The concentrated study of management, as a separate and distinct field of endeavor, is a product of the last century. The origin of this young discipline was the work performed by Frederick W Taylor and his associates during the scientific management movement that developed around 1900. This article, we are trying to present a brief review of the development of the thinking about management providing historical perspective for an understanding of the concepts.
Problems of administration were of interest to students of government even in ancient Greek and Biblical times. The Bible, for example, explains organizational problems faced by Moses in leading his people. Histories of the Roman Empire contain information on how administrative problems were handled.
Not until after the rise of the capitalistic system did students rigorously give attention to the field of economies. In 1776, Adam Smith wrote ‘The Wealth of Nations’ in which he developed important economic concepts. He emphasized the importance of division of labor with its three chief advantages: (1) an increase in the dexterity of every workman; (2) the saving of time lost in passing from one type of work to the next; and (3) the better of new machines. The development of the factory system resulted in an increased interest in the economics of production and the entrepreneur.
In the Middles Ages (and even until recently in many countries) the family unit was the basic production organization. A skilled craftsman taught his sons a trade, and the family was known by its particular trade and skill. Modern surnames as Carpenter, Goldsmith, Butcher, Farmer, and Taylor are evidence of this development. Production functions were not distinguished from social functions; there was still no need for separate attention to managerial activities. The inventions of the eighteenth century initiated a change which Toynbee later called the Industrial Revolution. Production moved from the home to a separate installation – the factory – where machinery was concentrated and labor employed. In the early stages of the Industrial Revolution, owners of factories directed production but generally did not distinguish between their ownership functions and their management duties.
In the early nineteenth century, the need for larger aggregations of capital to support factory operations resulted in increased applications of a special legal form of organizing a business. The corporation, as a separate legal entity, could sell shares of stock to many individuals and thus raise large sums of capital. Stockholders then became so numerous that all could not actively manage a business. By the middle of the nineteenth century, general incorporation acts made it possible for many businesses to use this legal form of organization at a time in which technological developments were forcing an increase in the size of the manufacturing unit. If the family fortune was insufficient for the family owners to expand, the corporation provided a means by which capital could be secured from owners who were not managers. The distinction between the function of owners and the function of managers became clear.
The social evils of the Industrial Revolution received wide attention in the early nineteenth century. In England, social reformers sought legal regulation of employment practices in the Factory of 1802, 1819, and 1831. One reformer also became a pioneer in management. Robert Owen, as manager of a large textile firm in New Lanark, Scotland, concentrated on the improvement of working conditions and on the development of a model community. The social impact of modern productive methods became an important interest of such men in operating management.