RESEARCH & IDEAS
The Lessons of Business History: A Handbook Q&A with: Geoffrey G. Jones Published: March 17, 2008 Autho Author: r: Sean Sean Silver Silvertho thorne rne
Comp Compil ilin ing g a hand handboo bookk on the the curr curren ent t contradicts many of today's fashionable theories thinking in any area of study seems daunting and and assum assumpti ption onss by other other discip disciplin lines, es, says says enou enough gh,, but but the the just just-p -pub ubli lish shed ed Oxfo Oxford rd Harvard Harvard Business Business School School professo professorr Geoffrey Geoffrey Handbook of Business History carries an even Jones, who edited the volume with University larger larger mission: mission: bring the lessons of business business of Wiscon Wisconsin sin-Ma -Madis dison on profes professor sor Jonat Jonatha han n history to current research in other disciplines Zeitlin. and to the practi practice ce of busine business ss manage manageme ment nt But unless you were a business historian, Geoffrey Jones. itself itself.. A Q&A with coedit coeditor or Geoffrey this this data data went went larg largel ely y unno unnoti tice ced, d, and and the the Key concepts include: consequences were not just academic. • Busine Business ss histor historian ianss over over recent recent decade decadess "This "This loss loss of histor history y has resulte resulted d in the have generated rich empirical data on firms spre spread ad of infl influe uent ntia iall theo theori ries es base based d on and business systems that can confirm or ill-informed understandings of the past," says chal challe leng ngee many many of toda today' y'ss fash fashio iona nabl blee Jones. the theori ories and and assu assum mptio ptions ns by othe other r For example, current accepted advice is that disciplines. wealth and growth will come to countries that • Business Business history history has has broadened broadened its its scope scope in open their borders to foreign direct investment. the last two decades by including research "The historical evidence shows clearly that this on corp corpor orat atee gove govern rnan ance ce,, indu indust stri rial al is an article of faith rather than proven by the districts, business groups, business culture, historical evidence of the past," says Jones. busi busine ness ss educ educat atio ion, n, skil skills ls trai traini ning ng,, We asked Jones to discuss the current state accounting and information systems, design, of business history. and engineering. Sean Silverthorne: What is the purpose • Hist Histor oric ical al know knowle ledg dgee help helpss us to trul trulyy book ok,, an and d wh who o is th thee in inte tend nded ed unde unders rsta tand nd busi busine ness ss,, but but the the grow growin ing g of the bo audience? ahistorical nature of much management and Geoff Jones: The purpose of this book is to econ econom omic icss lite litera ratu ture re has has seri seriou ousl slyy provide a state-of-the-art overview of business compromised its legitimacy. history research worldwide. It seeks to speak to • The business business history history literatu literature re is extremel extremelyy rese resear arch cher erss in mana manage geme ment nt,, econ econom omic ics, s, weak in Africa, and not much better in Latin sociology, and history who want to know about Amer America ica,, many many Asian Asian countr countries ies,, and the the latest research in business history, as well as Middle East. to a wider audience beyond academia, including practiti practitione oners, rs, who are intereste interested d in learning learning Confined to specialist journals and books, from the past of business. Hand Handbo book okss such such as the the Oxfo Oxford rd seri series es busines businesss history history research research too often lacks lacks the perform per form a useful usef ul role in making mak ing disciplin disc iplinary ary impact impact it should should have have on the resear research ch and and rese resear arch ch acce access ssib ible le to nons nonspe peci cial alis ists ts.. practice of business management and the social Academics have a growing tendency to pursue sciences, according to the editors of the newly ever-na ever-narrow rrower er research research agendas agendas and to talk published Oxfo Oxford rd Hand Handbo book ok of Busi Busine ness ss primarily to their own discipline, resulting in a History. History. The Handbook provides provides an overview overview of chronic problem of knowledge existing in silos and different disciplines reinventing wheels. business history research worldwide aimed at This problem particularly affects business both researchers and practitioners, practitioners, addressing addressing histor history, y, makin making g this this hand handboo book k especi especiall ally y challe challeng nging ing issue issuess such such as globa globaliz lizati ation on,, signific significant. ant. Business Business historia historians ns over recent recent entrep entrepren reneu eursh rship, ip, corpo corporat ratee gover governan nance ce,, decades have generated rich empirical data on techn technolo ology gy and innov innovati ation on,, and and econo economic mic firms and business systems. They can in some theory and development. cases confirm, and in others challenge, challenge, many of Over Over the the last last few few deca decade des, s, busi busine ness ss today's fashionable theories and assumptions by historian historianss have have generate generated d rich empirica empiricall data other disciplines. Yet for a number of reasons that in some cases confirms and in other cases
