Abstract

The purpose of this paper is to take a critical look at some of the assumptions and theories found in economics and management and discuss their implications for the practices found in the management of business and in public management. Two sets of assumptions are of interest here. First and foremost, the assumption that economic agents are only actuated by self-interest, accompanied by assumptions about the motivating effect of pecuniary incentives and assumptions about the regulation of behaviour through rules, controls and sanctions; secondly, assumptions about “scientificness” and objectivity, accompanied by demands for mathematical formalism, clear goals, quantifiable models and measurements. The assertion is that unrealistic assumptions of economics have become taken for granted and tacitly included into theories and models of management. Guiding management to behave in a fashion that apparently makes these assumptions become “true”. Cases and illustrative examples are used to show how this influences the practice of decision makers and managers.