as outlined below.10
1) Motivation. Before anything can be taught, the students should be
interested in learning. Their minds do not function automatically; they must
choose to focus their attention, and therefore any course should start with moti-
vation. The instructor would show how his or her specific subject helps the stu-
dents to achieve the skills they need or want. This may sound self-evident, but
motivation is a challenging task in a course about general management princi-
ples or about strategic management of a firm, when students are years away
from general management positions and when they need to learn abstract con-
cepts about business firms and their interactions rather than engage in the "trea-
sure hunt" for the solution of the case of the day.
Initial motivation, however, is not sufficient, since it is easy to lose the stu-
dents' interest during a long semester. The instructor should provide continuous
motivation by showing that he or she is delivering what was promised at the
beginning, and that it is important. Again, continuing motivation is more critical
when one is trying to teach and integrate concepts such as a business firm, com-
petitive strategy and organizational design rather than conduct problem-solving
exercises through case discussion where integration is not necessary.
2) Integration. Integration is a central process of human cognition. The
mind can only hold so many concrete perceptions and integrating them into
concepts is crucial (see Rand, 1990, pp. 62-74). Teaching conceptual thinking
is to teach the subject matter in a certain way, by integrating the parts of a sub-
ject into a whole or a unit. In contrast to today's education, the emphasis should
86 Jaana Woiceshyn

be on similarities, not differences; this goal is accomplished by pointing out

common denominators and giving overviews. Differentiation is also important,
however, but less difficult.
Integration implies not only relating the parts of a whole but also connecting
the abstract and concrete. Abstractions can be difficult to grasp, and they must
be connected to reality by giving concrete examples and showing how princi-
ples can be applied. Education should be like a shuttle: from concrete to abstract
and back to concrete to illustrate the abstractions. Ideally, a student should be
able to reduce every principle to a concrete situation and to identify and apply
principles to any situation.
At present, a typical business policy course suffers from lack of integration.
It consists of different cases to which a number of solutions are acceptable.
Finding the similarities and common denominators among them is rarely
attempted. Moreover, the cases represent only the concrete; the abstract is miss-
ing. In other words, few concepts and principles are identified. Increasingly,
business policy courses have started to present a number of key concepts in the
field and to integrate them into a common framework (e.g., Montanari, Morgan
& Bracker, 1990). Yet, the problem of integrating the abstract and concrete
remains. Cases are supposed to provide the concretes, but they are often overly
long and full of detail to "provide realism" (Kirkpatrick, 1989). This "realism"
also makes them difficult to retain, and the illustrations of concepts and princi-
ples, if present, are lost under the detail.
3) Structure. Knowledge in any field forms a hierarchy with concrete
facts as the base. The instructor should determine the proper organization for
teaching his or her specific topic, since facts are unintelligible if taught in a
wrong sequence. Interest, however, cannot be the organizing principle because
students may be interested in questions they are not ready to learn. Instead, the
hierarchical nature of the subject determines the structure of a course. A course
should proceed from lower level concepts to higher ones. For example, in busi-
ness policy, the concept of the firm should be clear before one discusses formu-
lating or implementing business strategy. Every subject has some kind of inner
logic. Pinpointing that inner logic and organizing a subject properly to facilitate
conceptual thinking is often the most challenging part of teaching.
For example, business policy courses have been structured around the size of
the firm or the complexity of financial information provided in cases. The case
selection logic has been to analyse cases on small firms first and then move on
to larger ones, or to discuss the cases with the most complex financial informa-
tion last. If the courses were designed to teach concepts and principles,
 A Philosophical Approach to Business Education 87

however, they would start with the most fundamental concepts such as the busi-
ness firm and managerial work, and then proceed to next level of concepts, such
as strategy and organizational structure.

An Illustration
As an illustration only, let us compare two hypothetical graduates. One of them,
Mr. A, has graduated with a MBA from a prestigious business school that
emphasises practising problem-solving through case analysis and discussion. In
none of the approximately two hundred cases Mr. A analysed and discussed
with his classmates was there ever a right answer; everyone's opinion was con-
sidered equally valid. No concepts and principles were offered to integrate the
cases. The other graduate, Mr. B, has graduated with a MBA from a school that
had adopted a very different philosophy. Courses provided many concepts and
principles, and they were integrated into easily retainable frameworks. Short
cases were used to apply the concepts and principles to various business situa-
tions.
Upon graduation, both Mr. A and Mr. B were hired as general managers of
small firms. They need to decide how to start working in their new positions
and what to do. Mr. A polls the few other managers, performs a SWOT analysis
(strengths, weaknesses, opportunities, threats), a tool that was always used in
case analysis at school, and scrutinises financial statements. The SWOT analy-
sis and the financial statements do not give any reason for concern or changes,
but the plant manager and the marketing manager give him contradictory infor-
mation and advice. This doesn't puzzle Mr. A. since he knows there are no right
answers and everybody's opinion is equally valid. He takes the plant manager's
advice because operations management was his favourite subject at school; and
he devotes his time to improving the production process and creating a pleasant
atmosphere in the firm by improving the physical facility and reward systems.
Mr. B also starts his new job by analyzing financial statements, performing
analyses on the competitive environment, and talking to other managers. From
the managers' reports, his analyses, and his observations, he concludes that
there is no reason to make immediate changes. So what should he do first?
From his MBA courses he learned the principle that the successful firms estab-
lish and maintain a relationship of legitimacy with the investors and customers,
and make efforts in capital acquisition and resource allocation. Being the man-
ager of a small firm in a small town, he decides that getting involved with the
Chamber of Commerce is the best way to get his own credibility established and
88 Jaana Woiceshyn

