Tarea 2. Las Funciones de Los Elementos Dirigentes

DA-1959, núm. 23. CHESTER I. BARNARD.
Las funciones de los elementos dirigentes
TAREA 2. Hacer un resumen del primer texto y un

comentario del segundo. Una cuartilla en cada caso
DOCUMENTACIÓN
BIBLIOGRÁFICA
El libro clásico y hasta la fe-

cha insuperado, de la doctrina
norteamericana sobre la estruc-
tura de las organizaciones y el
LAS FUNCIONES papel que en ellas desempeñan
los cargos directivos es el famo-
so «The principies of the execu-
DE LOS ELEMENTOS tive», de Chester i. BARNARD, de
cuya versión española, reciente-
DIRIGENTES mente aparecida (Instituto de
Estudios Políticos, Madrid, 1959),
35.08.007.1 ofrecemos a continuación una
síntesis.
I.—CONSIDERACIONES PRELIMINARES SOBRE LOS SISTEMAS

DE COOPERACIÓN
1. ORGANIZACIÓN
No existe prácticamente literatura sobre la organización como fenómeno

social a cuyo través se efectúa una amplia actuación social. Ello es sorpren-
dente, porque si incluímos a la familia, los municipios, etc., existen en Estados
Unidos más organizaciones que individuos, siendo raro el que no pertenece
por lo menos a diez, y corriente el que es miembro de cincuenta o aún más.
Organización convencional es toda cooperación humana consciente y enca-
minada a un ñn. La gran mayoría de las organizaciones humanas fracasan, o
desaparecen tras un ciclo, más o menos largo. Sólo la Iglesia Católica puede
gloriarse de una larga existencia, seguida a distancia por algunos municipios
y unas pocas universidades.
La función de los dirigentes es precisamente mantener el equilibrio vital
de la organización. No sólo los altos empleados desempeñan estas funciones,
sino también elementos auxiliares e incluso otras organizaciones, como son
los Consejos de Administración. Inversamente, no toda, sino sólo una parte
pequeña de la actividad de los altos empleados puede calificarse de función
directiva efectiva.
2. INDIVIDUO Y ORGANIZACIÓN
La base de toda cooperación es, naturalmente, el individuo, objeto físico,

con una constante de equilibrios biológicos, y que como tal no puede operar
DA-1959, núm. 23. CHESTER I. BARNARD. Las funciones de los elementos dirigentes
78 d. a. 23 — noviembre 1959 — documentación bibliográfica
sino conjuntamente con otros individuos, de lo que resultan interacciones con

experiencia y adaptabilidad mutuas. Los individuos son además personas, en
cuanto que tienen una conducta con factores psicológicos y una limitada
facultad de elección con vistas a un propósito determinado. Esta conducta
puede ser eficaz cuando alcanza el fin específico deseado; ineficaz, cuando no
lo logra; eficiente, cuando las consecuencias no deseadas de la actividad son
poco importantes, e ineficiente en el caso contrario, cuando estas consecuencias
son tan grandes que producen un resultado insatisfactorio y anulan la eficacia
conseguida.
3. LIMITACIONES DE LOS SISTEMAS DE COOPERACIÓN
Todo sistema cooperativo está sometido a un doble juego de limitaciones:
físicas y biológicas por una lado, psicológicas y sociales por otro. La cooperación
suele surgir precisamente para vencer las limitaciones físicas de los que actúan
aisladamente. Ahora bien, algunas facultades individuales son útiles para la
cooperación, pero otras suelen ser nocivas. Toda colaboración implica por
consiguiente ciertos inconvenientes, que han de salvarse mediante una orga-
nización, un orden previo y unos ensayos preliminares.
La cooperación complica además el esfuerzo individual al completarse con
actividades de distribución, mantenimiento de esfuerzo y capital que la acción
individual no requiere. En volumen, estas actividades llegan a ,ser más impor-
tantes que las directamente encaminadas al fin de la cooperación.
La necesidad de adaptarse a las nuevas condiciones al ambiente o al cambio
de finalidades de la cooperación requiere un esfuerzo de acomodación, enco-
mendado a los órganos dirigentes.
Las limitaciones psicológicas y sociales vienen impuestas: por la existencia
de otros individuos con los que se entra en relación, cada uno de los cuales
tiene una experiencia y una voluntad con la que hay que contar, y a cuya
determinación y valoración están destinados todos los sistemas de relaciones
humanas; por la interacciones "entre los individuos que forman el sistema
cooperativo, las que hay entre el individuo y el grupo, las acciones de la
cooperación sobre el individuo para atraerle y mantener en su seno, y las que
resultan de la eficacia del individuo para la cooperación y la eficacia de la
cooperación para el individuo. Si esta eficiencia es baja, el individuo abandona
la cooperación y la organización acaba pereciendo. Por ello es axiomático que
la única medida de la ejicacia de un sistema de cooperación es su capacidad
de supervivencia.
4. LOS ELEMENTOS DIRIGENTES
Esta supervivencia se logra cuando se realizan satisfactoriamente dos acti-
vidades interdependientes: la que cuida del equilibrio entre el sistema de coope-
ración y el medio ambiente en que se mueve, y la que se ocupa de producir
y distribuir las satisfacciones entre sus miembros, es decir, de su eficiencia
d. a. 23 — noviembre 1959 — documentación bibliográfica 79
última. El fracaso de la cooperación puede deberse a fallos en uno de esos

procesos por separado, o en la combinación de los dos. Las funciones de los
elementos dirigentes son, en síntesis, las de mantener la justa proporción y
la buena marcha de esas actividades, haciendo de la organización un ente
de gran adaptabilidad y eficacia.
n.—TEORÍA Y ESTRUCTURA DE LAS ORGANIZACIONES FORMALES
1. LA ORGANIZACIÓN FORMAL
Todo sistema de cooperación es una unidad dentro de otros sistemas más

amplios, y a su vez, un complejo de sistemas secundarios y ordinarios. La cé-
lula primaria, el sistema de cooperación elemental, es la organización, cuya
definición primera puede ser la de: «cooperación consciente y para un fin
concreto de dos o más personas».
En principio, y como concepto abstracto, es posible prescindir de los medios
físicos y sociales, definiendo la organización como sistema de actividades y
fuerzas conscientemente coordinadas de dos o más personas. Esta definición es
una «expresión», como pueda serlo, en las ciencias físicas, la de «campo elec-
tromagnético».
La organización es, ante todo, un sistema, porque en ella se coordinan los
esfuerzos de diferentes personas. Cuando esta coordinación se produce, aparece
algo nuevo que es diferente en. cantidad y calidad—o al menos en una de las
dos cosas—a la suma de los esfuerzos individuales aislados. En la organización
como conjunto, el todo es mayor que la suma de las partes.
2. ELEMENTOS DE LA ORGANIZACIÓN FORMAL
Los elementos de una organización, que se deducen de la definición, son:

unión, voluntad de ser útil y finalidad común. Para la existencia continuada
de la organización, es preciso que sea eficaz o eficiente, y para su duración
más larga, se requiere a la vez su eficacia y su eficiencia. Resumiendo, puede
decirse que la existencia inicial de una organización depende de que esos
elementos se combinen en forma apropiada a la situación externa, y su super-
vivencia depende de que el equilibrio inicial de todo el sistema sepa mantenerse
a través de las variaciones del medio exterior.
La voluntad de cooperación es un requisito evidente para la existencia de
toda organización. Sin embargo, en las sociedades modernas esta voluntad se
manifiesta de modo preponderantemente negativo, una vez realizado el acto
volitivo de ingresar en ellas, y a veces incluso sin este último. Son muy pe-
queñas las minorías que tienen realmente voluntad positiva de pertenecer a
las organizaciones formales de mayor extensión, como el Estado.
En todo caso, la voluntad de cooperar requiere un objeto, constituido por
la finalidad de la organización. Existe una finalidad de la organización, y una
finalidad individual que es el motivo por el cual la persona se adscribe a la

organización. Una y otra no son coincidentes, y mientras el cumplimiento de
la finalidad de la organización determina su eficacia, el de la finalidad indi-
vidual determina su eficiencia. Alcanzado su primer objetivo, la organización
nuede desaparecer, o bien adoptar nuevas finalidades para seguir existiendo.
Por último, un nuevo elemento surge entre los dos polos de la finalidad
común y las finalidades individuales sólo parcialmente equivalentes. Los indi-
viduos han de conocer, al menos superficialmente, cuál es la voluntad colectiva,
y para ello se requiere una comunicación. Las técnicas de comunicación cons-
tituyen una parte importante de toda organización, y el problema preponderante
en muchas de ellas, por cuanto determinan su forma y economía interna.
3. NACIMIENTO DE LAS ORGANIZACIONES COMPLEJAS
Las organizaciones complejas pueden gozar de una situación de preponde-

