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Does History Matter in Business?

Published online by Cambridge University Press:  18 February 2015

Abstract

In 2008 Professor Eric Godelier published a provocative essay in which he concluded that a positive dialogue between business historians and both management scientists and business management practitioners was possible. While the divide between these camps was not trivial, he nevertheless wrote that current events and scholarship was bringing them together, at least as he could observe these trends in the context of emerging French scholarship. In this current review, my own conclusion is the opposite. Management scholarship, in fact, continues to move away from the “soft” approach of the historian and more towards the “rigorous” and quantitatively biased methodology of the management sciences. My essay reviews the background of this development in terms of American business practice and scholarship, as it seeks to demonstrate how the evolution of management training in the United States brought us to the current state of affairs where “hard” drives out soft in almost every encounter. However, while I conclude that this is indeed the current reality, I do not imply any endorsement of this outcome. Rather, I end with a hope that some forms of rapprochement might be possible-yet with an acknowledgement that we will have no definitive answers to this question anytime soon.

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Copyright © The Author(s) 2009. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved.

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References

1. This response is hardly the forum to replay the controversy about historical facts and their interpretation. For perhaps the most wellknown recent discussion, see the Carr-Elton debate of some 50 years ago about the meaning and methodology of historical analysis: Carr, E.H., What Is History? (London: Vintage, 1961)Google Scholar and Geoffrey Elton, The Practice of History (London: Fontana Press, 1967); for current discussion, cf. Evan, Richard J., In Defense of History (New York: W.W. Norton, 1999).Google Scholar

2. Eric, Godelier, “;History, a Useful ‘Science’ for Management? From Polemics to Controversies,” Business and Economic History On-Line 6 (2008): 8.Google Scholar

3. For one representative example, see the syllabus for the doctoral course Management 390, “Longitudinal Analysis of Organizations,” offered at the McCombs School of Business at the University of Texas, Austin (Fall 2008 term). The course description states: “Evidence consistently shows that firms and their environments are far from being in equilibrium, and organizations’ behavior and performance is subject to numerous path-dependencies and evolutionary processes that cannot be captured using simple cross-sectional designs. As a result, researchers must increasingly turn to longitudinal methods to address cuttingedge research questions. In addition, because social science theories and their accompanying methodologies have often developed in tandem, one’s conceptual understanding will be limited without a firm grasp of longitudinal analysis.” (cf. www.mccombs.utexas.edu/dept/management/courses/ syllabi_fall2008/MAN20390).

4. Cf.Hammond, J.F., “Learning by the Case Method,” Case No. 376–241 (Boston: Harvard Business School Press, 1976).Google Scholar

5. George, Santayana, The Life of Reason. vol. 1, Reason in Common Sense, (London: Constable, 1905) 284.Google Scholar

6. Godelier, 8.

7. Many believe this quotation was taken out of context in an interview the automaker granted to the Chicago Tribune in May 25, 1916; nevertheless, Ford stated these words. And, it should be noted, not all business executives affect a complete abstinence from historical familiarity. Interestingly, the study and acquisition of “leadership“—certainly a growth market in the business world today—has shown a tendency for its acolytes to study history as one means of enhancing their leadership skills. No one has yet modeled the ideal means to become a leader, and thus history as one facet of the puzzle has become an accepted tool. There is anecdotal evidence that many CEOs read history—especially biographies of great people, such as military leaders—for inspiration in how they should lead their own organizations. See, for example, “FedEx Chief Takes Cue From Leaders in History,” USA Today: Money (June 19, 2005). In the article, Fred Smith, CEO of FedEx, says: “There are only about six business books worth reading. For enduring lessons, read history.” Cf. www.usatoday.com/money/companies/management/2006–06–19–fedex–advice_x.htm

8. Schumpeter, J.A., History of Economic Analysis (London: Oxford University Press, 1954), 12.Google Scholar For further detail, cf. McCraw, T.K., Prophet of Innovation: Joseph Schumpeter and Creative Destruction (Boston: Harvard University Press, 2007), 249–78;Google Scholar also see 453 for McCraw’s commentary on the German “Historical School” as a critical factor in the training of American economists in the early twentieth century.

9. The work of the institutionalists can be observed across such late nineteenth—early twentieth century scholars as Thorsten B. Veblen, John Commons, Wesley C. Mitchell, Walton H. Hamilton, and of course Karl Marx. Today the field is held together primarily through the Journal ofEconomic Issues, published by the academic Association of Evolutionary Economics. For an interesting commentary on the institutionalist approach and that of neo-classical economists, see Lazonick, William, Business Organization and the Myth of the Market Economy (New York: Cambridge University Press, 1991), 266 and especially Chapter 9, “Rigor and Relevance in Economics,”Google Scholar and Tool, Marc R., ed., Evolutionary Economics. Vol. II, Institutional Theory and Policy (New York: M.E. Sharpe, 1988). But also see footnote 11, below.Google Scholar

10. Chandler, A.D. Jr., “Comparative Business History,” in Coleman, D.C. and Mathias, Peter, eds., Enterprise and History (Cambridge, UK: Cambridge University Press, 1984), 326,CrossRefGoogle Scholar quote on 3. (Cited in Lazonick, 266.)

11. Some economists, of course, did seem to maintain faith in history—at least in their interpretation of how to practice it. See the work of the “cliometricians,” that group of “new economic historians” who utilized sophisticated quantitative techniques as primary tools for unearthing the past. Cf. White, Eugene N., “The Past and Future of Economic History in Economics,” Quarterly Review of Economics and Finance 36 (1996, Supplement): 6172,CrossRefGoogle Scholar and McCloskey, Donald N, “;The Achievements of the Cliometric School,” Journal of Economic History 38 (March 1978): 1328.CrossRefGoogle Scholar

12. Chandler, A.D. Jr., Strategy and Structure (Boston: MIT Press, 1962).Google Scholar

13. McCraw, T.K., ed., The Essential Alfred Chandler (Boston: Harvard Business School Press, 1988), 121.Google Scholar

14. Oliver, Williamson, Markets and Hierarchies, Analysis and Antitrust Implications (New York: Free Press, 1975).Google Scholar Also, cf. Ronald, Coase, “The Nature of the Firm,” Economica 4 (1937): 16 Google Scholar for the origins of transaction cost theory.

15. Rakesh, Khurana, “From Higher Aims to Hired Hands, The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession.” (Princeton, NJ: Princeton University Press, 2007),Google Scholar figure 4.1 and table 4.1 on p. 138.

16. Ibid., 158–70.

17. Harold, Koontz, “The Management Theory Jungle,” Journal of the Academy of Management 4 (December 1961): 182–6.Google Scholar Also see Daniel, Wren, The Evolution of Management Thought (New York: John Wiley, 1987), 355–65.Google Scholar

18. This simplistic approach is defined most famously, perhaps, by the early efficiency expert Frederick, W. Taylor in The Principles of Scientific Management (New York: Harper & Row, 1911).Google Scholar

19. And ironically, of course, it should be noted that “case studies,” or an evaluation of a one-off situation as a means to determine some future action, is associated with the traditional methodology of history far more strongly than it is with the survey–based deductive logic of the social sciences.

20. Most notably in this respect, cf. MIT psychology professor McGregor’s, Douglas path-breaking study The Human Side of Enterprise (New York: McGraw-Hill, 1960),Google Scholar in which he challenged the narrowly self-interested behavior of workers and introduced his famed “theory X and theory Y” mode of management behavior. For an overview of these changes, see Wren, The Evolution of Management Thought.

21. Quoted in Khurana, 236; others called them “the slums of the educational community,” Ibid., 247.

22. Ibid., 253. See Chapter 6, “Disciplining the Business School Faculty: The Impact of the Foundations,” 233–88, for detail.

23. Note how Professor Godelier cites a growing French trend, starting in 1949, of emulating American–conceived know–how—“the American model”—for managing a business enterprise, an approach increasingly based on engineering and “management science.”

24. West Churchman, C., Ackoff, R., and Arnoff, E., Introduction to Operations Research (New York: John Wiley), 1957.Google Scholar See Byrne, John A., The Whiz Kids (New York: Doubleday, 1993)Google Scholar for the diaspora of military analysts (including civilians) into industry following WW II.

25. Harvard Business School, perhaps due to legacy as much as anything (the school publishes The Business History Review), continues to employ historians. (In many cases it appears that business historians domiciled in business school have dual teaching capacities, offering courses in traditional business school subjects such as HR management or marketing and communications.) A cursory review of the membership of the Business History Conference reveals relatively few names of ladder faculty from the top-ranked American business schools.

26. See, for example, The Business History Group, a “historical and corporate identity consulting organization that explores the fundamental roots of an organization’s evolution and the essence of its corporate culture.” (cf. www.businesshistorygroup.com). This firm, employing some of the more well–known academic business historians in America, appears to have taken on a number of corporate projects based on some historical issue (though most of its work appears to be the production of commemorative studies); among the services it offers are “litigation support” and “illustrated popular histories.” The financial success of The Business History Group is unknown, though it appears that none of the principal researchers have left their day jobs.

Schools that actively advertise their programs in “applied history” include Shippensburg University in Pennsylvania, Oklahoma State University, and the University of Calgary in Canada, while others offer programs in “public history” that appear similar in tone.

Others too have seen fit to also pursue alliances between business practitioners and business historians; see, for but one example, “The Value of the Past: A Symposium on Marketing and History,” University of Glasgow, Scotland, January 19, 2007 (sponsored by the Center for Business History in Scotland and an organization called Seed Money). According to the symposium brochure, “This symposium will examine the intersection of marketing and history, studying a variety of relationships between the two practices. Looking at specific case studies and general trends, speakers will cover both the history of marketing and the marketing of company histories. We will emphasize the ways in which historical artifacts of trade (such as advertisements and illustrations in a variety of media, trade cards and catalogues, pamphlets, consumer education campaigns, testimonials, and endorsements) are useful both in crafting business history and also as contemporary marketing tools.”

27. Godelier, 15.

28. We have seen how a detailed and uncompromising review of past disasters in other realms of decision making, principally in the public domain, has revealed important lessons for managers—the tragedy of the space shuttles Challenger in 1986 and Columbia in 2003, for example (their operational shortcoming revealed in Federal Government Accident Investigation Boards). Investigative studies that detail the mistakes of public agencies in responding to Hurricane Katrina in Louisiana in 2005 continue to emerge.

29. Perhaps through adoption of such a term, with its overtones of “forensic science,” the historical method as a means of authentication of the past can enhance itself in the eyes of practitioners as well as management science scholars—“forensic history” as a subset of “applied history,” perhaps.

30. Business commentator Jim Collins, author of several best–selling books on management, recently released a new work, How the Mighty Fall: And Why Some Companies Never Give In (New York: HarperCollins, 2009), advertised as one that does review past corporate errors and offers “lessons” from such observations. There are, of course, many other published journalistic accounts of business failure, just as there must—as noted in the text above—be similar unpublicized studies in the archives of at least some firms.

31. If anything, the hostility to “soft” approaches is hardening. See, for example, the two influential recent works by business school academics calling for greater rigor in business practice: Pfeffer, J. and Sutton, R., Hard Facts: Dangerous Half-Truths and Total Nonsense (Boston: HBS Press, 2006);Google Scholar and Davenport, T. and Harris, J., Competing on Analytics: The New Science of Winning (Boston: HBS Press, 2007).Google Scholar

32. I might note, however, that in my own work with business firms and management practitioners, I typically attempt to use history to inform the present. I have developed and participated in numerous management training programs for a wide range of organizations both in the United States and abroad, and as well have performed many consulting engagements with business firms on a wide variety of topics and assignments. In all of these I have found that the inclusion of deep historical information, be it about the firm with whom I am working or related topics, is nearly always welcomed and in some cases very much appreciated by the audience. However, I attribute this primarily to the fact that most Americans are woefully undernourished in their knowledge of the past, and most—to cite Professor Godelier again—regard my historical deviations as more of a “curiosity” than anything else. (And, I would be remiss to not also report that on several occasions I was chided by those who felt that such historical context added little or no value to the goals of the assignment. While this has not occurred with any degree of frequency, it has happened.) But at the same time I do not want to imply that historians are no longer attempting to instill a greater appreciation of their profession in the eyes of “rational” decision makers; see, for example, the excellent work by the respected see, for example, the excellent Neustadt, Richard E. and May, Ernest R., Thinking in Time: The Uses of History for Decision Makers (New York: Free Press, 1988).Google Scholar While directed toward political and public service leaders, the “lessons” of this book are just as relevant to the practicing business executives.

33. For an overview of the debate as it exists in the practice of business management, see Sanchez, R., ed., Knowledge Management and Organizational Compe-tence (New York: Oxford University Press, 2001).Google Scholar A seminal source for this debate can be found in Polanyi, M., The Tacit Dimension (London: Routledge & Kegan Paul, 1966).Google Scholar