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their their resear research ch rarely rarely perme permeate atess into into wider wider literatures. Q: Why does business history history resear research ch remain in a silo? A: I think there are at least three reasons. First, First, busines businesss historian historianss often often write big books on big issues, whilst the preferred outlet for much much mana managem gemen entt and and social social scien science ce research is specialist, peer-reviewed journals. Second, much research takes the form of case studies and is often qualitative rather than quantitative. In disciplines where standardized social science methodology, especially multiple regressions, has become the accepted norm of rigor, it is hard to understand the significance significance of this this empir empirica icall litera literatur ture, e, and quite quite easy easy to dismiss it as anecdotal and unscientific. Third, many business historians still work within national frameworks. As a result, much literatur literaturee is placed within the context context of the histor histories ies of parti particul cular ar count countrie riess rathe ratherr than than addressing analytical issues, such as why firms grow big. Moreove Moreover, r, whilst whilst English English may be trium triumph phant ant in the world of busin business ess,, in the world of business history, scholars still write in local local language languages. s. There There is a rich literature literature on Japanese business history in Japanese and on Latin American business history in Spanish, as well well as a good good under understa stand nding ing of Europ Europea ean n busines businesss history history that requires requires knowled knowledge ge of multiple languages.
"Thi "T hiss lo loss ss of hi hist stor oryy ha hass resu re sult lted ed in th thee sp spre read ad of infl in flue uent ntial ial th theo eorie riess ba base sed d on understandings
ill-informed of
the
past." As editors, Jonathan Zeitlin and I insisted that the contributors of our chapters focus on key issues and not national frameworks, and at a minimum address the literature generated in North America, Europe, and Asia, and ideally elsewh elsewhere ere.. The refere referenc nces es in almos almostt every every chapter contain multiple citations to literatures
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not published in English. Q: The founda foundational tional research research by the late H BS professor Alfred Cha Ch andler is acknowledged in essays throughout the book, but is also sometimes contradicted. How have curre cur rent nt re rese sear arch ch ag agend endas as bu buil iltt up upon on or moved beyond Chandler's work? A: The foundational nature of Al Chandler's Chandler's research research is widely widely confirm confirmed ed through throughout out the essa essay ys of the the Handbook . Chan Chandl dler er was was primarily primarily concerne concerned d with underst understandi anding ng the growth of large, diversified, and professionally managed firms from the late 19th century. The grow growth th of big big busi busine ness ss,, and and its its role role in generatin generating g innovati innovation on and wealth, wealth, remains remains a central central topic topic of research research in business business history, history, reflectin reflecting g of course course its continu continued ed importan importance ce today. Yet Yet it is immed immediat iately ely appar apparent ent from from the titl titles es of the the 25 chap chapte ters rs in the the book book that that busines businesss historian historianss have have become become concerne concerned d with a much wider set of issues. Some of these, such as marketin marketing, g, entrepre entrepreneur neurship ship,, and the role of the state, also concerned Chandler, but they were not central to his concerns. There are also chapters on topics that Chandler had little or noth nothin ing g to say, say, incl includ udin ing g corp corpor orat atee govern governan ance, ce, indust industria riall distri districts cts,, busine business ss groups, groups, business business culture, culture, business business educatio education, n, skill skill traini training, ng, accou accounti nting ng and inform informati ation on systems, systems, design and engineer engineering, ing, and so on. Busi Busine ness ss hist histor ory y has has wide widene ned d its its scop scopee enormously in the last two decades. A striking feature of the research reviewed Handbook is that so much of it concerns in the Handbook is the perio period d since since 1950. 1950. Chand Chandler ler's 's prima primary ry historica historicall research research covered covered the era between between 1850 and 1950, when big business emerged and grew spectacularly, and when the United States became the world's largest economy. There is an underlying assumption in Chandler's work that the United States and large, professionally managed firms represent the normative model to which the rest of the world is marching as a result result of the imperati imperatives ves of technolo technology gy and market markets. s. Over Over the last two decade decades, s, as the boundaries of firms became much more fluid and as non-U.S non-U.S.. players players became much more important, it has become clearer that in fact the classic Chandlerian firm should be better seen as the product of a specific historical era and a particular place, essentially the United States. The chapter on family firms shows that they could could be as succes successfu sfull or more more so than than the managerial managerial firms that Chandler considered to be optimal. The chapters on business groups and even even carte cartels ls treat treat them them as valid valid and and often often successful forms of business enterprise rather than than infe inferi rior or opti option onss to larg large, e, vert vertic ical ally ly integrated firms. Q: Is th ther eree a ma majo jorr th them emee ru runn nnin ing g through the book? A: For me, a major theme is the importance of historical knowledge in truly understanding