rancia absoluta, o por el contrario estar total o parcialmente subordinadas y
en dependencia de otras organizaciones superiores. En el primer caso se habla
de organizaciones completas; en el segundo, de organizaciones incompletas.
En los pueblos antiguos, la ciudad-estado era la única sociedad completa.
En las naciones civilizadas de la actualidad existen dos organizaciones com-
pletas que son las «sociedades perfectas»: el Estado y la Iglesia, cuyas inter-
relaciones están recogidas en lo fundamental por una organización irregular.
Las demás organizaciones están sometidas por lo menos a una de estas dos,
por un proceso de subordinación que comprende, por lo común, varios grados
intermedios: Estado-Provincia-Municipio, etc.
Las organizaciones surgen por uno de estos cuatro modos: espontáneamente,
por un esfuerzo individual de organización, por ser una entidad filial nacida
de otra organización previa, como producto de la segregación brusca de otra
preexistente. El caso más frecuente es el de organización espontánea—por ejem-
plo, la prestación de primeros auxilios en un accidente—, pero la perdurabi-
lidad de las organizaciones así creadas suele ser muy escasa, contra lo que
sucede con las nacidas a impulsos de una actuación deliberada individual. En
todo caso la organización naciente es siempre ínfima; puede afirmarse que
no es posible crear una organización amplia mas que uniendo organizaciones
pequeñas. En sentido contrario, tampoco le es posible a una organización ele-
mental crecer ilimitadamente; las necesidades de comunicación restringen
sus posibilidades de expansión de forma que su desarrollo sólo puede efec-
tuarse mediante la asociación con otras organizaciones, o la creación de
nuevas. Cada una de estas organizaciones parciales tiene un director, y el
conjunto de éstos forma una organización dirigente cuyos miembros participan
simultáneamente: en la organización simple que presiden, en la organización
simple—de elementos dirigentes—de que son miembros, y en la organización
compleja que agrupa a todas las simples, incluso la de elementos dirigentes.
4. LAS ORGANIZACIONES IRREGULARES

Las relaciones recíprocas entre personas no tienen todas un fin común;
las que están desprovistas de este objeto, se denominan organizaciones irre-
gulares, que no dejan de producir efectos dignos de tenerse en cuenta. Son
indefinidas y carecen de estructura, pero forman el medio ambiente en que se
mueven las organizaciones regulares. Crean los hábitos, las actitudes y las
condiciones necesarias para el nacimiento de estas últimas, de tal forma que
la Sociedad está estructurada por las organizaciones formales y éstas vitali-
zadas por las irregulares. Es fácil comprender que, a su vez, las organizaciones
formales, en su normal desenvolvimiento, crean organizaciones irregulares.
Las organizaciones irregulares son esenciales para la vida de las formales;
a través de ellas se recibe la comunicación y se protege al individuo estimu-
lando su sensación de libertad.
ni.—ELEMENTOS DE LAS ORGANIZACIONES FORMALES

1. ESPECIALIZACIÓN
En las organizaciones como en las personas, la especialización actúa sobre

cinco factores: el lugar en que se ejecuta el trabajo—la especialización geo-
gráfica es la más importante y precede a la especialización funcional habi-
tual—, el tiempo, las personas que lo llevan a cabo—especialización asocia-
tiva—, los objetivos del trabajo y el procedimiento o técnicas del trabajo.
Esta especialización en cinco sentidos conduce a dos proposiciones generales:
la primera, que la eficacia de los sistemas de cooperación depende casi por
completo de la adopción o creación de innovaciones en la especialización; y la
segunda, que el aspecto primario de la especialización es el análisis de los
fines generales desde los grados intermedios de actividad de la organización.
Organización y especialización pasan así a ser términos casi equivalentes.
Puesto que toda unidad de cada organización es una especialización, el propó-
sito general del sistema de cooperación complejo ha de dividirse en propósitos
específicos para cada célula organizada. ¿Hasta qué punto ha de participar
ésta en el conocimiento del fin absoluto y superior del sistema? La respuesta
es que, en general, no es esencial ni normalmente deseable. Las organizaciones
complejas se caracterizan por la necesidad evidente de una comprensión de
los objetivos propios; pero esa necesidad de comprensión por parte de los
dirigentes, en general, obra más bien como un factor paralizador y divisor.
2. POLÍTICA DE INCENTIVOS
El individuo es siempre el factor base en la organización; por ello, el tema
de los incentivos es fundamental para su existencia. Existen incentivos posi-
tivos y negativos, que suponen remoción de gravámenes o esfuerzos. Pero
es más interesante la clasificación en incentivos objetivos y subjetivos: estos
últimos hacen referencia a un estado de opinión, o psicológico. Los primeros
se fomentan mediante vina política de incentivos propiamente dicha, los se-

gundos mediante una política de persuasión y propaganda.
Los incentivos en sentido estricto son:
Materiales.—El típico es el dinero o sus alternativas—coche oficial, accio-
nes—. Contra lo común, soy de opinión que constituyen débiles alicientes
pasado el nivel de las elementales necesidades fisiológicas.
— Personales no materiales.—Honores, distinciones, puestos de prestigio y
mando. Son, con la misma reserva que en el caso anterior, más eficaces
que los incentivos puramente materiales.
— Mejores condiciones físicas de trabajo, en ocasiones insospechadamente
eficaces.
— Beneficios ideales.—Sentido de utilidad, de servicios a la patria, al bien
común, a la sociedad, sentimientos estéticos, etc. Se cuentan entre los
incentivos más poderosos y también menos utilizados.
— Incentivos sociales.—Estos, como los que siguen, no son individualizables,
sino que se ofrecen genéricamente. Por incentivo social se entiende for-
man al grupo en convivencia perfecta, eliminando los obstáculos étnicos,
profesionales, religiosos, etc., que separen en sectores hostiles a los inte-
resados.
— Condiciones normales de trabajo.—Con ello se rechazan los métodos o
prácticas que no son habituales y que causan irritación, extrañeza o
repulsión.
— Sensación de participación en los acontecimientos.—El grupo siente su
responsabilidad y que su acción repercute en la realidad. Es un incentivo
a menudo de importancia decisiva.
— Condición de comunidad.—Llamo así al sentimiento de satisfacción
personal en las relaciones sociales, y es elemento esencial para el naci-
miento de organizaciones irregulares dentro de lo formal.
Los incentivos o técnicas de persuasión abarcan desde la coerción a la
propaganda oportunista, pasando por la inculcación de ideas—educación deli-
berada de la juventud, por ejemplo.
¿Cómo se utilizan estos varios incentivos?: En la organización industrial,
su uso depende esencialmente de su coste relativo—campañas de propaganda,
incentivos materiales—. En la organización política figuran en primer plano
los incentivos idealistas—Patria, bien común—y los de prestigio individual
—aparte la persuasión y—hasta la coerción. En las organizaciones religiosas,
los beneficios ideales y la persuasión.
3. AUTORIDAD
Autoridad es en una organización el carácter de una comunicación en

virtud del cual el miembro la acepta como rigiendo lo que ha de hacer o no
hacer. Reviste así dos aspectos: uno, subjetivo, la aceptación de una comu-
nicación como autoritaria, y otro, objetivo, el carácter autoritario de la
comunicación. La decisión de si una orden tiene o no autoridad depende

de las personas a las que va dirigida, y no de las personas «constituidas en
autoridad», como suele creerse. Una persona acepta una comunicación como
orden cuando: 1. La conoce y entiende; 2. Cree que es compatible con el
fin de la organización y su interés personal, y 3. Es capaz de obrar en con-
cordancia con ella.
A su vez, una comunicación tiene «carácter» de autoridad cuando procede,
bien de un puesto jerárquico con función de ordenación—autoridad de posi-
ción—, bien de los especiales conocimientos e inteligencia de quien la emite
—autoridad de dirección—; lo deseable es que una y otra clases de autoridad
se den simultáneamente; pero incluso en este caso la determinación de la
autoridad permanece en los individuos.
4. DECISIÓN
La adopción de decisiones es una tarea difícil, para la cual la mayoría de
los hombres está insuficientemente capacitada. Aunque las circunstancias que
rodean la adopción de decisiones es infinitamente variable, puede decirse que
la esencia de una decisión dirigente radica en: 1. No decidir cuestiones mo-
mentáneamente secundarias.—2. No decidir prematuramente.—3. No tomar
decisiones que no se pueden hacer efectivas, y 4. No tomar las que hayan de
ser adoptadas por otros. Esta última es tal vez la más importante, porque
en la inmensa mayoría de los casos el arte de la dirección consiste en inci-
tar a los que tienen autoridad a utilizarla, adoptando la decisión pertinente.
IV—LOS ELEMENTOS DIRIGENTES
1. FUNCIONES
Las funciones de los elementos dirigentes se refieren a todo trabajo esencial
para la vitalidad y perduración de una organización. No es, por consiguiente,
organizar su misión, sino mantener en funcionamiento la organización.
Todos los elementos dirigentes realizan una considerable labor no dirigente,
a menudo más valiosa que la dirigente en sentido estricto. Las funciones
esencialmente dirigentes son las de mantener el sistema de comunicación,
conseguir las prestaciones esenciales de los individuos y formular los propó-
sitos de la organización.
a) El mantenimiento de las funciones de organización es la primera tarea
del organizador y el origen inmediato de la organización dirigente. Para ello
es preciso determinar los puestos de la organización—«esquema de organiza-
ción»— y la designación para ellos de las personas más idóneas.
b) La segunda función de los dirigentes es conseguir que estas personas
presten los servicios que constituyen la materia de la organización. Esta
función se subdivide en: 1) Inducir a las personas a entrar en relaciones
de cooperación con la organización; y 2) Obtener la prestación de servicios de
estas personas.
c) La tercera función dirigente es la de formular y definir los propósitos,

objetivos y fines de la organización.
2. PROCEDIMIENTO
No existe un procedimiento concreto y tipificado para la función dirigente.

