Economics and ‘bad’ management: the limits to performativity

The performative power of mainstream economic theories (notably agency theory and transaction cost economics) has been criticised by researchers within management studies. The latter blame these theories for creating ‘bad’ management in real-world organisations and call for their removal from business schools. This paper questions this line of criticism. It argues that mainstream economic theories have condoned more than created ‘bad’ management. It also questions whether ‘bad’ management can be negated by ousting these theories from business schools. Rather it is argued that ‘bad’ management has deep roots within organisations—specifically, it reflects on how organisations are run by and in the interests of capital owners. The possibilities for securing comparatively enlightened or ‘good’ forms of management are seen as necessarily limited by capitalist ownership relations. The paper argues that the transformation of management will require wider reforms in—and importantly beyond—business schools.