busin busines ess, s, and and how how the growin growing g ahist ahistori orical cal are other other importan importantt examples examples.. For example example,, nature nature of much much managem management ent and economic economicss during the 1950s Harvard's Research Center in lite litera ratu ture re has has seri seriou ousl sly y comp compro romi mise sed d its its Entrepren Entrepreneuri eurial al History, History, organize organized d by HBS legitimacy. bus busin ines esss hist histor oria ian n Arth Arthur ur Cole Cole,, laid laid the the In a well-documented well-documented process, the spread of grou ground ndwo work rk for for the the acad academ emic ic stud study y of quantita quantitative tive and standard standardized ized social social science science entrepreneurship. meth method odol olog ogie iess has has driv driven en busi busine ness ss and and The study of globalization provides another econom nomic histo istori rian anss from rom eco economics ics example. Mira Wilkins published a major study depar departme tments nts and journa journals, ls, and and from from many many of the globalization of Ford in 1964, only four secon second-t d-tier ier busin business ess schoo schools. ls. This This loss loss of years after the word "multinational" was coined. history has resulted in the spread of influential Her Her stu study of the the growt rowth h of Americ rican theories based on ill-informed understandings understandings multinati multinational onalss from the colonial colonial era to 1914 of the past. As Gary Gary Herrig Herrigel' el'ss chapte chapterr on was published in 1970. Its analysis of why and corpo corporat ratee gover governan nance ce argue argues, s, much much of the how firms globalize would only be much later contemporary contemporary literature distinguishing sharply form formal aliz ized ed in the the econ econom omic ic theo theory ry of the the bet betwe ween en disp disper erse sed/ d/ou outs tsid ider er (e.g (e.g., ., Unit United ed multinati multinational onal enterprise, enterprise, and it would would take a States/United Kingdom) and furt furthe herr 20 year yearss befo before re the the main mainst stre ream am concen centra trated ted/in /insider ider syste ystem ms (e.g (e.g., ., econ econom omic icss prof profes essi sion on woul would d iden identi tify fy Germany/ Germany/Japa Japan) n) is problema problematic, tic, because because in globalization and global firms as a topic of real reality countries have historically both moved importance. be betwee tween n diff ifferen erentt syste stems and, more importan importantly, tly, combine combined d elements elements of different different "Many of the most pressin pressing g systems for long periods.
unan un answ swer ered ed
"The
history
of
globalization warns against easy ea sy as assu sum mpt ptio ions ns on th thee linearity of globalization." Another Another instance instance is the highly highly influent influential ial "law "law and and econ econom omic ics" s" lite litera ratu ture re,, whic which h emphasizes the importance of the common law tradition in protecting minority shareholders in cont contra rast st to the the civi civill law law trad tradit itio ion, n, and and in stim timulati latin ng fin financial cial and econo onomic development. This has sometimes been used to explain explain why the United States performe performed d so much better economically than Latin America. Yet Yet ther theree is now now a form formid idab able le amou amount nt of evidence evidence from busines businesss history, history, not least least the outst outstand anding ing resear research ch by Harva Harvard rd Busin Busines esss School' School'ss Aldo Musacchio Musacchio in the BGIE Unit, Unit, showing that this hypothesis has little empirical support. A careful study of 19th-century French and American American law, for example, example, found little differen difference ce between between the two countries countries in the legal legal system system's 's respo responsi nsiven veness ess to busin busines esss organizational needs. Indeed, U.S. law offered entrepreneurs entrepreneurs fewer options on how to organize their businesses. Q: In an essay you write that "globalization is a central issue, and perhaps the central issue, in business history." What have business historians contributed to the study stu dy of glo global baliza izatio tion, n, and wha whatt can the they y contribute to our current understanding? A: It is seld seldom om reco recogn gniz ized ed how how earl early y busines businesss historian historianss have been in identifyi identifying ng issues issues that later later become become highly highly fashiona fashionable ble among management scholars. Of cour course se it is well well-k -kno nown wn how how much much strategic management and the resource-based theory of the firm owe to Chandler, but there