La función dirigente es un arte más que una ciencia; es cuestión más de
sensibilidad que de lógica. La función dirigente es cognoscible más por sus
efectos que por su análisis, y sus resultados habrán de juzgarse desde los
dos únicos puntos de vista de la eficacia y la eficiencia de su actuación.
3. RESPONSABILIDAD
El puesto de dirigente tiene dos aspectos: el primero, es el de superioridad

personal (conocimientos, memoria, técnicas, etc.), inmediato y sumamente va-
riable a través del tiempo y el lugar. El segundo, el más general, absoluto y
subjetivo, es el de superioridad en lo referente a la calidad de la actuación,
y es lo que se entiende por responsabilidad. En ella aparece implícito en toda
organización un factor moral, que varía con los «códigos morales privados» que
tiene cada persona. En efecto, no es difícil observar que cada uno tenemos
unas ideas morales diferentes; pero la responsabilidad es precisamente aquella
cualidad del individuo en virtud de la cual, sea la que fuere la moralidad
intrínseca de esa persona, hace que ésta resulte eficaz para su conducta.
Para los elementos dirigentes se requieren especiales condiciones de mora-
lidad y responsabilidad, a saber:
a) Una moralidad compleja, creada por diferentes «códigos morales» que
actúen sobre él.
b) Una elevada capacidad de responsabilidad que haga de él un ser
eminentemente digno de confianza.
c) Una elevada capacidad de actividad responsable.
d) Una facultad de crear códigos de moralidad para los demás. Este es
el signo distintivo de la responsabilidad de los dirigentes, encerrado en la
función llamada de «fomento de la moral de la organización». El aspecto crea-
dor de la responsabilidad dirigente es la expresión de la más alta responsa-
bilidad.
4. CONCLUSIÓN
No hay que pensar que la ciencia de la cooperación y el arte de la dirección
se limitan a fomentar los factores sociales o materiales de la organización.
La cooperación está presidida por un ideal ético exterior al individuo, que
exige la aceptación voluntaria de subordinar el interés personal inmediato al
bien común de forma consciente y responsable. En la actual lucha entre el
individuo y las tendencias socializantes el aumento de la cooperación volun-
taria y libre es tal vez la única vía que conduce al desarrollo pleno de la
individualidad y del bienestar humano.—M. P. O.
530042
research-article2014
JMIXXX10.1177/1056492614530042Journal of Management InquiryGodfrey and Mahoney
Essay
Journal of Management Inquiry
The Functions of the Executive at 75:

2014, Vol. 23(4) 360–372
© The Author(s) 2014
Reprints and permissions:
An Invitation to Reconsider a Timeless sagepub.com/journalsPermissions.nav
DOI: 10.1177/1056492614530042
Classic jmi.sagepub.com
Paul C. Godfrey1 and Joseph T. Mahoney2
Abstract
The year 2013 marks the 75th anniversary of the publication of Chester I. Barnard’s classic, The Functions of the Executive,
a groundbreaking contribution to management theory. We maintain that Barnard’s work provides a valuable perspective
on the causes and potential solutions to challenges facing capitalism, business, and management consequent to the scandals
and financial crises of the early 21st century. We believe Barnard would see a systemic failure of the moral dimension of
organization as a driver of these crises, and that management theory and practice need to focus on both the science and
the aesthetics of management. We look back on The Functions and provide a review of key elements of Barnard’s theory of
organization. We then look forward from The Functions and see unique insights and solutions into the ongoing challenges
of managerial morality.
Keywords
management history, stakeholder theory, strategy
Introduction organizational management and governance (Sun, Stewart,

& Pollard, 2011). Former Federal Reserve Board of
The year 2013 marks the diamond jubilee (75th Anniversary) Governors chairman Alan Greenspan (2008) referred to the
of the publication of Chester I. Barnard’s The Functions of financial crisis at the time as a “one in a century credit tsu-
the Executive,1 perhaps, the 20th century’s most influential nami” but would later revise that assessment and argue that
book on organization and leadership (Bedeian & Wren, the financial meltdown “is likely to be viewed, in retrospect,
2001; Gabor, 2000; Gabor & Mahoney, 2013). We submit as the most virulent global financial crisis ever” (Greenspan,
that Barnard’s classic, written in the midst of the Great 2010). Greenspan (2008: 3) maintained that the cause of the
Depression, has relevance for current issues facing managers crisis was primarily technical:
and management scholars and should become more salient in
our collective consciousness and work. Barnard’s central It was the failure to properly price such risky assets that
message of the foundational role of morality in the effective precipitated the crisis. In recent decades, a vast risk management
practice of management—indeed, moral work is the hall- and pricing system has evolved, combining the best insights of
mark of the executive function—makes the book influential mathematicians and finance experts supported by major
and significant for the practice and study of management advances in computer and communications technology. A Nobel
today. We invite management scholars to re-read The Prize was awarded for the discovery of the pricing model that
Functions. We anticipate that they will find useful insights underpins much of the advance in derivatives markets. This
into their own work, and we maintain that Barnard’s theoreti- modern risk management paradigm held sway for decades. The
cal perspective on the nature of organization and executive whole intellectual edifice, however, collapsed because the data
inputted into the risk management models generally covered
leadership informs today’s most important issues. We illus-
only the past two decades, a period of (irrational) euphoria.
trate Barnard’s timely contribution to our understanding of
the causes and consequences of a seemingly continuous
string of crises plaguing business.2 Barnard’s unique view on 1
Brigham Young University, Provo, UT, USA
executive morality and responsibility can at least inform, and 2
University of Illinois at Urbana–Champaign, USA
perhaps transform, current debates concerning the legitimacy
of formal organizations and capitalist markets. Corresponding Author:
Paul C. Godfrey, William and Roceil Low Professor of Business Strategy,
The apparent causes of these crises—and anticipated Marriott School of Management, Brigham Young University, 576 TNRB,
remedies—fall into two broad categories. Some see the cri- Provo, UT 84602, USA.
ses as having been precipitated by technical failures in Email: Paul_Godfrey@byu.edu
Downloaded from jmi.sagepub.com at UNIV AUTONOMA METROPOLITANA on September 21, 2016

