Harvard University Founds a Business School Summary

  • Last updated on November 10, 2022

The Harvard Business School’s innovative instructional methods helped professionalize management and the way managers are educated.

Summary of Event

The emergence of the multiunit form, a vision that institutions of higher education could serve a utilitarian purpose, and a popular desire to professionalize most occupations encouraged the development of collegiate business education in the late nineteenth century. An early participant in this exciting experiment in higher learning was the Harvard Business School, founded in 1908. Although preceded by the Wharton School at the University of Pennsylvania and the Amos Tuck School at Dartmouth, the Harvard Business School inaugurated a change in the education of professional managers through its innovative instructional methods and the high priority it placed on business research. Harvard Business School Harvard University Business education Education;business [kw]Harvard University Founds a Business School (Apr. 8, 1908) [kw]University Founds a Business School, Harvard (Apr. 8, 1908) [kw]Business School, Harvard University Founds a (Apr. 8, 1908) [kw]School, Harvard University Founds a Business (Apr. 8, 1908) Harvard Business School Harvard University Business education Education;business [g]United States;Apr. 8, 1908: Harvard University Founds a Business School[02120] [c]Business and labor;Apr. 8, 1908: Harvard University Founds a Business School[02120] [c]Education;Apr. 8, 1908: Harvard University Founds a Business School[02120] [c]Organizations and institutions;Apr. 8, 1908: Harvard University Founds a Business School[02120] Gay, Edwin F. Shaw, Arch W. Copeland, Melvin T. Eliot, Charles William

An emphasis on framing business problems, class discussion, written case analysis, and a climate that encouraged confident decision making were seen from the outset as vital to the development of top managers. It soon became apparent, however, that a rather large breach existed between the school’s educational aspirations and its ability to achieve them. Few teachers were trained in business administration, and scholarship in the form of published works was almost nonexistent. In fact, course offerings, materials, and textbooks were sparse until the 1920’s.

Early professors of business administration both at Harvard and elsewhere were drawn from a wide variety of academic disciplines. Economists such as Simon N. Patten were influential teachers and scholars at the Wharton School. The economics department also dominated academic life at the Amos Tuck School at Dartmouth. Business educators in this nascent stage of development were also drawn from less closely allied fields. Of the two accounting courses offered at Wharton, for example, one was taught by a professor of journalism who also instructed in business practices and banking. The other course was taught by a political scientist.

The recruitment of faculty proved to be the most challenging aspect of running the fledgling Harvard Business School for its first dean, Edwin F. Gay. Convinced that the education of professional managers required a unique approach, he eschewed teachers from undergraduate business programs and scholars from the traditional social science disciplines. This represented a departure from accepted practice. The business school, in fact, had been envisioned as a school of diplomacy and government by Harvard University president Charles William Eliot.

Gay quickly set out to establish a core faculty and to recruit practicing managers from New York, Boston, and Philadelphia. William Morse Cole Cole, William Morse and Oliver Mitchell Sprague Sprague, Oliver Mitchell joined the regular faculty to teach accounting and banking, respectively. Paul Terry Cherington, Cherington, Paul Terry who would make seminal contributions in the field of marketing education through his work Advertising as a Business Force: A Compilation of Experience Records (1913), joined the faculty from the Philadelphia Commercial Museum. Lincoln Frederick Schaub Schaub, Lincoln Frederick became the school’s first full-time instructor of commercial law. These individuals, along with two part-time instructors, eight part-time lecturers, and fifty-five outside (guest) lecturers, composed the school’s first teaching staff. Over the next decade, the permanent faculty grew, and as the case method became more widely used, the need for outside lecturers waned.

Initial courses at Harvard were analogous to those provided at the older business schools. The required first-year courses in accounting, commercial contracts, and economic resources of the United States (later marketing) were augmented by electives in industrial organization, corporate insurance, and banking. These traditional courses were seen as essential prerequisites of a career with a multiunit firm. Second-year courses examined the intricacies of management in specialized industries such as railroading, foreign trade, banking, and insurance.

The school made a marked advance toward achieving its unique mission of educating professional managers through a “problems” or “case method” approach with the addition of Arch W. Shaw to its faculty. Case study teaching method Shaw was the energetic publisher of System, a journal that crusaded for more efficient business practices. Upon his appointment to the faculty at Harvard, he turned his energies to developing a course in business policy using the case approach. His use of “real-life” cases animated his classes, and in time his course became the capstone for the school. His book An Approach to Business Problems (1916) Approach to Business Problems, An (Shaw) and colleague Melvin T. Copeland’s Problems in Marketing (1920) Problems in Marketing (Copeland) did much to advance their respective specialties as well as business education in general in the United States.

These textbooks, along with other seminal contributions to the business literature by Cherington, Charles Edward Russel, Bruce Wyman, and Walter Dill Scott, became required reading in every business school and program soon after publication. Despite these works, however, there was a dearth of business information and research material needed for the development of cases and advanced course work. The development of the marketing discipline, perhaps more than any other in the business curriculum, was constrained as a result of meager real-life data. Even the trade journals of the day gave scarce attention to selling or marketing problems.

