Market Based Management: It's Application Today

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Market Based Management: It’s Application in Business Today

Lindsey Nelson

Nova Southeastern University

Market-Based Management: It’s Application in Business Today


Past management styles or practices have been mostly authoritarian or managed from the top down. There was little regard or consideration for the input of labor, supervisors or middle management. Their opinions and experience was only asked for in times of crisis when their knowledge of a particular situation or project was needed to help upper management make a decision on a particular problem which usually dealt with a financial area that would be solved to best suit the company or benefit the company for the short term instead of looking down the road to the long term objectives—if the company had any long term objectives at all. (CITATION)


Market-Based Management

According to Koch (2007), Market-Based Management (MBM) is, at its most essential level a “philosophy and methodology to encourage innovations and create value for both the company and society” (p. 166). According to the Home Page of The Blog about All Things MBM, a working definition of MBM is that it is “a philosophy that applies the ideas of free societies to the organizational level. It views the organization as a mini-society. [Market-Based Management] practitioners strive to translate the benefits of a free society into the organization, so organizations prosper long-term (

I believe MBM is a management system that infuses core values and ethical practices to a company’s employees and management to create innovative ideas that benefit the company as well as its clients through cost effective measures, environmentally friendly practices, creative thinking and greater input through straightforward motivation of each employee or department.

To achieve this goal Market-Based Management has identified several concepts that are keys to the successful implementation of this system. These key concepts are humility, integrity, tolerance, responsibility, and a desire to contribute.

Practicing humility is necessary to enable company employees to acknowledge weaknesses and to be able to learn from others to experience social progress and economic growth. It is imperative that those in the company able to take suggestions and listen to criticisms of other employees and supervisors with the knowledge that these suggestions and criticisms are made to benefit the company and society (clients).

Integrity is what Varey (2002) defines as a commitment to a “discovery culture [that] is based on honesty, openness, and constructive challenge [which] improves and expands [a company’s] knowledge and vision” (p. 227). In other words, integrity means that a company does what it advertises or contracts it will do in all aspects of its business dealings. Integrity also means that an employee of the company will behave with integrity in all of his/her activities—whether the activities are within or outside of the company’s walls—to the best of his/her ability.

Tolerance, or respect, is a vital concept or principle. Tolerance includes treating others with “dignity, respect, honesty, and sensitivity, [to] appreciate the value of diversity, [and to] encourage and practice teamwork” (Koch Industries website)

The Market-Based Management Concept of Integrity in Action at Rentenbach Constructors, Inc.

Gable and Ellig (1993) emphasize that in both society and in organizations “moral principles serve the crucial function of guiding our decisions in ways that promote our long-term welfare. The relevant tradeoff is not between what is right and what is profitable; it is between long-term and short-term profitability” (p. 22). One of the key concepts discussed in Introduction to Market-Based Management and previously...
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