Godfrey and Mahoney 361
Others see these crises as individual moral failures, high- One can list on the fingers of one hand the truly influential
lighted by the likes of Ken Lay and Jeff Skilling of Enron organizational scholars working prior to 1950. They include:
(McLean & Elkind, 2003). Individuals with enormous power Max Weber, Frederick Winslow Taylor, Henri Fayol, Elton
and resources under their control, but with poorly developed Mayo, and Chester I Barnard. Of these, the two paying most
attention to the sociological aspects of organizations were Weber
internal moral compasses, lead their organizations to ever-
and Barnard. (E. O’Connor, personal communication, 2010, 18
increasing levels of narcissistic and sociopathic behavior, all in
May)
the name of increased economic returns (Stout, 2012). A rem-
edy for the organizational and technical malady resides in busi-
Barnard’s published corpus totals 22 pieces, listed in the
ness and public policies and laws such as Sarbanes–Oxley
appendix, as well as a set of unpublished notes that O’Connor
(Soxlaw.com, 2013) that close loopholes, encourage transpar-
(2012) used as the basis of a new treatment on Barnard as a
ency in transactions, and insure that past causes will not pre-
pioneer of management theory. The Functions,3 Barnard’s
cipitate future crises. Individual moral failures require increased
Magnum Opus, sets forth a systems theory of organization
enforcement, stiffer prison sentences, and perhaps, a number of
for the emerging modern age, an age dominated by large,
chilling business case studies that highlight the personal peril
managerially controlled organizations (Berle & Means,
of risky behaviors. Business ethics education seems largely tar-
1932), vastly different than the ones theorized in classical
geted toward remediating individual moral lapses (see, for
economics (Smith, 1776/1965) and emerging as neoclassical
example, Ortenblad, Koris, Farquharson, & Hsu, 2013).
theory ascended (Marshall, 1890/2006). Barnard hoped The
Our reading of Barnard suggests a third, deeper cause of
Functions would provide an analysis of “the executive pro-
such crises: a moral failure of organizations. The organiza-
cesses, which are specialized functions in what we know as
tional roots of the problem stem from the central and critical
‘organizations’” (p. vii),4 but suggested that “if these func-
role that organizations play in larger cooperative systems of
tions are to be adequately described, the description must be
human activity; organizations enable individuals to collabo-
in terms of the nature of organization itself” (p. vii), specifi-
rate and combine their efforts to respond to and shape an
cally in terms of the “universal characteristics” (p. viii) of
ever-changing and complex external environment. The moral
organizations. The Functions details relevant features of
dimension follows from Barnard’s view of the inherently
organizations, but admits that “more than the topography and
moral nature and purposes of complex, formal organizations.
cartography of organization would be necessary to under-
The first section of our article looks back at The Functions to
stand the executive functions; a knowledge of the kinds and
explain and justify these claims in greater detail. The second
qualities of forces at work and the manner of their operation
section draws upon these notions to suggest a series of for-
would also be needed” (p. viii, emphasis added). Barnard
ward-looking actions for practitioners, management educa-
noted late in his life that he could have titled the book “The
tors, and researchers to move business away from negative
sociology of formal organizations” (Morals, p. 162).
scandal and toward the positive development of individuals,
The work thus presents a simultaneously descriptive,
communities, and societies at large.
analytical, and dynamic theory of organization, the individ-
uals who compose them, and the executives that lead them.
The Deep Structure of the Functions Barnard’s writing style in The Functions insures a challeng-
ing read for almost any reader, and we do not intend to pro-
Turning attention back to The Functions allows us to pause
vide a detailed review of the book’s core arguments; the
and appreciate the depth and breadth of Barnard’s thinking
impressive legacies of the individual concepts in the book
and early contribution to Organization Theory, Institutional
have been noted by others (Gabor & Mahoney, 2013; Scott,
Theory, and Strategic Management. The book represents one
1992; Williamson, 1995; Wolf, 1974). We choose a selective
warp and woof on which ensuing scholars have woven
treatment of two overarching themes relevant to Barnard’s
sophisticated theoretical tapestries. Nobel Laureate Herbert
value today: (a) organizations, their components, and envi-
Simon (1947), of the “Carnegie School” of Management,
ronments as systems and (b) the moral imperatives that
first identified Barnard’s intellectual impact: “The Functions
should guide and constitute executive work. Barnard’s view
of the Executive exerted a major influence on my thinking
of morality becomes central to our claim of his relevance to
about administration” (p. xiii). Kenneth Andrews (1968)
current issues and a systems view of organization shows
maintained that “The Functions of the Executive remains
how the pervasive interconnections in organizational life
today, as it has been since its publication, the most thought-
mean that seemingly small moral choices lead to societal
provoking book on organization and management ever writ-
challenges.
ten by a practicing executive” (p. xxi). Recent Nobel Laureate
Oliver Williamson (1995) stated that “Barnard inspired some
of the very best work in organization theory that followed” Systems Theory
(p. 5), and noted organizational sociologist Dick Scott sug- Barnard saw organizations through a systems theory lens. If,
gested that as we claimed above, The Functions provides a warp and

362 Journal of Management Inquiry 23(4)
Figure 1. A visual representation of The Functions.
woof for the tapestry of management theory then systems essential need of the individual is association, which gives
theory makes up not only the threads that Barnard used to rise to a cooperative system of two or more individuals.
weave his theory, but also the dye that colored his individual Organization, the process of coordinating effort through the
constructs and their interrelations. In his classic work on division of labor and sequencing effort over time (Chapter
general systems theory, von Bertalanffy (1968) defined gen- X), becomes a defining element in many cooperative sys-
eral systems theory as “a general science of wholeness” or tems; however, organization and cooperation exist as sepa-
“systems as sets of elements standing in interrelation” (pp. rate constructs: “an organization is a subordinate system of a
37-38) where the whole of a system exceeds the sum of its specific larger system, the cooperative system, whose com-
parts. The emphasis of systems theory becomes not merely ponents are physical, biological, and personal systems” (pp.
the taxonomic description of the fundamental elements, nor 98-99, fn). The dotted circle in Figure 1 highlights this rela-
an analysis of the dynamic interplay between the elements, tionship. Organization is completely social and structural;
but also a focus on the system as a whole entity that tran- organizations do not act, only individuals do; organizations
scends any and all the individual elements. To facilitate our do not produce outputs or create utilities, only cooperation
brief discussion of systems theory in The Functions we cre- does (p. 252). Organization coordinates the activities or
ated a graphical representation, Figure 1. interactions of individuals in a cooperative system; formal
organization “consciously” (p. 73) and deliberately (p. 186)
structures and facilitates action while informal organization
Individuals, organizations, and cooperation. Individuals repre-
represents those interactions “without any specific conscious
sent the most basic, non-reducible element in the organiza-
joint purpose” (p. 114, emphasis in original).
tional system. An individual, for Barnard, is “a single,
Barnard believed that organization creates “something
unique, independent, isolated, whole thing, embodying innu-
new in the world that is more or less than or different in
merable forces and materials past and present which are
quantity and quality from anything present in the sum of the
physical, biological, and social factors” (p. 12); individuals
efforts” of the elements (p. 9). Barnard notes
constitute complex systems. Unique and independent humans
cannot survive alone; physical and biological limitations systems of cooperation, which we call organizations I regard as
mean that “human organisms do not function except in con- social creatures, “alive,” just as I regard an individual human
junction with other human organisms” (p. 11). being, who himself on analysis is a complex of partial systems,
Barnard believed that the social, psychological, and moral as different from the sum of these constituent systems. (pp.
elements of individuals combined in such a way that the 79-80)

Cooperation represents a systemic outcome of the interac- rightness, goodness, or legitimacy of the commands. Barnard
tion between two or more physical individuals. Small coop- noted that “Either as a superior officer or as a subordinate,
erative endeavors, what Barnard refers to as unit organizations however, I know nothing that I actually regard as more ‘real’
(p. 109), operate as a system because the act of cooperation than ‘authority’” (p. 170, fn). The reality of authority arises
affects the individuals involved (p. 17). Systems thus exer- from its organizational nature, the recognized position from
cise power over individuals because the needs and demands which it comes, and the channels those communications
of the system alter and script action, sometimes in way indi- travel to reach affected individuals.
viduals would not choose otherwise. However “real” authority may appear to us, Barnard
Individuals form organizations and cooperative systems nonetheless advanced an acceptance theory of authority,
to more effectively interact with the external environment. which asserts the “fiction of superior authority” (p. 170).
The environment in which individuals live and work com- Authority relies on a subjective, individual element, for its
prises, like the individuals themselves, a dynamic system of acceptance; commands must be properly given and recog-
physical, biological, and social forces or elements; those nized as legitimate or binding for action to occur or behavior
social forces include formal organizations (arranged in a to be modified. Authority “is the process by which the indi-
hierarchy of dominant and subordinate organizations) but vidual delegates upward . . . responsibility for what is an
also as a “great complex of informal organizations” (p. 97). organization decision—an action which is depersonalized”
Dynamism and constant change describe the critical charac- (p. 170). Individuals grant to the organization and its execu-
teristic of the environment, driven by two sets of forces. tives large leeway for the responsibilities of decisions and
First, physical instability (e.g., the weather) results in a phys- the right to control or direct behavior. That grant will not be
ical environment constantly in flux. Second, the interplay of complete, however, but limited by an individual’s “zone of
cooperation and the environment (p. 99) changes conditions: indifference” (p. 167).
cooperation creates outputs (e.g., houses) that change the Individuals respond to authoritative commands in one of
environment but also engenders/refines norms of interaction four ways; commands can be “clearly unacceptable,” “barely
that “change the history of its environment” (p. 59). unacceptable,” “barely acceptable,” and subject to further
Cooperation in a dynamically changing and interactive thought, or “unquestioningly acceptable” (pp. 168-169).
environment requires individuals (usually more than one) Communications in the last category represent the “zone of
who specialize in the work of organization. The work of the indifference.” The zone of indifference represents degrees of
organization such as dividing labor tasks, coordinating freedom that provide significant discretion for executives;
efforts, and supervising processes and outputs we consider the wider that zone the greater flexibility of action they enjoy
today as management. Beyond the work of the organization, in furthering the work of the organization and the less time
however, Barnard saw another role, that of the executive: and energy they must spend justifying their decisions or
“Executive work is not that of the organization, but the spe- soliciting agreement.
cialized work of maintaining the organization in operation” In summary, Barnard saw organizations, when stripped to
(p. 215, emphasis in original). their fundamental elements, as systems. The system of coop-
eration exerts power over individuals in mandating certain
The executive. Executives do work “essential to the vitality actions for the good of the system; authority works to clarify
and endurance of an organization” (p. 215). Executives com- and legitimate those needs in the minds of organizational
plete this work through three key roles: they maintain the sys- participants. At one level, organizations represent technical
tem of communication and authority necessary for cooperation systems to facilitate cooperation; however, Barnard saw the
to be coordinated, they secure individual efforts, and they for- essential function of organization, especially the functions of
mulate, define, and refine the purpose of the organization. We the executives that lead them, as moral in nature. Barnard’s
consider authority and its role in generating individual effort in description of motives, value attitudes, appraisals of utility,
this section; the purpose of the organization falls under the norms of conduct, and ideals situates The Functions within a
moral dimension that we take up in the next section. view of morality that was common during his lifetime as
“establishing and disseminating principles of right and
Consent theory of authority. Organization, as a social creation, wrong in conduct or behavior [or] behavior characterized by
depends on communication among members to accomplish excellence of conduct” (Webster’s new international diction-
its purposes. “Authority is the character of a communication ary, 1934).5 We now consider in some detail the moral themes
(order) in a formal organization by virtue of which it is running through The Functions.
accepted by a contributor to or ‘member’ of the organization
as governing the action he contributes” (p. 163). Legitimate
Morality
management authority represents both a technical and moral
motivation for action in organizations; those giving the Cooperation, as a particular activity, achieves an equilibrium
orders, and those carrying them out, do so in the belief of the state with its environment when the exact sequence and

