Business history

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 spot in the history of American business entrepreneurs to Henry Ford, followed by Bill Gates; John D. Rockefeller; Andrew Carnegie, and Thomas Edison. Also included were 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; Elton Mayo; and Lillian Moller Gilbreth. An emphasis on expertise can be seen as defining an era of management work, shown in the works of Elton Mayo, Chester Barnard, Mary Parker Follett, Max Weber, Chris Argyris, and Peter Drucker. Drucker introduced the term "knowledge work" in 1959 and has been described as "the founder of modern management".

Chandler

After 1960 the most influential scholar was Alfred D. Chandler Jr. (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.

A number of sources address the history of business management as it has developed as a profession. From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession (2007) by Rakesh Khurana traces the rise and development of American management as a profession and argues that its promise has been unfulfilled. A key event was the publication of the Gordon-Howell report, Higher Education for Business (1959), by economists Robert Aaron Gordon and James Edwin Howell. Funded by the Ford Foundation, the report gave detailed recommendations for treating management as a science and improving the academic quality of business schools. Another influential report, that same year, was The Education Of American Businessmen: A Study Of University-College Programs In Business Administration (1959) by Frank Cook Pierson. The next thirty years are sometimes referred to as a “Golden Age” in which quantitative social science research became an established part of business schools. By the 1990s, however, there was a gap between theory-oriented business school faculty and the more applied interests of students and business practitioners. In 1993, Donald C. Hambrick's presidential address to the Academy of Management (AoM). “What if the Academy Actually Mattered?”, drew attention to this relevance crisis. The theme has been repeatedly visited since then, including by president Anita M. McGahan in 2017. Another major focus of concern has been the replication crisis. Anne S. Tsui has suggested that business and management should not treat the issues of rigor (credibility of evidence) and relevance (usefulness of knowledge) separately, but see them as related.

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. Anne S. Tsui has studied business in both the United States and China and encourages scholars to collaborate internationally and to study leadership as it is practiced in China.