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Philosophy of Science:

- Management isnt a science but rather a function of logic and moral and
ethical reasoning should be kept when making managerial decisions
- Managers adapt themselves to the theories we have about them
- Young managers are being told they are powerless against the economy, but
they actually make the economy with their decisions

Agency theory prominent in corporate governance

Negative image of human nature (economic theory and agency theory in particular)
+ the pretense of absolute knowledge in management (positivism and determinism) =
Cause of economic failures at the turn of the century (frauds)

What is positivism: when science and knowledge is based on facts and mathematical
proof alone, hence meta physics and theism is rejected in positivism

Causal Explanations: explaining phenomena using only causal situations (used in

Functional Explanations: explaining phenomena by their function in survival
Intentional Explanations: explaining phenomena with intentions or choices

Bi-directional causality in economic strength and institutional stability

Determinism: at odds with humans self-assessment of being free and responsible

for your actions, determinism would say that actions are already determined as a
result of genetic makeup and situational standards

Determinism may be applicable for the natural sciences, but perhaps not for the
social sciences

Determinism is an ontology

Counterfactual understanding of causation is currently the dominant view in social


Ontology = theory about reality

Epistemology = Our knowledge of reality
Double hermeneutic: we create reality through our assumptions of what reality
really is like

Two types of questions: ontological questions, epistemological questions

Positive theory: theory that needs to be right and must be changed once it is
proven wrong
Normative theory: theory in which has ambition to justify the world as it ought to

Lecture 2:
What is the pretense of knowledge? treating social science as if it was a natural
science specifically with a regard to determinism and positivism
Determinism is deeply linked with causality
Ontology = the view of reality that we have
Epistemology = a way of shaping how we get knowledge about reality and how we
are able to acquire knowledge about the world

Assumption made in agency theory = that humans are self-serving and do not care
about other humans
research shows that humans are not self-serving i.e. research shows that
humans will go to great limits to serve their children
Economics assumes that humans are rational but this has been proved to not be

Double hermeneutic: we create reality through our assumptions of what reality

really is like
Our knowledge of reality changes reality

Intentional explanation: explaining behavior from an intention or a certain state of


Functional explanations are often used in business and economics, but are
sometimes fundamentally wrong

Logical Positivism
Metaphysics are theories about things beyond what we can see in reality Logical
positivism aimed to dismantle
3 grand theories of knowledge:
- Rationalism: all our knowledge comes from thinking and rational parts,
mathematics is the primary source of knowledge for rationalists (Descartes)
- Empiricism (positivism): all our knowledge comes from sensory experiences
(Locke, Hume) a big problem with empiricism is that we cannot see causality
and therefore we cannot sense it meaning that we can never know that there
is causality between two things
- Idealism: is the group of philosophies which assert that reality, or reality as
we can know it, is fundamentally mental, mentally constructed

Problem: how to structure observations without resorting to metaphysics?

The linguistic turn: The linguistic turn was a major development in Western
philosophy during the early 20th century, the most important characteristic of
which is the focusing of philosophy and the other humanities primarily on the
relationship between philosophy and language.

Logic can provide structure in observations in a non-metaphysical way

Determinism is a metaphysical assumption about the world, because it cannot be

seen or observed

Analytical statements sentences for which the method of verification is analysis

not observation (for example statements that can be proven with the use of

Synthetic statements: method of verification observation

Analytic statements: the truth of the statement depends on logical analysis and

Lecture 3:
Linguistic turn: the relationship between language and reality and how they affect
each other (both things are outside of us)
What is an analytical statement: a statement that is true that is true because of
the rules of the language in which that statement is made?
What is the method of verification for the truth of analytical statements?

What is a synthetic statement: needs to be measured of observed, a statement for

which the truth depends on observation.

The unity of science ideal: the unity of science is a thesis in philosophy of

science that says that all the sciences form a unified whole.

all scientific knowledge can be put into a single system of language

Logical positivism
Intension: the conjunction of general properties that together define a concept
(the meaning of the concept, explaining the reasons why an object consists of the
amount of properties that are assigned to it)
Extension: the set al all (real-life) phenomena that the concept refers to

A well-defined concept X: is based on solid theoretical arguments that explain the

intension of X
Denotes all and only cases of X in reality

Concepts in social science often have a complex structure

Searchlight theories: concepts guide us in what to look for and infect our reporting
of what we see
- Theory embedded in observational instruments

Lecture 4
Ideas and concepts that are not reducible to logical deduction yet and are
therefore not

What is the difference between a reflective concept and a formative concept

- Reflective concept: disease symptom concept (observable things that reflect

a concept and the theory is the underlying cause for the things)
- Formative concepts: what we see and can observe forms the theory
Induction: observation leads to an empirical law and once there is an exception
observed the empirical law is changed (not a valid logical inference)

Deduction: derive true statements from other statements that you assume to be

What is the problem of induction? You can never be 100% certain because you
cannot generalize from things you have observed to things you have not observed

What is empirical content? Is about what the statement says about reality, the
more it says about reality the more empirical content there is

Critical rationalism: for whatever theory you have you need to treat it as critically
as possible and therefore need to come up with the strongest possible counter
arguments, rationalism part means that the theories need to be as testable as

Intension vs Extension of a concept: the intension of a concept (you define a

concept with the connection of parameters of the concept)

Extension: the set of all phenomena to which the concept refers to in reality

Thomas Khuns theory of paradigms

Science within the boundaries of a given paradigm
Steady cumulative growth of knowledge
Compare: solving a puzzle on the basis of an available picture of the image to be
constructed by the puzzle

Consensus theory of truth:

Pragmatic theory of truth: