Business History

Selected Readings

Kenneth. A. Tucker

• Publisher: Taylor & Francis
• Year: 2013
• Print ISBN: 9780714630304
• eBook ISBN: 9781135160968
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

First Published in 1977. This set of readings has been planned to demonstrate good examples of the writing of business history using a wide range of source material. Furthermore, the intention is to aid the development of critical perception and facilitate further analysis. The overriding criterion in selection has therefore been the framework of structure-conduct-performance for the industry, activity or firm. The emphasis is on the technical and organisational relationships between the governing factor input and output conditions and the objectives and control mechanisms of the decision-making personnel.

PART ONE

Aims and Methods
in
Business History

1

What is Business History?

Arthur H. Cole*

As one grows old, one becomes increasingly annoyed at confusion of almost any variety; and that which continues to surround the concept of ‘business history’ chances to impinge frequently enough upon my attention to impel me to try to reduce the disparities in concepts still existent among individuals interested in the field. Diversity of concepts was evident even among men interested enough in the area to come — in some cases, goodly distances — to attend a two-day meeting at the Harvard Business School on the teaching of the subject. Perhaps because I was already teaching economic history before business history was born, because I have known the chief actors in the world created by Professor N. S. B. Gras, and because I have had to give thought to the nature of entrepreneurial history, I may in this connection pretend to pose as a sort of academic amicus curiae. And I think that I have made manifest my interest in the field.

THE NATURE OF BUSINESS

Too often young folk start talking about business history without first stopping to secure a clear concept of business itself. They may carry the notion that business is merely buying and selling, huckstering, the hurly-burly of the traditional bazaar of the Middle East; others may hold the image of business as an arena populated by giants of great wealth and great power who buy politicians and generally are up to no good; and the novelists or muckrakers or others have created other impressions. Actually business is much more complex than the concepts which any of these notions convey. It can be visualized on at least three levels or in three patterns.

One level or pattern is the ideational. It is constituted of all the knowledge by aid of which the wheels of production, distribution, advisory service, etc., are established and maintained: how to secure a corporate charter, how to manage a shoe factory, how best to compensate salesmen, etc. — millions and millions of ‘bits’ of knowledge, accumulated over centuries of experience, and daily being added to. It is the presence or lack of this body of knowledge that really distinguishes the developed from the underdeveloped countries, and it is the slow manner in which such knowledge can be absorbed into an industrial order that spells the slowness with which such underdeveloped countries can rise toward equality with the older business nations.

A facet of this ideational world — ideas transmuted into modes of behaviour — was spoken of recently by Professor Solomon Fabricant:¹

Underdeveloped countries are learning that in their rush to reach desired levels of economic efficiency, time must be taken to develop the kind of business ethics, respect for the law, and treatment of strangers that keep a modern industrial society productive. Widening of the concept of family loyalty and tribal brotherhood to include love of man ‘in general’ is a necessary part of the process of economic development.

Another facet is made a significant portion of Mrs Edith Penrose’s theory of the growth of ‘the firm’ when she specifies experience of men working together in individual enterprises as conditioning greatly the manner in which those concerns would be expected to perform in the future. A firm uses two types of knowledge, she writes, one that may be looked upon as objective and available to everyone, and, the other, knowledge which is born of experience within the particular enterprise. Moreover, ‘increased experience,’ she asserts, ‘shows itself in two ways — changes in knowledge acquired and changes in the ability to use knowledge.’²

Again, the importance given to decision-making in some descriptions of primary business processes — even in some definitions of business — is related to this level or feature of business life. Thought processes do precede and condition the decisions of businessmen; and those who participate in the decision-making process are surely important cogs in the business machinery. It is a question merely whether decision-making constitutes a full description of business — surely not.

At all events, it scarcely behoves those of us who have been or are now connected with schools of business to look askance at the notion of business possessing a prime basis in knowledge. Such institutions of learning are founded on the faith that business experience can be observed and generalised into assertions of wider or narrower pertinence to future business action, and that these acquired truths can by oral communication or the perusal of books be somehow made to lodge in the brains of students to a degree adequate to guide them in their own efforts to manage business enterprises or help in that management.

Stemming in large part from this ideational level is the world of institutions — the production enterprises, the construction companies, the banks, the department stores, and a myriad of other forms of organization — through which business operations are carried out. Traditionally such institutions have been viewed as a multitude of independent units — a candy factory, a hardware wholesaler, a bank, a railroad, etc. — with the only connection among them being competition of units concerned with the same or overlapping areas of activity. I would propose a different image, that of an interconnected, mutually supporting congeries of business units. For purposes of exposition, the extractive, manufacturing, and construction industries may be conceived to constitute the central core of this business system, while, outside of this primary citadel, one can specify a series of concentric circles in which other business institutions may be held to lie — the complement in each successive circle being perhaps those ancillary or service institutions closely and then less closely connected with the performance of the institutions located in the central region. Purveyors of productive equipment, providers of short-term capital, transporters of raw materials and finished goods, etc., might lie in an inner circle, the publishers of trade periodicals, public accountants, etc., perhaps in a more removed circle, while still further away might lie the interior decorators of executive offices, schools that trained workmen or clerks for the establishments, etc. Perhaps the major industries of steel, rubber, textiles and the like could be envisaged as possessing to some extent separate and distinct institutional worlds — like Innis’ ‘staples,’ perhaps Rostow’s ‘sectors,’ or the Swedes’ ‘development blocks’ — but, inasmuch as some of the ancillary and service institutions — such as railroads, commercial banks, etc. — serve many industries, a good deal of overlapping would need to be envisioned.

Incidentally, attention may be drawn to the circumstance that such a business construct differs essentially from that usually employed by economists. The latter seem content to line institutions up in industries and go no further, except perhaps as required by the modern ideas of monopolistic competition — a rather specialized instance of business interconnections.

Actually, it is somewhat difficult to draw a limit to the series of concentric circles that I have proposed. Out some distance would lie perhaps management advisory concerns, commodity exchanges, and the publishers of trade journals; possibly still farther, schools of business, architects specializing in industrial buildings, or counsel specializing in antitrust matters; and it might be questioned whether the Federal Bureau of Standards, the Census Bureau, the Securities and Exchange Commission, and other governmental agencies should not be added, since the government is by no means merely regulatory; it also provides much information useful to the managers of individual enterprises.³

In fact, one may wish to conceive of the outermost ring of the business circles as merging closely with much that we are inclined to call ‘society.’ There are surely many connections between the business world and the publication of both newspapers and general periodicals; there are portions of the world of art which affect business and, in turn, are affected by the latter; there are connections between business affairs and literature, the drama, and sometimes even poetry. It was actually a consequence of this line of reasoning that led me to envisage three areas of social action — the individual business unit, the business system, and the contacts with the total society — when I ventured to write about the ‘business enterprise in its social setting.’⁴

The third level or pattern of business is that of performance — bales of cotton goods produced, shares traded on the New York Stock Exchange, ton-miles of freight carried, and the like. To many businessmen, this aspect of the business world would seem the most important; and surely it is the most obvious. I would hold, however, that this is an area of minor interest to the business historian. When there is a question of the value of the whole business system, he would undoubtedly desire to indicate the increase in the output of goods and services which has occurred over the centuries and decades under the exertions of the private enterprise system; and, for the short run, he may be concerned with ‘volume’ as a factor in the determination of diminishing prices. But it seems to me that, by and large, this counting of output is more properly the domain of the economic historian. When goods are really produced or distributed, the work of the businessman is finished.

That the world of business spreads out geographically from border to border of most countries — with perhaps only small enclaves of even modestly self-sufficient farmers — needs hardly be stated. Less common, I believe, is an appreciation of the variety of economic activity — the provision of goods and services — which has come under the domain of business action. That the world of business extends over diverse extractive, manufacturing, construction, distributive, financial, and transportation activities is obvious. However, surely commercial or market-oriented farmers should be embraced, likewise many entertainment and recreational facilities from theatres to bowling alleys, baseball teams to the producers of ski wax, while many of the basic human activities or experiences do not escape the advantages (or disadvantages) of response to business management: materials for the control of pregnancy, presentations of young ladies to society, commercial administrators of weddings, and both funeral homes and huge mausoleums to wind up one’s stay on earth.

It is also to be noted that, with the increase of the professional quality in business management personnel, the divergence of business and the professions seems to have become narrowed — at least vis-a-vis some of the professions such as actors and actresses of screen or television, lawyers, architects, and even college professors, thanks to the inroads of foundation funds and the increased opportunity for employment in government service. Our ‘business civilization’ has lately become even more inclusive than ever before of events in the total society.

COROLLARIES OF THE FOREGOING

It is obvious that the earlier identification of ‘business history’ with company history is grossly inappropriate. No doubt company history is business history; but the reverse gives an erroneous view of conditions, as if one identified any one architectural style and ‘architecture.’ The preparation and publication of company histories seem not far different from the drafting and issuance of personal biographies in the area of political history. They are surely of much value, but they can hardly be viewed as pre-empting the whole field.

Secondly, it becomes desirable to look at the forces and instrumentalities which make viable the business system of a nation. Some of the so-called ‘business virtues’ may be worth noting, such as reliability, promptness, rectitude in business dealings, and the like. Also, one should observe the importance of such instrumentalities as stock certificates, bills of lading, promissory notes, time-payment contracts, and the like.

Since the paths taken by the evolution of the business system will almost inevitably differ from country to country, perhaps even among regions in so large a nation as our own, and since the timing of such developments would surely differ in the several areas, there would appear to be many opportunities for comparative studies. Professor Karl Deutsch used to propose a study of the relative speeds in the adoption of particular technological advances — such as the adding machine or the Linotype apparatus — in various countries as likely to make manifest variations in entrepreneurial character; but surely a comparison of the course, speed, and extent of achievement in the development of a complex business system would prove even more revealing of variant national business characters. This would seem a sort of symphonic form for business history writing.

However, I am tempted to add two lines of thought pertinent to economico-business performance. The first is that when one brings down to earth or — to change the figure — puts flesh on the bare bones of such economistic phrases as ‘capital formation’ or the ‘international movement of the productive factors.’ one is coming closer to a consideration of realities and, if one wishes to make use of historical inquiries, one is better equipped to propose public policies appropriate to the circumstances of the real world...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Introduction
• Part One: AIMS AND METHODS IN BUSINESS HISTORY
• Part Two: ENTREPRENEURS, THE FIRM AND INDUSTRIAL STRUCTURE
• Part Three: TECHNIQUES OF BUSINESS MANAGEMENT AND ORGANISATION
• Part Four: SPECIAL APPENDICES
• Author Index
• General Index