amount of effort optimally matches external demands. Either Put simply, executives invoke, and sometimes create,
through exogenous change in any external element (includ- moral norms, or what Barnard referred to as moral codes.
ing the individuals in the cooperative endeavor) or an endog-
enous alteration of the environment that arises out of Moral codes. Organizations possess moral character:
cooperative action, the world changes and creates a new set
of demands to which the organization or cooperative system As social systems, organizations give expression to or reflect
must respond. The necessity of maintaining the survival of mores, patterns of culture, implicit assumptions as to the world,
the organization and the search for equilibrium represents the deep convictions, unconscious beliefs that make them largely
first moral imperative of the executive function. The primary autonomous moral institutions on which instrumental political,
tools used by executives extend beyond the technical work economic, religious, or other functions are superimposed or
from which they evolve. (Morals, p. 162)
done by the organization: the redefinition of purpose (pp. 91)
and constantly adjusting the utilities that individuals receive
from the organization (pp. 256-257). When done well, this By moral, or what is right or wrong, Barnard meant one of
work requires constant adjustment of internal purposes and three things: personal morality, organizational morality, or
dynamic communication processes to create a homeostasis developmental morality. Personal morality corresponds to
or dynamic equilibrium with the external environment (pp. the general notion of morality as ethical behavior, and arises
233, 238). from religious, philosophical, or family training as well as
Homeostasis represents a problematic construct for open individual propensities or broader societal norms (Morals, p.
systems, as Burrell and Morgan (1979) noted, 168). Morals are “personal forces or propensities of a general
and stable character in individuals which tend to inhibit, con-
Whilst a closed system must eventually obtain an equilibrium trol, or modify inconsistent immediate specific desires,
state, an open system will not. Given certain conditions, an open impulses, or interests” and are “a matter of sentiment, feel-
system may achieve a steady state, homeostasis, in which the ing, emotion, internal compulsion, rather than one of rational
system remains constant as a whole and in its phases, though there process or deliberation” (p. 261).
is a constant flow of the component materials. However, such a
steady state is not a necessary condition of open systems. (p. 59) The requisite character [of the executive] includes: avoidance of
criminal acts, gross and public immoralities and in particular
Burrell and Morgan (1979) saw homeostasis as one poten- stealing and lying; a willingness to recognize the interests of
tial, but not necessary, end of systems because they submit others to the extent of ordinary courtesy; and finally, a
that systems have no teleological ends. The Functions pres- willingness to discharge commitments, that is, to perform duties
accepted, to honor promises. (Morals, p. 168)
ents a view of organizations as a unique type of system.
Executive work indeed concerns the maintenance of the
Organizational morality derives from the needs of the
organization (p. 215); the first moral duty resides in insuring
cooperative system. Barnard referred to this as “the good of
the survival and sustainability of the organization. The search
the organization,” and it constitutes whatever action may be
for homeostasis, however, represents a means but not the end
necessary for the endurance of the organization. Like per-
of organization. Homeostasis, organizational survival,
sonal morality, organizational morality is limited by the
enables two larger, teleological ends. The first end of organi-
strictures of superordinate organizations, the State and
zation can be found in the cooperative purposes that brought
the organization together in the first place, or the pragmatic Church, or law and accepted moral norms (pp. 96-98).
achievement of goals and organizational effectiveness (p. Organizational morality differs from personal morality in
91). The second end, as we consider in detail later, rests in two key respects: first, its impersonal character means that
creating an effective organization that provides a platform the rightness or wrongness of an action depends on position
for “the mutually dependent realities” (p. 296) of individual not personality; second, “right” action depends on the spe-
cific demands of an ever-changing environment. Hiring new
and collective development.
employees may be morally right (as it allows the organiza-
The executive work of maintaining the vitality and endur-
tion to endure and thrive) at one time, while reductions in
ance of the organization transcends physical, biological, or
force may be the correct moral course of action at another
social work and constitutes moral work. Barnard explains
time. The stability of organizational morality arises from a
that
constant end or ultimate objective—survival of the organiza-
In many instances it has been unavoidable in this study to refer tion and the cooperative system.
to the dependence of action in formal organizations upon Barnard spoke of a third type of morality that we term
personal choice, motives, value attitudes, appraisals of utility, developmental morality. Developmental morality reaches
norms of conduct, ideals . . . all these elements of organization back to Aristotle’s notion of virtue as excellence (Randall,
[are] the moral factor [in] its concrete expression . . . to inspire 1960), and implies that right actions enable individuals to
cooperative personal decision. (pp. 258-259) reach their full or best potential in all areas of human

endeavor; such a morality contains a clear teleological char- democratic process as “that of securing formal consent of an
acter, pushing individuals to reach noble ends. Individual electorate to a formal governing proposition” (Dilemmas, p.
development includes education and skill development 28) based on the fundamental right of individuals for voice.
(Collectivism, p. 18), creativity and good judgment (Mind, p. Transparency and inclusion stand as essential organiza-
305), development of aesthetic abilities (p. 235), patience tional processes in decision making and implementation. In
and sympathy (Personnel, p. 11), and responsibility describing his work with the unemployed in Trenton during
(Collectivism, p. 22), particularly moral responsibility. the Great Depression, Barnard highlighted the importance of
Moral codes and moral responsibility exist as a system; respectful, inclusive organizational processes. “The essential
the former a multilevel set of abstract ideas (drawn from first step in accomplishing these purposes [cooperative
society, organizations, groups, and personal dispositions and action] is complete sincerity and honesty of employers and
beliefs) and the latter an individual-level behavioral “quality managers” (Riot, p. 23). The adherence to personal moral
which gives dependability and determination to human con- codes of interpersonal respect and courtesy may enhance
duct, and foresight and ideality to purpose” (p. 260). individual commitment to the organization or defuse poten-
Responsibility means adherence to a moral code. Moral tially destabilizing loss of commitment (Riot, pp. 63-64,
codes and moral responsibility work within the executive to Nature, p. 91).
produce a systemic outcome, which Barnard labeled the The Functions explains the importance of the creation of
“moral factor” that enables executives an organizational moral code by executives for others and for
the organization as a whole:
to inspire cooperative personal decision by creating faith: faith
in common understanding, faith in the probability of success, The distinguishing mark of executive responsibility is that it
faith in the ultimate satisfaction of personal motives, faith in the requires not merely conformance to a complex code of morals
integrity of objective authority, faith in the superiority of but also the creation of moral codes for others. The most
common purpose as a personal aim of those who partake in it. generally recognized aspect of this function is called securing,
(p. 259) creating, inspiring of “morale” in an organization. This is the
process of inculcating points of view, fundamental attitudes,
Individual actions produce organizational values because, loyalties, to the organization or cooperative system, and to the
as Barnard submitted, “we say that a man cannot divorce his system of objective authority, that will result in subordinating
official or professional conduct from his private morals” (p. individual interest and the minor dictates of personal codes to
274). Barnard saw the generation of a moral system as the the good of the cooperative whole. (p. 279)
critical work of executives (Mahoney, Huff, & Huff, 1994;
O’Connor, 2012). The ability of executives to act consis- This process constitutes organizational morality. The bet-
tently with moral codes helps insure the effective functioning ter executives complete this task, the greater the stability of
of the organization. organizational authority and, consequently, the wider the
zone of indifference among organizational members. Wider
The strategic value of morality. Barnard viewed managers as zones of indifference enhance flexibility and adaptability by
moral actors and maintained that their ability to execute the organization to shifting environmental demands. Well-
these distinctly moral roles determined the effectiveness of articulated and accepted organizational purposes also act as
their organizations. Put in today’s terms, Barnard champi- strong methods of persuasion, meaning that individuals
oned the strategic value of moral behavior within organiza- receive greater personal satisfactions from accomplishing an
tions based on personal and organizational morality. In terms organization’s purpose. The morally constructed organiza-
of personal morality, executives should give attention to dis- tion obtains greater contributions by its members while
tributional and procedural concerns of fairness, dignity, and offering fewer costly material inducements, thus creating
courtesy in maintaining the organization. Concerns about positive net value for the organization. Indeed, carrying out
fairness and justice should work on a broad conception of the purpose may become “an inducement in itself” (p. 174).
organizational membership; Barnard provided a logic that To sum up, the first moral imperative of executive work
presages stakeholder theory (e.g., Freeman, Harrison, & entails maintaining the organization in its ongoing interactions
Wicks, 2007). with internal individuals and external environmental elements.
The advantage of a strong personal morality in executive The ability to clearly articulate a personal moral code lays a
work builds on Barnard’s fundamental and deeply held view foundation for executives to act with integrity and to create
of individuals as autonomous moral actors and the need to stewardship through an organizational morality or moral code.
respect the rights of the individual (Wolf, 1974). At the orga- Barnard saw the strategic value of moral work in establishing
nization level, Barnard experienced the positive impact of processes that enable organizational purpose as well as
courtesy, respect, and extended the “opportunity for self- improve strategic flexibility and adaptive capability. As we
expression and recognition” to organizational members now explain, The Functions suggests that deliberately coordi-
(Riot, p. 71); at the nation-state level Barnard saw the nated and goal driven organizational activity accomplishes the