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business
ques qu esti tion onss
hist sto ory
in
center
around entrepreneurship." A succe successi ssion on of other other "first "firsts" s" follow followed ed,, including major studies of the globalization of services whilst most of the literature remained focus focused ed on manu manufac factur turing ing,, and of diasp diaspora ora entrep entrepren reneu eursh rship ip years years befor beforee it becam becamee of interest interest because because of recent recent attentio attention n on Indian Indian and Chinese entrepreneurs in the United States and elsewhere. As I write in my essay in the Handbook , and have have explo explored red in other other work work with with my HBS coll collea eagu guee Taru Tarun n Khan Khanna na,, the the hist histor ory y of globa globaliz lizati ation on deliv delivers ers a rich rich set of data data for current debates and literature on globalization. At the crudest level, historical evidence avoids spurious labeling of some phenomena as "new," and and by so doin doing g can can chal challe leng ngee curr curren entt explana explanation tionss of their their determin determinants ants.. Historic Historical al evide evidenc ncee is cruci crucial al to explor exploring ing the causal causal relationship between foreign direct investment and long-run economic development. development. Today's world policy advice to all countries, and even more so to poor ones, is to open their borders to fore foreig ign n mult multin inat atio iona nals ls beca becaus usee they they will will genera generate te wealth wealth and growt growth. h. The histor historica icall evidence shows clearly that this is an article of fait faith h rath rather er than than prov proven en by the the hist histor oric ical al evidence of the past. Or more precisely, there have been a wide variety of outcomes, but one persisten persistentt general generalizat ization ion is that foreign foreign direct direct inve invest stme ment nt does does not not brin bring g sust sustai aina nabl blee develo developm pment ent unles unlesss the host host coun country try has a business system that is able to learn and absorb new know knowled ledge, ge, and an appro appropri priate ate publi publicc policy framework. At the the broa broade dest st leve level, l, the the hist histor ory y of globalization globalization warns against easy assumptions on the linearity linearity of globaliz globalizatio ation, n, as business business historians have shown how the world globalized
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spec specta tacu cula larl rly y befo before re 1914 1914,, only only for for it to spectacularly deglobalize over the following 50 years. years. Business Business historia historians ns have explored explored the reasons for this deglobalization, demonstrating how globalization can result in losers as well as winners. The historical evidence on how firms and governme governments nts have in the past contribu contributed ted to subop suboptim timal al outco outcomes mes provid provides es import importan antt lesson lessonss for for today today if a simila similarr meltd meltdow own n of globalization is to be avoided. Q: Did putting putting the Handbook together change your own thinking? A: One of the most surprising revelations for Jonathan and myself was just how many people are working in the area. This may sound surprising, given that I edit the leading journal in the field, the Business History Review, Review , and regularly attend conferences of the flourishing business history societies in the United States and Europe. Yet as we reviewed the literature being covered by our contributors, it became apparent that business history, as both a body of literature and a community of scholars, has a narrow and a broad definition. The narr narro ower wer defin efinit itio ion n inc includ ludes research researchers ers such as myself myself who do primary primary archival archival research research on the history of business business,, who belong to the societies, and who publish in the core journals. However, there is a much broader definition comprising people whose primary affiliation is with one of the social sciences or management, but but who who are are extr extrem emel ely y inte intere rest sted ed in the the historical development of business, sometimes doing original research themselves, sometimes bring bringing ing new new theore theoretic tical al persp perspect ective ivess and and frameworks. Business history is so exciting because these two narrow and broader circles interact. In the past past I have considered considered such vaguene vagueness ss about about what exactly business history is to be a source of weak weakne ness ss,, but but as we put put the the Handbook together I realized that it explains the vitality of the field. It means that business history remains open open to mult multip iple le meth method odol olog ogie iess and and new new ques uestio tions, and is not crip rippled led by the the orthodoxies that constrain research agendas in so many other disciplines. This open open-a -arc rchi hite tect ctur uree stru struct ctur uree lets lets busi busine ness ss historians engage in two-way exchanges with
