Walter Fröhlich on Erich Gutenberg’s Grundlagen der Betriebswirtschaftslehre (1956)

Walter Fröhlich’s journal book review evaluates the second edition of Gutenberg’s first volume, Die Produktion, and the first edition of his second, Der Absatz. These form the published portion of a projected three-volume treatment of Betriebswirtschaftslehre, which Fröhlich roughly translates as the “science of industrial administration” or industrial economics; a further volume is to address finance. His central judgment is that Gutenberg gives business administration an unusually substantial theoretical framework. The work’s value lies in applying economic analysis to varied business practices, although its conceptual distinctions sometimes require correction and its empirical grounding remains limited.

Fröhlich follows the two volumes’ organization before locating their contribution within German and American scholarship. The production volume begins by distinguishing elemental factors—labor, means of production, and raw materials—from disposing factors, comprising planning and organization. He describes this opening as abstract and largely taxonomic. The subsequent treatment of production as factor combination distinguishes functions permitting relatively free variation in input proportions from those with fixed proportions, which Gutenberg considers much more prevalent. Fröhlich finds this account insufficiently precise despite its revision for the second edition:

The law of variable proportions is not always clearly distinguished from decreasing returns to scale.

This criticism concerns the separation of analytically different relationships, not simply the difficulty of the exposition. Fröhlich also finds the distinction between short- and long-run production functions inadequately developed: the period under consideration changes the extent to which inputs can vary. His reservations therefore qualify the reliability of the theoretical framework at points central to production analysis.

The discussion of costs receives stronger praise. Its numerous graphs explore how costs and adjustments vary with output, technology, and the lumpiness of production factors, drawing on American theoretical literature and some empirical research. Fröhlich nevertheless checks the account against the scholarship it uses: Gutenberg correctly criticizes Viner’s envelope-curve error without noting Viner’s subsequent correction. He also identifies the omission of location theory, despite the important German contributions of Weber and Lösch. Chapters on organization and decision-making complete the first volume.

The sales volume moves from sales organization and sales costs to pricing, then concludes with product development and advertising. Fröhlich distinguishes its references to theoretical tools from their actual development: selling-cost theory is mentioned but not elaborated, while Neumann and Morgenstern’s reasoning is acknowledged without being applied. Pricing occupies most of the volume, organized around differing forms of market behavior rather than merely conventional market classifications. Its account of relations between markets largely follows Triffin, and Fröhlich appreciates its extensive cases, subcases, and apparently realistic examples.

The review’s decisive interpretive move is to choose an appropriate standard of comparison. Fröhlich regards direct comparison with price-theory textbooks or specialized theoretical monographs as unfair. Management and marketing textbooks provide the more revealing benchmark:

As compared with the widely used textbooks in management and marketing, the book aims at a much higher level of abstraction, shows a good acquaintance with economic theory, and a thorough willingness to set up a theoretical scaffolding around business practices.

That “scaffolding” explains both the work’s distinctive achievement and the caution needed in using it. Gutenberg supplies abundant examples and applications but little empirical material. Fröhlich observes that the analytical development reflected in its sources is chiefly Anglo-American, while its mathematical presentation assumes the preparation of a Continental secondary-school graduate: graphs and elementary calculus are used freely. The relevance for American readers is thus the sustained application of familiar economics to management and marketing problems.

Fröhlich’s final comparison with Joel Dean sharpens this assessment. Dean’s Managerial Economics is preferable in some respects, particularly its closer connection with empirical data, but Gutenberg makes more extensive use of theoretical tools. His recommendation remains qualified rather than unconditional:

It will be of real concern to those specifically interested in the application of standard theory to the manifold and varying conditions of different types of firms.

The review ultimately grants Gutenberg a distinct place in the specialist’s library: a comprehensive, abstract treatment of business problems whose reach exceeds customary management literature, but whose analytical weaknesses demand careful and discerning reading.