second moral imperative of creating an organization that Organization creates intrinsic moral value by providing a
allows individuals to flourish and develop their full potential. platform for individual development. Education and the
Put simply, strategic action has moral value. skills training that often accompany organizational member-
ship create not only instrumental economic value but intrin-
The moral value of strategy. Barnard offered a moral justifica- sic moral value as education and skill (a) makes an individual
tion for organized cooperation, particularly formal organized more than he or she was before and (b) provides a platform
cooperative behavior prevalent in the 1930s (Scott, 1992). for further growth and development of “higher purposes,”
The moral justification of organization, and strategic actions excellences, or virtues (p. 296). Freedom exemplifies another
that create effective organizational outcomes, draws on his intrinsic value; the strictures and limitations of formal orga-
view of individuals and their potential for development, nization, paradoxically, enhance human freedom of action by
growth, and flourishing, or what we have termed develop- focusing and channeling those actions, a good in its own
mental morality. Barnard believed that individuals possess right (Barnard, 1948; Hayek, 1944; Wolf & Iino, 1986).
free will, foundational rights, and fundamental dignity (Wolf, Responsibility to moral codes and the intellectual, emotional,
1973, p. 5). The moral value of strategy begins with the limi- and spiritual growth that comes from resolving the moral
tations of those same individuals, particularly the physical conflicts attendant to organizational membership stands as
and biological limitations that keep them from accomplish- another intrinsic moral outcome of the process of formal
ing goals and creating value on their own. “Cooperation jus- organization. To the extent that people become, not merely
tifies itself, then, as a means of overcoming the limitations possess, more because of organizational participation then
restricting what individuals can do” (p. 23). Cooperation both organization and participation represent moral goods
provides the seed from which organizations flower. (John Paul, 1991).
The justification that Barnard speaks of may be construed In this section, we looked back on The Functions not only
as purely instrumental and pragmatic as cooperation creates to lay out the core concepts for a new generation of readers
value, economically and socially, that would not exist other- but also to lay bare some of its deepest structures. We focused
wise. Organized cooperation enables individuals to clear on the pervasive role of systems logic, and the primary role
more land, grow more food, create more products, deliver of morality in organization and executive work. We also
more services, and provide more entertainments than indi- noted that the properties of systems that permeate organiza-
viduals could produce on their own. Organizations exist as tions intertwine with the moral underpinnings of those orga-
moral institutions because cooperation creates moral conse- nizations to create collectives capable of actions that better
quences: more total social welfare, utility, or value. society instrumentally and individuals intrinsically. We now
Organization meets the utilitarian, and economic, standard turn our gaze forward and illustrate the continued relevance
for moral desirability by creating greater good as measured of The Functions for issues facing scholars and professional
at the level of the larger social system (Mill, 1863). managers in the 21st century.
Barnard recognized this instrumental justification, but
also argued for a different, non-instrumental moral justifica- The Current Value of The Functions
tion in the creation of value:
In this section, we illustrate how the central argument of The
I believe in the power of the cooperation of men of free will to Functions can inform current issues in management thought
make men free to cooperate; that only as they choose to work and practice. We note that Barnard’s work contributed to the
together can they achieve the fullness of personal development; nascent field of management theory (Wren, 1994). The
that only as each accepts a responsibility for choice can they Functions appeared between Schumpeter’s great works, The
enter into that communion of men from which arise the higher Theory of Economic Development (1934) and Capitalism,
purposes of individual and cooperative behavior alike. (p. 296)6 Socialism, and Democracy (1942), on the heels of Coase’s
(1937) Theory of the Firm, and coincident to the Hawthorne
Barnard emphasized the primacy of individual growth studies (Wolf & Iino, 1986). Barnard differed from these
and development: thinkers because he was, fundamentally, a practitioner of
management interested in theory. We maintain that those les-
Although highly developed individualism and well developed sons from practice about the roles, responsibilities, and func-
collectivism are mutually dependent conditions and perhaps
tions of the executive speak to the challenges observed from
equally indispensable to any high degree of civilization, so far as
there may be a difference in their importance, the emphasis
the failure of Long Term Capital Management in 1997 to the
requires to be put on the development of the individual rather insider trading conviction of McKinsey and Company’s for-
than upon the development of organization. The vital problem is mer head, Rajat Gupta, in 2013, the scandal most recent to
that both shall be developed in proper balance and that they shall our work.
be integrated in ways that increase the strength of each. Sun, Stewart, and Pollard (2011) saw in the financial crisis
(Collectivism, pp. 18-19) “a fundamental systemic failure of institutional arrangements

underpinned by several increasingly popular paradoxical (Asher, Mahoney, & Mahoney, 2005; Blair & Stout, 1999;
assumptions, such as shareholder primacy, profit maximiza- Klein, Mahoney, McGahan, & Pitelis, 2012). Responsibility
tion, effective incentive systems, rational self-interest human means that individual action conforms to the requirements of
behavior, universal agency problems, efficient market for cor- some relevant code of conduct; executive responsibility
porate control, etc.” (p. 6). In short, the origins of the crisis entails the adoption of an “organizational personality” (p.
reside in neither the technical machinery of sophisticated 270) where actions will be dictated by “a sense of the good
financial instruments, nor the implementation of good gover- of the organization as a whole” (p. 277). The primary good
nance, but rather in the moral failure of the entire edifice of for the organization is survival and the maintenance of the
governance logics. Even Alan Greenspan (2008: 2) saw a cooperative effort in the face of environmental change, unex-
moral failure in the 2007 financial crisis: pected human or social events, and the vagaries of chance.
Executive responsibility thus points in the direction of exer-
Those of us who have looked to the self-interest of lending cising due care in decision making and action.
institutions to protect shareholder’s equity (myself especially) The fiduciary doctrine, properly understood, closely
are in a state of shocked disbelief. Such counterparty surveillance resembles Barnard’s description of executive responsibility.
is a central pillar of our financial markets’ state of balance. If it Consider
fails, market stability is undermined.
There are two well-established, primary fiduciary duties under
While others may recognize the moral dimension under- Delaware law: care and loyalty. The court imposes these duties
lying the scandalous record of business, they have little to to create a legal framework that protects shareholders by
recommend in terms of moral alternatives; technical solu- reducing agency costs and aligning the directors’ interests with
tions hope to mitigate and constrain morally reprehensible the shareholders’ interests . . . The duty of care requires that
behavior while accepting the legitimacy of the self-interested when making decisions, the directors use the amount of care that
nature of organizations. The Functions, in contrast, offers a person of ordinary prudence would use under similar
three lessons for scholars and executives in the wake of the circumstances . . . The duty of loyalty requires that the directors
most recent crisis: (a) maintaining the organization—the first act solely in the best interest of the corporation. The directors
have breached their duty of loyalty if they acted in their own
executive responsibility—requires substantial attention to
self-interest and deprived the shareholders of a “neutral”
the duty of care, (b) the depth of the moral purpose of the decision-making body. (Appleby & Montaigne, 2009, p. 431)
organization undergirds its survival and effectiveness, and
(c) the need to narrow the zone of indifference in our society
toward financial risk taking. These recommendations flow The ongoing scandals and crises of the 21st century con-
from our perspective that the ongoing crises represent fail- tinually expose several breaches of the duty of care, or the
ures of organizational morality and executive responsibility. obligation of executives to act responsibly to ensure the sur-
vival of their organizations. Long Term Capital Management
took hedged positions that exposed it—and its partners on
Executive Responsibility the other side of the trade—to overwhelming naked (literally
uncovered) risks when their models predicted the wrong out-
The primary moral responsibility of the executive resides in
comes. Enron’s board created a set of dubious off-balance-
the work of maintaining the organization, creating a homeo-
sheet entities in violation of its own ethics practices (Abelson,
stasis that ensures the survival of the organization.
2002). Banks and financial institutions, in pursuit of ever
Responsibility entails difficult choices that force the execu-
higher yields, invested in securitized debt products so com-
tive to act in the best interest of the corporation rather than
plex that many did not understand what they were buying;
his or her own interest. In short, Barnard saw one role of the
information asymmetries between the packagers and pur-
executive as a fiduciary. Fishman (2007) defined a fiduciary
chasers of these instruments obtained to the extent that nei-
as a person
ther party could accurately assess the risks involved
(Schwarcz, 2011), or consider credit default swaps (CDS’s),
entrusted with a power to use either property or assets of the
one entrusting the fiduciary, which may be to the detriment of a hedging tool to insure against financial losses from bad
the beneficiary. The fiduciary obligation goes against normal debt. At the height the crisis, CDS’s represented a US$62
human behavior, because the fiduciary cannot act for himself or trillion dollar market, more than 5 times the value of the
advance his own interest but can only further the interest of stocks traded on the New York Stock Exchange (M. Phillips,
another. (p. 8) 2008).
Executives who take seriously the idea that their primary
Barnard made the case that executives have a fiduciary moral responsibility resides in maintaining and insuring the
responsibility to the organization as a whole and not to any continued existence of their organization will also take seri-
one stakeholder group—a view consistent with modern ously the duty of care suggested in the fiduciary doctrine.
property rights theory and contemporary corporate law The prudent man test for the duty of care applies here; how

