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The role of Business Management in relation to Economic Development1

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This paper describes and gives some evidence of two related concepts: Firstly: what has been called socio-psychological and habit infra-structures and Secondly: the concept of the "availability" of skill It was argued that socio-psychological and habit infra-structures can be identified in a business organization by the way in which they facilitate (like roads and railways in the macro economy) the exploitation of existing resources and skills. Examples were given of the pre-circulation of agendas and minutes of Boards of Directors and the habit of dictating letters instead of writing them out in long-hand. The concept of the "availability of skills" differentiates between possessing an ability and using it. While it is recognized that there is always likely to be a gap between knowledge and skill on the one hand and their use in practice on the other, it is argued that in developing countries this gap has often become so great as to constitute a major bottleneck in the efficient development of a business unit. The absence of certain socio-psychological and habit infra-structures is identified as one important element in the process of preventing knowledge and skills from being "available". This problem should be explored and considered in connection with the Galbraith-Harbison-Myers-Schultz argument for strategic human capital as a major resource scarcity in the process of economic development. It would seem to follow that one of the critical roles of modern business management in developing countries may be to build these habits and procedures which have here been called infra-structures.

Affiliations: 1: University of California, Berkeley,2 U.S.A.


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