Russ Woodward and Tim Veal argue for greater integration of micro and macro economics content in business studies assessments
As has been written about numerous times, including in this journal, the way economics is taught on business programmes needs to differ from teaching on single subject economics courses in terms of changing the perspective from the policy maker or economics commentary point of view to one of seeing the economic environment as a source of opportunities, threats and constraints for businesses – and indeed as sense making for understanding business performance as well as decisions made by businesses.
Another issue, however, in addition to this for tutors and course designers is how to organise the economics content on business programmes, especially with regard to assessment.
What is advocated below is a greater integration of microeconomics and macroeconomics in business course assessment than is often the case. Here we are not talking about the very sophisticated literature on microeconomic underpinnings of modern macroeconomic theory which was set off by Nobel Laureate Professor Edmund Phelps many years ago, Phelps (1970).
As implied above, one way that assessment is often arranged, perhaps as a mirror to teaching and to textbooks, is to keep the micro and macro assessment separate, e.g. separate assignments, separate exams, separate sections within exams with one essay required from each section.
It is argued here that while this approach may be fine for introductory micro and macro on a single subject economics course, it is not fit for purpose on a business course; chiefly in that it does not plausibly mirror the way in which business decisions are reached in context of the economic environment. As such it does not prepare students for business management or business management advisory career roles. Also, it does not reflect the fact that in the real world micro-macro issues combine to affect business environment circumstances. Further, it fails to encourage integrative learning which may be key to synthesis capabilities and strategic analysis at later levels in the business course. The micro/macro separation in assessment may well be fine on a single subject economics course where economics material is studied for its own sake or in the form of economic and economic policy commentary. It may also be fine on economics courses where application of specific theory in macro or micro relevant context is being assessed. A final point to note is that at later stages on a single subject economics degree, the student may wish/ be able to specialise in either microeconomics or macroeconomics as an option, alongside other electives like financial economics or economic development and therefore the early stage assessment separation may help to clarify/illustrate relative strengths and preferences.
When making or advising business management decisions one looks across all the relevant business environment issues; one does not cordon certain environment issues off from others for a partial analysis. This is/ should be the same with regard to business environment study early on in a business course. The idea is that tools like SWOT should be integrative and combine the decision relevant parts into a whole – rather than be a series of separate lists (Bell and Rochford, 2016). Further when using PESTLE as a business environment tool either in actual management or in business studies class, the E economics is looked at alongside the Politics, Social/Cultural, Technological, Legal and Environmental; it would be strange completely to separate the economics out when the rest of the tool is about combining.
In view of the above, a separation of micro and macro economics in business management studies assessment would be implausible making the programme fail to mirror authentic business decision making.
Looking at business management economics assessment in context of modern curriculum design theory – we know that threshold concepts serve to define a subject and its scope not least through possession of the integrative criterion, (Meyer and Land, 2003) where being integrative means the ability to show the previously hidden interrelatedness of content. In cases where business economics concepts show the connection of micro and macro themes for the management decision making discipline, it would be restrictive of learning if assessment required the integrated field to be written about entirely separately. In context of traditional curriculum design theory (Bloom’s 1956 Cognitive Domain), teaching and assessing such integration would represent key groundwork preparing students for higher level cognitive skills in business, e.g. Synthesis, at later levels. Leonard (2012) noted that integration can occur at various levels through a course with the highest being synthesis. In context of both forms of curriculum design theory in business, teaching and assessing such integration would be a key step forward for success in later business management modules such as International Business Environment and Strategic Business Environment.
|Bloom et als Cognitive Domain Taxonomy||Leonard’s Taxonomy of Integrative Thinking|
|Threshold Concept Criteria – Meyer and Land
Transformative, Irreversible, Integrative, Boundary Setting, Counter-Intuitive, Discursive, Reconstitutive, Liminality
What clinches the case for keeping micro and macro together in assessment – and in classroom activity – is the importance of real life business examples for which the integration is crucial to sense making in the subject.
While the Elasticity topic is rightly chiefly taught within microeconomics, including on business courses e.g. focussing on sales impacts of company price changes, it also links macro phenomenon to micro implications. For example: income elasticity of demand may guide firms on what to expect from sales through the business cycle e.g. for luxuries such as high end restaurants during recession and boom periods, and thus what decisions should and should not be taken as sales fluctuate. In this sense short run income elasticity of demand – product specific – can be seen as the ‘microeconomic cousin’ of the Marginal Propensity to Consume MPC – which focuses on aggregate consumption. It is perhaps not surprising to note that elasticity, behind opportunity cost, is almost certainly the second most cited threshold concept in economics. See Economics and Business sections of the UCL web based Threshold Concepts Bibliography.
Market Structure and Supply Chains
The related topics market structures and supply chains are again, chiefly taught within the microeconomics part of business management courses. However again, their use – in combination – can be key to sense making of business actions and outcomes in different macroeconomic conditions. In the grocery sector during recession, the relative extent and timing of profit squeezes between those felt by supermarkets (oligopoly) and by agricultural suppliers (perfect competition approx.) [i.e. the issue of what happens to the prices farmers get for their products], can be explained in many cases by the comparative market power of the organisations at the two stages. The need for regulatory protection of at least the promptness if not the level, of supermarket payment to farmers, through the Groceries Supply Code of Practice (see Guardian, 2016) can also be rationalised by the microeconomics. It should also be noted here that another business microeconomics tool, namely Porter’s Five Forces model could also be used to make sense of the above situation during macroeconomic recession.
It is hard to envisage how accurate coverage of the above business examples – and many others like them – could be achieved, and indeed rewarded, on a module assessment format that kept micro and macro apart.
With regard to relevant modes of assessment, and speaking from experience of both, it is fair to say that business degree courses – being vocational – tend to have a wider selection of assessment formats than the chiefly essay assignment/essay exam traditional format of economics degree programmes. With this in mind, there may be greater scope for highlighting and deploying assessments best able to bring out the integrative micro/macro environment aspects for business and student understanding thereof, e.g. presentation, consultancy report. This also enables better orientation to constructive alignment, whereby assessment/activity method choice aligns to learning outcomes/objectives being pursued (see Biggs, 2003).
A final specific point. It has been noted (Simatele, 2010) that one of the defining economics assumptions that business students dislike the most is ceteris paribus, i.e. holding all other things constant. There may be plausible reasons for this, i.e. the real world interaction of aspects in the business environment. Assuming away microeconomic behaviours by ignoring them when macroeconomic conditions change – even in introductory studies – means that students have something quite sizeable to unlearn when they come to more strategic modules later in business programmes.
On grounds of 1) fitness for purpose in business courses and business careers, 2) better use of business environment models and tools 3) building for higher more integrative cognitive business studies activity later and 4) for better deployment of economic environment business examples, an integration of micro and macro on introductory level economics for business assessments – and formative activities – is strongly advocated.
Russ Woodward and Tim Veal teach at University Centre, Grimsby Institute FHE
References and Resources:
Bell, G., and Rochford, L. (2016) Rediscovering SWOT’s Integrative Nature: A New Understanding of an Old Framework. The International Journal of Management Education. Vol 14, Iss 3; pp: 310-326
Biggs, J. (2003) Aligning Teaching for Constructing Learning. Higher Education Academy, pp.1-4.
Bloom, B. et al (1956) Taxonomy of Educational Objectives. Handbook I: The Cognitive Domain. New York. David Mckay.
Guardian (2016) Tesco to be Censured by Supermarket Watchdog over Conduct with Suppliers. Available at: https://www.theguardian.com/business/2016/jan/25/tesco-censured-supermarket-watchdog-suppliers-groceries-code-adjudicator
Leonard, J. B. (2012) Integrative Learning: a Grounded Theory. Issues in Integrative Studies. No 30, pp: 48-74
Meyer, J. and Land, R. (2003) Threshold Concepts and Troublesome Knowledge: Linkages to ways of Thinking and Practising within the Disciplines (412-424). Edinburgh: University of Edinburgh.
Phelps, E. S. ed (1970) Microeconomic Foundations of Employment and Inflation Theory. New York. Norton
Simatele, M. (2010) Reconsidering the Teaching of Economics to Students on Business Programmes. The Economics Network. Available at: https://www.economicsnetwork.ac.uk/showcase/simatele_business
The Threshold Concepts Bibliography. Prof. Mick Flanagan, University College, London. Available at: https://www.ee.ucl.ac.uk/~mflanaga/thresholds.html