many prudent individuals would invest huge sums of money a regulator of the life of a business, but it is not the only one;
without understanding the fundamental nature and risks of other human and moral factors must also be considered which,
the products? Prudent investors avoid a mythical enchant- in the long term, are at least equally important for the life of a
ment of abstract principles like “the power of self-interest” to business.
regulate and constrain behavior, especially when others
engage in risky behaviors and reap such short-term rewards. Barnard identified many of those moral factors, which we
Barnard’s notion of executive responsibility encourages included in our discussion of developmental morality. Such a
behaviors consistent with a duty of care that keeps in mind moral focus in organizations would clearly include stake-
the importance of organizational survival. holder voice and consideration, but also a deep and deliber-
ate concern for “higher purposes”; that is, organizational
objectives that focus on making all stakeholders not just
Organizational Purpose wealthier in an economic sense but better in Aristotle’s sense
In the midst of the crisis of the great depression, Barnard of eudemonia or human flourishing (Donaldson, 2012; R.
wrote, Phillips, 2003). A broad moral purpose involves a focus on
actions with intrinsic virtue as well as economic and social
Organizations endure, however, in proportion to the breadth of outputs with instrumental value. Such organizations may
the morality by which they are governed. That is to say that look very similar to existing ones; however, we suspect they
foresight, long purposes, high ideals are the basis for the would act quite differently. John Paul II (1991, Section 32)
persistence of cooperation. (p. 282) both echoed Barnard and illustrates the point:
Barnard explicitly linked the breadth of organizational It is his disciplined work in close collaboration with others that
morality with “long purpose” and “high ideals.” When func- makes possible the creation of ever more extensive working
tioning properly, shareholder value focuses managerial fore- communities which can be relied upon to transform man’s
sight and long purposes toward the creation of long-term natural and human environments. Important virtues are involved
in this process, such as diligence, industriousness, prudence in
economic value. Friedman (1970) praised shareholder capi-
undertaking reasonable risks, reliability and fidelity in
talism for its instrumental moral value—that it allows share-
interpersonal relationships, as well as courage in carrying out
holders to have more and invest in things that create personal decisions which are difficult and painful but necessary, both for
utility. Barnard would not be opposed, given his work in the the overall working of a business and in meeting possible
Bell System, to shareholder wealth as an instrumentally set-backs.
moral organizational purpose; however, he would note the
lack of an intrinsic “high ideal” in shareholder capitalism Barnard emphasized that there is a need to articulate the
and, in particular, the high ideal of personal development. “higher purposes” in organizations, which almost certainly
The depth, breadth, and length of organizational purpose include stakeholder principles and codes of ethics. It would
certainly evoke calls for stakeholder management, in that also include recognition of the instrumental moral value of
theory’s current development (Freeman et al., 2007; Freeman, organizational outcomes in producing societal welfare. That
Harrison, Wicks, Parmar, & De Colle, 2010). Including higher purpose, however, would ultimately focus on the
stakeholder voices in decision making may have ameliorated powerful end of building communities that allow partici-
some transgressions leading to the great depression. We pants to develop and flourish.
doubt, however, that a concern for the instrumental values of
stakeholders connected with the firm, or inclusion in their
decision processes would have had a decisive impact. We Narrowing the Zone of Indifference
submit that the breadth of purpose Barnard wrote about Our last remedy and recommendation does not concern exec-
entails a focus on “eudemonia,” or human flourishing utives or leaders of societies, but rather members of organi-
(Randall, 1960). Pope John Paul II (1991, Section 35, empha- zations and common citizens. The law of supply and demand
sis added) articulated a vision of such a moral firm, and the stands central to economic doctrine; perhaps no principle is
type of purposes underpinning it: more foundational. We can easily imagine financial firms
and their executives trading mortgage-backed securities
When a firm makes a profit, this means that productive factors
among themselves as the culprits and perpetrators of vast
have been properly employed and corresponding human needs
have been duly satisfied. But profitability is not the only
economic harms, creating untoward risks for their firms,
indicator of a firm’s condition . . . In fact, the purpose of a shareholders, and society. We too easily overlook, however,
business firm is not simply to make a profit, but is to be found in the holders of those mortgages and the role they played. Sun,
its very existence as a community of persons who in various Stewart, and Pollard (2011) characterized a society plagued
ways are endeavoring to satisfy their basic needs, and who form by “multifacets of greed permitted or encouraged by govern-
a particular group at the service of the whole of society. Profit is ment policies, institutional arrangements, ideologies, and

cultures” (p. 7). In short, we have seen the enemy and he or perpetuation of good management practices requires good
she is, in some substantial degree, us. theory and the same logic holds for “good” consumers,
Reform and progress entail not only changing corporate employees, suppliers, or community members (Ghoshal,
behavior, but also in the revival of critical thinking and ques- 2005). We expend much effort in traditional business ethics
tioning that would shrink our collective zone of indifference classes posing quandaries to our students from a manager’s
to business decisions with opaque, but very real risks. The perspective. We spend precious little time viewing those
public must narrow the zone of business behaviors we see as same quandaries from the perspective of employees, con-
“unquestioningly acceptable,” even when our moral com- sumers, or citizens.
pass suggests that such behaviors run afoul of our core Scholars seem to implicitly presume managers have
human values. The justifications of business as a competitive unlimited degrees of freedom and can do whatever they want
sport with a set of rules all its own needs to fade; in its stead, in their organizational roles; the reality, suggested by the
we should adopt a view that business is, in fact, one of many acceptance theory of authority, reveals they can do whatever
social actors and one whose power and influence affect the we allow them to do. A critical view of history, particularly
whole of society. Business is not a game played outside the business history, should enter our curriculum in management
larger societal system, rather the game of business must be courses beyond ethics. We must instruct our students that by
bounded by the needs of that larger society. We must not questioning authority, demanding transparency, and consid-
allow businesses a “free pass” in moral behavior, especially ering the long run of economic activity as consumers and
justified when our own material comfort level increases. We citizens we can encourage, and even enforce, better decision
need, instead, critical thinking and questioning that subjects making on the part of our business leaders. If we, collec-
executive behavior and business decision making to scrutiny, tively, are part of the problem, then we must become part of
transparency, and a concern for long-term consequences. the solution.
Reinhart and Rogoff (2009) noted one common refrain in
every financial crisis of the last eight centuries: This time is
different. The reality is that the causes of crises tend to follow Conclusion
similar patterns. We enlarge our zone of indifference when Barnard made clear that while there is a need to develop a
we, collectively, fail to examine history in critical ways. We “science of organization” (p. 290), such an effort will not be
see new technologies, new models, or new forms of social sufficient for success. An appreciation of the art of organiz-
organization and believe that changes in the artifacts around ing is also needed (Isomura, 2010; Levitt & March, 1995;
humans somehow equate to fundamental changes within Mahoney, 2002), which is derived from the intimate, habit-
human natures. The zone of indifference expands here not ual, interested experience. Barnard wrote that the decision-
because of our willingness to accept decisions foisted upon making process
us but because of our lack of awareness concerning previous
incarnations of those same decisions. transcends the capacity of merely intellectual methods and the
Management scholars have two roles to play in shrink- techniques of discriminating the factors of the situation. The terms
ing the zone of indifference. Ghoshal and Moran (1996) pertinent to it are “feeling,” “judgment,” “sense,” “proportion,”
and Stout (2012) questioned fundamental assumptions “balance,” [and] “appropriateness.” It is a matter of art rather than
(Stout) and consequences (Ghoshal and Moran) of an unfet- science, and is aesthetic rather than logical. (p. 235)
tered acceptance of the notion that the “[moral] responsibil-
ity of business is to make [as much] money” as possible for We began this article with an invitation to our colleagues
shareholders (Friedman, 1970). While such scholarship to re-read The Functions. Barnard’s opus continues to hold
may appear as “fringe” or those making these claims may important messages for managers and management scholars,
be perceived as annoying gadflies to the real conversations messages about the criticality of seeing the organization as a
in management, we submit that questioning the dominant key element in societal systems. Given the important role
assumptions in the field invites examination of the zone of business plays in current social arrangements, attention to
indifference. Such conversations about the moral aspect of the moral nature, roles, and purposes of organization becomes
organization belong front and center in the management vital for moving business as an institution and individual
research literature. The field of business ethics has much to businesses beyond an epoch of scandal. If accepted, our invi-
add to these conversations; however, Barnard reminds us tation should help management scholars to focus, as Barnard
that moral considerations cannot be hived off into a com- did, on both the science and art of management; we hope to
partmentalized discussion of ethics. Moral action is central see words such as feeling, judgment, sense, and above all
to organization. morality begin to have their place in our thinking, conversa-
Second, management scholars act as management education, and eventually research literature. Our goal would be
tors; as such we can, collectively, influence future genera- that in another 75 years, The Functions will continue to be an
tions of not only managers but consumers as well. The important part of the management conversation.