othe otherr rese resear arch cher ers, s, some someti time mess usin using g thei their r empirical data to test or challenge the "stylized facts" facts" of economis economists, ts, and sometime sometimess learning learning from other disciplines new questions to ask in their own research. Q: Where is more research needed? A: The first first answe answerr is geog geograp raphic hicall ally. y. Business history has been a rich person's game. It has flourished flourished in North North America, America, Western Europe, and Japan. At the other extreme, the literature is extremely weak in Africa, and not much better in many Asian countries and the Middle East. Indi India' a'ss rich rich busi busine ness ss past past is stil stilll only only partiall partially y documen documented, ted, despite despite some first-rate first-rate research in India and elsewhere. There is still only only one one overa overall ll survey survey of Indian Indian busin busines esss histor history. y. As Indian Indian compa companie niess such such as Tata Tata become global giants, we need to understand where they came from. Latin America represents a mixed picture, with pockets of outstanding research in Mexico, Braz Brazil il,, Colu Columb mbia ia,, and and Arge Argent ntin ina, a, and and significant gaps elsewhere. The business history grou group p curr curren entl tly y has has a majo majorr init initia iati tive ve to enco encour urag agee busi busine ness ss hist histor ory y rese resear arch ch in Argentin Argentinaa and Chile led by Research Research Fellow Andrea Lluch, who is currently based at our Latin American Research Center. Among other acti activi viti ties es,, she she is cond conduc ucti ting ng oral oral hist histor ory y intervie interviews ws with leading leading practitio practitioners ners in both countrie tries. s. Last week she she org organiz anizeed a Colloquium in Buenos Aires, which I attended, to map map out out futu future re rese resear arch ch agen agenda das. s. The The meet meetin ing g attr attrac acte ted d a larg largee numb number er of both both academics and practitioners. It is very ery imp importa rtant to expand and our know knowle ledg dgee abou aboutt the the busi busine ness ss hist histor ory y of countries beyond the West and Japan, not only because the firms of these other countries are increasingly important, but because we are sure to get a whole new set of research questions, and to questi estio on many of our curre rrent assumptions as well. And second, I believe that many of the most press pressing ing unan unanswe swered red quest question ionss in busin busines esss history history center center around around entrepre entrepreneu neurship rship.. This was was a major major conc concern ern of busin busines esss histor historian ianss befor beforee Chand Chandler ler,, and and others others refoc refocuse used d the discipli discipline ne on issues issues of organiza organization tion and firm growth from the 1960s.
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Over Over the last few decade decades, s, the study of entr entrep epre rene neur ursh ship ip has has not not been been enti entire rely ly displaced, but it has always been marginal to mainstre mainstream am research research agendas agendas,, and business business historians have not made a lot of progress in reach reaching ing valid valid gener generali alizat zation ionss of the kind kind Chandler Chandler offered offered for the growth growth of firms. firms. In recent years, entrepreneurship researchers have made progress in understanding understanding entrepreneurial cogn cognit itio ion n of oppo opport rtun unit itie iess and and issu issues es surrounding the assembly of resources. The achieve achievemen ments ts of such research research have have been constrained, however, because of neglect of the the cont contex extt in whic which h entr entrep epre rene neur uria iall decisions are made, and because of a need to use large data sets, which has narrowed much research to a study of high-technology start-ups in a few locations. Business historians have a real opportunity now to address the key issues of why societies diff differ er in entr entrep epre rene neur uria iall cogn cognit itio ion n and and performance in a systematic fashion, building on their deep knowledge of historical context. Q: What are you working on now? A: I'm I'm comp comple leti ting ng a book book for for Oxfo Oxford rd Universi University ty Press Press on the globaliz globalization ation of the beau beauty ty indust industry ry from from the 19th 19th centur century. y. I'm trying to practice what I preach about the need to globalize research agendas by undertaking a comparative study of the world industry, using the historic historical al archives archives of firms firms and—for and—for the more recent recent period—i period—inter nterview viewss from around around the the worl world d to expl explor oree thes thesee issu issues es.. It's It's an enormo enormous usly ly time-c time-con onsum suming ing exerci exercise, se, and perha perhaps ps one one that that could could only only be possi possible ble at Harvard Business School. I try to addres addresss classi classicc busin business ess histor history y questions concerning the growth of large firms and the reasons reasons why particul particular ar firms became became global leaders, but I also venture beyond the traditional comfort zone for a business historian by delving into social and cultural cultural issues issues by explor exploring ing how how far the comm commerc ercial ial beaut beauty y industry has homogenized homogenized beauty ideals around the world.
About the author Sean Silverthorne Silverthorne is the editor editor of HBS Working Knowledge. Knowledge.
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