Business history is a historiographical field which examines the history of firms, business methods, government regulation and the effects of business on society. It also includes biographies of individual firms, executives, and entrepreneurs. It is related to economic history. It is distinct from "company history" which refers to official histories, usually funded by the company itself.
United States
Robber baron debate
Even before academic studies began, Americans were enthralled by the Robber baron debate.
As the United States industrialized very rapidly after the Civil War, a
few hundred prominent men made large fortunes by building and
controlling major industries, such as railroads, shipping, steel, mining
and banking. Yet the newer who gathered the most attention was
railroader Cornelius Vanderbilt.
Historian Stephen Frazier argues that probably most Americans admired
Vanderbilt; they agreed with biographer William Augustus Croffut who
wrote in 1886:
- It is now known that the desire to own property is the chief difference between the Savage and the enlightened man; that aggregations of money in the hands of individuals are in inestimable blessing to Society, for without them there could be no public improvements or private enterprises, no railroads or steamships, or telegraphs; no cities, the leisure class, no schools, colleges, literature, art – in short, no civilization. The one man to whom the community owes most is the capitalist, that the menu gives, but the man who saves and invests, so that his property reproduces and multiplies itself instead of being consumed.
However, Fraser goes on, there was a minority who vehemently dissented:
- A minority were irate and excoriated the titans of finance and industry as 'robber barons' and worse. E.L. Godkin, founder of The Nation, launched a volley of invective at the new plutocracy: 'kings of the street' like Vanderbilt displayed 'unmitigated and immitigable selfishness' as appalling as their 'audacity, push, unscrupulousness and brazen disregard of others' rights'.
By the Great Depression of the 1930s, Fraser continues:
- Biographies of Mellon, Carnegie and Rockefeller were often laced with moral censure, warning that 'tories of industry' were a threat to democracy and that parasitism, aristocratic pretension and tyranny have always trailed in the wake of concentrated wealth, whether accumulated dynastically or more impersonally by the faceless corporation. This scholarship, and the cultural persuasion of which it was an expression, drew on a deeply rooted sensibility–partly religious, partly egalitarian and democratic–that stretched back to William Jennings Bryan, Andrew Jackson and Tom Paine.
However a counterattack by academic historians began as the Depression ended. Business historian Allan Nevins challenged this view of big businessmen by advocating the "Industrial Statesman" thesis. Nevins, in his John D. Rockefeller: The Heroic Age of American Enterprise
(2 vols., 1940), took on Josephson. He argued that while Rockefeller
may have engaged in some unethical and illegal business practices, this
should not overshadow his bringing order to industrial chaos of the day.
Gilded Age
capitalists, according to Nevins, sought to impose order and stability
on competitive business, and that their work made the United States the
foremost economy by the 20th century. Business journalist Ferdinand Lundberg later criticized Nevins for confusing readers.
By contrast, historian Priscilla Roberts argues that Nevins' studies of
inventors and businessmen brought about a reassessment of American
industrialization and its leaders. She writes:
- Nevins argued that economic development in the United States caused relatively little human suffering, while raising the general standard of living and making the United States the great industrial power capable of defeating Germany in both world wars. The great capitalists of that period should, he argued, be viewed, not as 'robber barons', but as men whose economic self-interest had played an essentially positive role in American history, and who had done nothing criminal by the standards of their time.
Historians have followed Nevins' lead in writing biographies of the major industrialists of the Gilded Age. These include:
- David Cannadine, Mellon: An American Life (New York: Alfred A. Knopf, 2006)
- Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Atlantic Monthly Press, 1990)
- Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, 2007)
- George Harvey, Henry Clay Frick: The Man (Washington, D.C.: Beard Books, 2002)
- David Nasaw, Andrew Carnegie (New York: Penguin Press, 2006)
- T.J. Stiles, The First Tycoon: The Epic Life of Cornelius Vanderbilt (New York: Alfred A. Knopf, 2009)
- Jean Strouse, Morgan: American Financier (New York: Random House, 1999)
Though these later biographers did not confer heroic status on their
subjects, they used historical and biographical investigations to
establish a more complex understanding of the American past, and the
history of American economic development in particular.
In 1958 historian Hal Bridges finds that "The most vehement and
persistent controversy in business history has been that waged by the
critics and defenders of the 'robber baron' concept of the American
businessman."
In terms of the Robber Baron model, by the end of the 20th-century
scholars had mostly discarded it although it remained influential in the
popular culture. Richard White,
historian of the transcontinental railroads, stated in 2011 he has no
use for the concept because it had been killed off by historians Robert H. Wiebe and Alfred Chandler. He notes that "Much of the modern history of corporations is a reaction against the Robber Barons and fictions."
Academic studies
Meanwhile, business history as an academic discipline was founded by Professor N. S. B. Gras at the Harvard University Graduate School of Business Administration,
starting in 1927. He defined the field's subject matter and approach,
wrote the first general treatise in the field, and helped Harvard
build a tradition of scholarship as well as the leading library in the
field. He edited a series of monographs, the Harvard Studies in Business
History. He also served as editor of the Bulletin of the Business Historical Society (1926–1953), a journal which later became the Business History Review (1954-date). N.S.B. Grass and Henrietta M. Larson, Casebook in American business history (1939) defined the field for a generation.
Business history in the U.S. took off in the 1960s with a high
volume of products and innovative methodologies. Scholars worked to
develop theoretical explanations of the growth of the business
enterprise, the study of strategy and structure by Alfred Chandler being
a prime example. The relationship between business and the federal
government became a focal point of the study. On the whole, the 1960s
affirmed the conclusions of the earlier decades regarding the close
interrelationship between government and business enterprise.
Ranking entrepreneurs and management theorists
A 2002 survey of 58 business history professors gave the top spots in American business history to Henry Ford, followed by Bill Gates; John D. Rockefeller; Andrew Carnegie, and Thomas Edison. They were followed by Sam Walton; J. P. Morgan; Alfred P. Sloan; Walt Disney; Ray Kroc; Thomas J. Watson; Alexander Graham Bell; Eli Whitney; James J. Hill; Jack Welch; Cyrus McCormick; David Packard; Bill Hewlett; Cornelius Vanderbilt; and George Westinghouse. A 1977 survey of management scholars reported the top five pioneers in management ideas were: Frederick Winslow Taylor; Chester Barnard; Frank Bunker Gilbreth Sr.; Elton Mayo; and Lillian Moller Gilbreth.
Chandler
After 1960 the most influential scholar was Alfred D. Chandler (1918-2007) at the Harvard Business School.
In a career that spanned over sixty years, Chandler produced numerous
groundbreaking monographs, articles, and reviews. Intensely focused on
only a few areas of the discipline, Chandler nonetheless succeeded in
establishing and developing an entirely new realm of business history.
Chandler's masterwork was The Visible Hand: The Managerial Revolution in American Business
(1977). His first two chapters looked at traditional owner-operated
small business operations in commerce and production, including the
largest among them, the slave plantations in the South. Chapters 3-5
summarize the history of railroad management, with stress on innovations
not just in technology but also in accounting, finance and statistics.
He then turned to the new business operations made possible by the rail
system in mass distribution, such as jobbers, department stores and mail
order. A quick survey (ch 8) review mass innovation in mass production.
The integration of mass distribution and mass production (ch 9-11) led
to many mergers and the emergence of giant industrial corporations by
1900. Management for Chandler was much more than the CEO, it was the
whole system of techniques and included middle management (ch 11) as
well as the corporate structure of the biggest firms, Standard Oil,
General Electric, US Steel, and DuPont (ch 13-14). Chandler argued that
modern large-scale firms arose to take advantage of the national
markets and productive techniques available after the rail network was
in place. He found that they prospered because they had higher
productivity, lower costs, and higher profits. The firms created the
"managerial class" in America because they needed to coordinate the
increasingly complex and interdependent system. This ability to achieve
efficiency through coordination, not some anti-competitive monopolistic
greed by robber barons, explained the high levels of concentration in
modern American industry.
Chandler's work was somewhat ignored in history departments, but
proved influential in business, economics, and sociology departments.
In sociology, for example, prior to Chandler's research, sociologists
assumed there were no differences between governmental, corporate, and
nonprofit organizations. Chandler's focus on corporations clearly
demonstrated that there were differences, and this thesis has guided
organizational sociologists' work since the 1970s. It also motivated
sociologists to investigate and critique Chandler's work more closely,
turning up instances in which Chandler assumed American corporations
acted for reasons of efficiency when they actually operated in a context
of politics or conflict. Other historians, such as Gabriel Kolko, challenged the very notion of "efficiency through coordination", arguing instead that big business
had, for reasons of inefficiency and a dislike of market discipline,
openly sought government assistance to keep market forces at bay.
Other mechanisms
Lamoreaux et al.
(2003) offers a new synthesis of American business history during the
19th-20th centuries. Moving beyond the markets-versus-hierarchies
framework that underlies the previously dominant interpretation of
Chandler, the authors highlight the great variety of coordination
mechanisms in use in the economy at any given time. Drawing on
late-20th-century theoretical work in economics, they show how the
relative advantages and disadvantages of these different mechanisms have
shifted in complex and often unpredictable ways as a result of changing
economic circumstances. One advantage of this perspective is that it
avoids the teleology that has characterized so much writing in the
field. As a result, the authors can situate the "New Economy" of the
late 20th century in broad historical context without succumbing to the
temptation to view it as a climactic stage in the process of economic
development. They thus provide a particularly persuasive example of the
importance of business history to the understanding of national and
international history.
Comparative
Understanding
the development of business history as a discipline meriting its own
aims, theories and methods is often understood as a transition from
dominating themes of 'company biography', toward more analytical
'comparative' approaches. This 'comparative' trend enabled practitioners
to underline their work with 'generalist' potential. Questions of
comparative business performance have become a staple, featuring into
the wider economic histories of nations, regions, and communities. For
many, this transition was first achieved by Alfred D. Chandler. Chandler's successors as Isidor Straus Professor of Business History at Harvard Business School continued to emphasize the importance of comparative research and course development. In 1995 Thomas K. McCraw published Creating Modern Capitalism (Cambridge, MA 1995)
This book compared the business histories of Britain, Germany, Japan,
and the United States since the Industrial Revolution, and was used as
the text of a new year MBA course at Harvard Business School. Geoffrey Jones,
who was McCraw's successor as Isidor Straus Professor of Business
History, also pursued a comparative research agenda. He published a
comparative study of the history of globalization called Multinationals and Global Capitalism (Oxford, 2005). In 2010, Jones also published a comparative history of the global beauty industry entitled Beauty Imagined: A History of the Global Beauty Industry (Oxford, 2010). More recently, Jones and the Business History Initiative at the Harvard Business School
has sought to facilitate research and teaching on African, Asian and
Latin American business history in a project called Creating Emerging
Markets, which includes interviews with long-time leaders of firms and
NGOs in those regions.
A trend in recent years has been to compare the business histories of individual countries. Geoffrey Jones (academic) and Andrea Lluch have published a comparative study of the historical impact of globalization on Argentina and Chile. In 2011 Jones and his co-editor Walter A. Friedman published an editorial in Business History Review which identified comparative research as essential for the future of business history as a discipline.
France
American historians working in French business history led by Rondo Cameron argued that most of the business enterprises in France were family-owned, small in scale, and managed conservatively.
By contrast, French business historians emphasized the success of
national economic planning since the end of World War II. They argued
that the economic development in this period stemmed from various
phenomena of the late 19th century: the corporation system, the
joint-stock deposit and investment banks, and the technological
innovations in the steel industry. To clarify the contributions of
19th-century entrepreneurs to the economic development in France, French
scholars support two journals, Enterprises et Histoire and Revue d'Histoire de la Siderurgie.
Latin America
Barbero
(2008) examines the development of the field of Latin American business
history, from the 1960s to 2007. Latin American business history
developed in the 1960s, but until the 1980s it was dominated by either
highly politicized debates over Latin American underdevelopment or
biographies of Latin American entrepreneurs. Since the 1980s, Latin
American business history has become a much more professionalized and an
integrated part of Latin American academia. It is much less politicized
and has moved beyond entrepreneurial biography to histories of
companies and industries. However, Latin American business historians
have still not devoted enough attention to agricultural enterprises or
comparative histories between the many countries. Probably most
importantly, Latin American business historians have to become much more
versed in business history theory and methodology so as to get beyond
mere summation of the region's economic past.
In the 1980s, numerous governments in Latin America adopted neoliberal policies. In Mexico, for example, under presidents Carlos Salinas de Gortari (1988-94) and Ernesto Zedillo
neoliberalism became the basis for state-private sector relationships.
The new policy allowed for close cooperation with United States and
Canada as exemplified by the North American Free Trade Agreement (NAFTA) solidified a strategic alliance between the state and business.
In Brazil The key policy was privatization of nationalized industries
especially steel through the 'Programa Nacional de Desestatizção'
(National Program of Destatization) during the early 1990s. It aimed to
implement a new industrial policy by restructuring the industry and
reforming labor-business relations.
The Common Market of the South, or Mercosur,
is a South American commerce pact started in 1991 among Argentina,
Brazil, Paraguay, and Uruguay at the instigation of Argentina and
Brazil. Mercosur's purpose is to promote free trade
and the fluid movement of goods, people, and currency. Since its
foundation, Mercosur's functions have been updated and amended many
times; it currently confines itself to a customs union, in which there is free intra-zone trade and common trade policy between member countries.
Britain
Business
History in Britain emerged in the 1950s following the publication of a
series of influential company histories and the establishment of the
journal Business History in 1958 at the University of Liverpool. The most influential of these early company histories was Charles Wilson (historian)’s History of Unilever,
the first volume of which was published in 1954. Other examples
included Coleman's work on Courtaulds and artificial fibers, Alford on
Wills and the tobacco industry, Barker on Pilkington's and glass
manufacture.
These early studies were conducted primarily by economic historians
interested in the role of leading firms in the development of the wider
industry and therefore went beyond mere corporate histories. Although
some work examined the successful industries of the industrial
revolution and the role of the key entrepreneurs, in the 1970s scholarly
debate in British business history became increasingly focused on the
economic decline. For economic historians, the loss of British
competitive advantage after 1870 could at least in part be explained by
entrepreneurial failure, prompting further business history research
into the individual industry and corporate cases. The Lancashire cotton
textile industry, which had been the leading take-off sector in the
industrial revolution, but which was slow to invest in subsequent
technical developments, became an important topic of debate on this
subject. William Lazonick
for example argued that cotton textile entrepreneurs in Britain failed
to develop larger integrated plants on the American model; a conclusion
similar to Chandler's synthesis of a number of comparative case studies.
Studies of British business leaders have emphasized how they fit
into the class structure, especially their relationship to the
aristocracy, and the desire to use their wealth to purchase landed
estates, and hereditary titles. Biography has been of less importance in British business history, but there are compilations.
British business history began to widen its scope in the 1980s, with
research work conducted at the LSE's Business History Unit, led first by
Leslie Hannah, then by Terry Gourvish. Other research centres followed,
notably at Glasgow and Reading, reflecting an increasing involvement in
the discipline by Business and Management School academics. More recent
editors of Business History, Geoffrey Jones (academic)
(Harvard Business School), Charles Harvey (University of Newcastle
Business School), John Wilson (Liverpool University Management School)
and Steven Toms (Leeds University Business School) have promoted
management strategy themes such as networks, family capitalism,
corporate governance, human resource management, marketing and brands,
and multi-national organisations in their international as well as
merely British context. Employing these new themes has allowed business
historians to challenge and adapt the earlier conclusions of Chandler
and others about the performance of the British economy.