Appendix greatly to the refinement of these ideas. During the writing of this
manuscript, Dr. William G. Scott, the scholar who introduced Paul
The Published Works of Chester I. Barnard, to Barnard and his work, passed away. With the death of Bill Wolf
Chronologically Arranged in 2009 and Scott’s passing in 2011, the field lost two outstanding
Barnard scholars. We dedicate this article to them in the hope of
inspiring a new generation of Barnard scholarship.
Year Complete title Published in
1934 Collectivism and individualism Wolf and Iino (1986) Declaration of Conflicting Interests
in industrial management The author(s) declared no potential conflicts of interest with respect
1935 Some principles & basic Barnard (1948) to the research, authorship, and/or publication of this article.
considerations in personnel
relations Funding
1936 Persistent dilemmas of social Wolf and Iino (1986)
The author(s) received no financial support for the research, author-
progress
ship, and/or publication of this article.
1936 Methods and limitations of Wolf and Iino (1986)
foresight in modern affairs
Notes
1937 Notes on some obscure aspects Wolf and Iino (1986)
of human relations 1. To ease the burden on the reader, we omit the author/date in
1938 The Functions of the executive Barnard (1938) text references for The Functions. Quotations from the work
1938 Mind in everyday affairs Barnard (1938) will include the page number(s) only. The appendix provides a
1939 Dilemmas of leadership in the Barnard (1948) list of Barnard’s published works; citations from other works
democratic process will include a text marker (the bolded word in the appendix)
1940 The nature of leadership Barnard (1948) and the page number(s).
1940 Concepts of organization Barnard (1948) 2. We could begin a short recounting of scandal and crisis with
1943 On planning for world Barnard (1948) the first “too big to fail” incident, the 1997 bailout of Long
government Term Capital Management (Lowenstein, 2000). Since the
1945 Riot of the unemployed at Barnard (1948) dawn of the new millennium, our list would include Enron,
Trenton, New Jersey, 1935 World Com, Adelphia Communications, the Bernie Madoff
1945 Education for executives Barnard (1948) investment scandal, and the financial meltdown and ensuing
1946 Functions and pathology of status Barnard (1948) rescue of 2008 to 2011 (including the bailouts of AIG, General
systems in formal organizations Motors, and the TARP program); the mortgage foreclosure cri-
1946 A review of Barbara Wooton’s Barnard (1948) sis and robo-lending scandals, the collapse of MF Global, and
Freedom under Planning the insider trading scandal ensnaring McKinsey & Company,
1947 Some aspects of organization Wolf and Iino (1986) KPMG, and SAC (Stephen A. Cohen).
relevant to industrial research 3. The Functions represents the edited versions of eight lectures
1947 Social factors in the medical Wolf and Iino (1986) Barnard delivered at Harvard in November and December of
career 1937. Wolf (1973, 1974) and Wolf and Iino (1986) provide
1950 Skill, knowledge, and judgment Wolf and Iino (1986) excellent accounts of how Barnard came to give the Lowell
1950 Book review of Bureaucracy in a Wolf and Iino (1986) Lectures.
Democracy by CS Hyneman 4. For convention, when referring to Barnard we use the past
1952 Leadership and the law Wolf and Iino (1986) tense but when referring to The Functions, other works, or the
theory he developed we use the present tense. The past and
1958 Elementary conditions of business Wolf and Iino (1986)
morals present tense may be used simultaneously in the same para-
graph, but we follow this convention throughout the article.
1961 Conversations with Chester I. Wolf (1973)
Barnard 5. We reference here a common definition of morality current at
the time Barnard worked and wrote.
Note. Cited works in the text used bolded word as title marker. 6. Donaldson (personal conversation, 2011, 26 July) explains
the significance of Barnard’s contribution as clearly estab-
lishing freely chosen cooperative activity as a good in itself,
Acknowledgment and as a good that is not merely instrumental: “This takes
him beyond Mill, for whom all goodness resides in the maxi-
We heartily thank Tom Donaldson, Ed Freeman, Kazuhito Isomura,
mization of individually located happiness, and, indeed,
Ellen O’Connor, Dave Whetten, and Alan Wilkins, for their insight-
beyond Kant, for whom being good is its own reward, and
ful critique of an early draft of this manuscript.
all the way to Aristotle, for whom man is a social animal
that cannot be fulfilled save through cooperative efforts in
Authors’ Note an organization (for Aristotle, who lived in a world without
Journal of Management Inquiry (JMI) Associate Editor, Karen corporations, that organization was firstly the polity, and sec-
Patterson and the two anonymous reviewers have contributed ondly, the family).”

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Tarea 2. Las Funciones de Los Elementos Dirigentes

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DA-1959, núm. 23. CHESTER I. BARNARD.

Las funciones de los elementos dirigentes

TAREA 2. Hacer un resumen del primer texto y un

El libro clásico y hasta la fe-

I.—CONSIDERACIONES PRELIMINARES SOBRE LOS SISTEMAS

No existe prácticamente literatura sobre la organización como fenómeno

La base de toda cooperación es, naturalmente, el individuo, objeto físico,

78 d. a. 23 — noviembre 1959 — documentación bibliográfica

sino conjuntamente con otros individuos, de lo que resultan interacciones con

d. a. 23 — noviembre 1959 — documentación bibliográfica 79

última. El fracaso de la cooperación puede deberse a fallos en uno de esos

n.—TEORÍA Y ESTRUCTURA DE LAS ORGANIZACIONES FORMALES

Todo sistema de cooperación es una unidad dentro de otros sistemas más

Los elementos de una organización, que se deducen de la definición, son:

80 d. a. 23 — noviembre 1959 — documentación bibliográfica

finalidad individual que es el motivo por el cual la persona se adscribe a la

3. NACIMIENTO DE LAS ORGANIZACIONES COMPLEJAS

Las organizaciones complejas pueden gozar de una situación de preponde-

d. a. 23 — noviembre 1959 — documentación bibliográfica 81

4. LAS ORGANIZACIONES IRREGULARES

ni.—ELEMENTOS DE LAS ORGANIZACIONES FORMALES

En las organizaciones como en las personas, la especialización actúa sobre

82 d. a. 23 — noviembre 1959 — documentación bibliográfica

se fomentan mediante vina política de incentivos propiamente dicha, los se-

Autoridad es en una organización el carácter de una comunicación en

d. a. 23 — noviembre 1959 — documentación bibliográfica 83

comunicación. La decisión de si una orden tiene o no autoridad depende

84 d. a. 23 — noviembre 1959 — documentación bibliográfica

c) La tercera función dirigente es la de formular y definir los propósitos,

No existe un procedimiento concreto y tipificado para la función dirigente.

El puesto de dirigente tiene dos aspectos: el primero, es el de superioridad

Journal of Management Inquiry

The Functions of the Executive at 75:

Paul C. Godfrey1 and Joseph T. Mahoney2

Introduction organizational management and governance (Sun, Stewart,

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Figure 1. A visual representation of The Functions.

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References Greenspan, A. (2010, April 07). Testimony of Alan Greenspan.

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