thus to maintain the company's legitimacy. Although the balance sheet is satis-
factory, Mr. B follows the principle of the successful firms and decides to
increase working capital, in order to have some slack resources for any unantici-
pated events. He arranges a new line of credit at the prime rate through a bank
manager, also a fellow Chamber of Commerce committee member.
After about a year in their jobs, our business school graduates face a crisis: a
foreign firm unexpectedly introduces a revolutionary new process technology
that requires significant investment. Mr. A is left scrambling. His recently
upgraded production system is obsolete, and he has difficulty raising financing.
The company is falling behind in competition; its performance is deteriorating.
Mr. B, on the other hand, uses his additional line of credit and also manages to
arrange a private placement through his contacts. Very few competitors have
been able to acquire the new technology, and the company's sales and profits
start to soar.
Of which of our graduates can we be proud? More importantly, to whom do
we want to trust the leadership of the nation's businesses? The choice is
between the one who focuses on the concrete and the short-term, and the other
who acts in the long-range, on the basis of a framework of concepts and princi-
ples.
Conclusion
The deficiencies in business education are not necessary and can be overcome.
Philosophy can be blamed for the deficiencies, but it can also come to rescue.
Empiricism, pragmatism and rationalism are not the only alternatives.
Objectivism may be able to overcome the problems caused by the dominant
philosophies, and it could be adopted by researchers and educators in sciences,
humanities, and business alike. Objectivism is based on the notion that reality
exists independently of consciousness, and that humans can obtain objective
knowledge of reality by means of their senses, by integrating their sense percep-
tions into concepts, and by formulating principles.
Objectivism would imply that business schools do not necessarily need to
add ethics and other current humanities courses but can focus on developing
curricula and teaching methods that facilitate thinking conceptually and devel-
oping principles. The more the students learn to integrate, the better they can
understand the various consequences of their decisions. Such an approach
would reveal to them that unethical conduct is also impractical in the long term
(Gandz & Hayes, 1988), and we would witness fewer incidents of unethical
 A Philosophical Approach to Business Education 89

conduct in business and more well-rounded business graduates, instead of man-

agement technicians and number crunchers.

Notes
1 This definition differs significantly from the rationalist concept of reason, which
maintains that reason does not need sense data as its initial raw material, but instead, that
the mind can create its own content. The definition of reason given here is used through-
out this paper.
2 To say that they are anti-reason does not imply that they do not employ reasoning
in their arguments, but that they do not regard reason as a valid means or the only means
of knowing reality.

^ For more on empiricism, see W.T. Jones, 1969.

^ Pragmatism has been popular in North America not because of its actual theoreti-
cal content but because of its emphasis on "practicality". Americans in general have been
attracted to ideas that have tangible, practical significance, believing that is what prag-
matism offers. However, "practicality" according to pragmatism consists of action
divorced from thought and reality (Peikoff, 1982: 136).

^ This notion of truth being defined by what works was held by Dewey (1958) and
especially by James ( 1 9 5 5 : 5 9 ) but rejected by the founder of pragmatism, Peirce
(1931-35,5.407).
6 Kant's view was more extreme; he believed that we have no access to the noume-
nal world. We cannot know things as they are in themselves. According to Kant, we can
only know the phenomenal world which is created by the intersubjective consciousness
of people.

^ It must be noted that there is a variety of branches within realism, from

"extreme", or "naive", to "moderate", to modern "radical". The variety of realism
referred to here is Objectivism, developed by Ayn Rand. It maintains, metaphysically,
the primacy of existence view, and, epistemologically, that concepts are objective mental
integrations of the characteristics of existents.

^ For a complete philosophic discussion of Objectivism, see Peikoff (1991).

9 Rand calls her philosophy Objectivism because it differs significantly from that of
the other realists. Her epistemology is unique, and is discussed later.

These principles were outlined by Dr. Leonard Peikoff in his course "Philosophy
of Education," delivered at the Jefferson School in August, 1985.

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