The collection of business information and data for course materials, cases, and textbooks proceeded in an ad hoc fashion through individual professors and in a more organized manner through bureaus of business research. J. E. Hagerty, Hagerty, J. E. an early marketing professor at Ohio State University, for example, was frustrated by the paucity of textual material in his discipline and attempted to fill this breach by interviewing local businesspeople. He discovered that these individuals gave freely of their time and information because of their curiosity about his research effort. They wondered why anyone would want to learn about their organizations, methods, procedures, and business problems.

The Harvard Bureau of Business Research Harvard Bureau of Business Research was begun at the urging of Arch W. Shaw shortly after the business school was founded. Although its principal mission was to gather data to aid instruction in the school, especially in marketing, it was hoped that research results would prove beneficial to students and teachers in other schools and to individuals in the wider business community. The findings of the bureau’s first study, which examined the shoe industry, received wide distribution in trade papers and other business publications and aroused interest in the activities of the school. Soon, studies of the operating expenses of grocers, department stores, and variety chains were produced. Later, scholarly investigations of labor unions, the distribution of textiles, cotton mill hedging practices, and interstate power transmission not only provided a wealth of teaching material but also encouraged further exploratory work in other business schools throughout the United States.

Significance

The founding and the early success of the Harvard Business School had a significant effect on the professionalization of management, Management;professionalization which in turn had consequences for the education of managers. With its bold and innovative instructional methodologies and scholarly climate, Harvard became a model for all other business schools to follow in the early twentieth century.

It soon became common for business careers to begin after formal education in business administration. General education preceded professional course work. Students took a core of business subjects that gave coherence and content to their professional studies. These subjects included business law, statistics, marketing, accounting, money and banking, and corporate finance. The problem approach superseded rote memorization of formulas and data. Written and oral communication were stressed for future business leaders, and the discovery of new business knowledge through research and investigation of active organizations was encouraged. Classroom instruction and theoretical knowledge were augmented by internship experiences in business. The formal education of managers did not necessarily terminate in the nascence of their careers, as professional education for practicing managers was introduced.

Each of these innovations was a bold step. Each served to convince prospective students as well as academic and business leaders that the business site and academe could be connected through a business school or program. Within two decades of the opening of the Harvard Business School, numerous major public and private universities established similar ventures, including Ohio State (1916); Alabama, Minnesota, and North Carolina (1919); Virginia (1920); Indiana (1921); and Kansas and Michigan (1924). Private institutions that established business schools during this period included Columbia University (1916) and Stanford University (1925). In addition, it was not long before an even larger number of public and private institutions established business programs “in town” to educate future business leaders living and working in large metropolitan areas.

The revolutionary changes in the education of future managers were the result of a courageous decision to foster the development of an educational experience free of the intellectual control of other long-established academic disciplines. Gay believed that the aims of a graduate school of business should be instillation of a rational method of attacking business problems and development of intellectual respect for the management profession. This also entailed appreciation for the social, cultural, and ethical dimensions of the field. Harvard’s early commitment to developing a business administration paradigm that could stand on its own energized stakeholders to find new ways and means of educating a new profession, that of management. The case method, with its attendant vigorous analysis and discussion of companywide problems together with scholarly investigation of living organizations, was an important part of this philosophy of education.

Case studies adopting the companywide problems approach benefited students, teachers, and practitioners alike. Students benefited by seeing that rational decision-making processes could be applied to problems encountered in a wide variety of business settings. Professors gained because cases gave flexibility as well as content and depth to their courses. Well-researched and well-written cases provided a wealth of information about industry practices and technical matters in the process of teaching problem-solving skills. Perhaps most important, practicing managers benefited from their training in the case method. As business school graduates, they enjoyed a common basis for communication and a better understanding of mutual problems. In short, managers trained in this analytic method could relate better to their peers.

Business research, like the case method, can trace its origins to the first years of the Harvard Business School. It reached its full instructional potential some years later. Harvard’s pioneering Bureau of Business Research had substantial pedagogical value to the academic community in the school and elsewhere while also providing strategic information to managers in industry. The work of the bureau helped make class discussions and teaching materials more interesting and relevant for the first students in the school and, in time, became the foundation for instruction conducted there. The style and method of research carried out in the early days of the Harvard Business School also had important consequences for the conduct of business research in general. The bureau, with its strategy of focusing its efforts on a small area of business and studying it thoroughly to achieve notable results in a brief period, its refusal to be commercialized, and its aspiration to be at a level equal to Harvard’s other schools, became a model for other researchers and institutions to imitate. Harvard Business School Harvard University Business education Education;business

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Chandler, Alfred D., Jr. The Visible Hand: The Managerial Revolution in American Business. Cambridge, Mass.: Belknap Press, 1977. Seminal work by a distinguished historian of business examines the rise of modern business enterprise and its managers during the formative years of modern capitalism, from the 1850’s to the 1920’s. A superb book for anyone interested in the profession of management.
  • citation-type="booksimple"

    xlink:type="simple">Copeland, Melvin T. And Mark an Era: The Story of the Harvard Business School. Boston: Little, Brown, 1958. An important study of the founding and development of the Harvard Business School through its first half century. Written by a distinguished member of the school’s faculty during the period addressed. An essential work for understanding the development of collegiate business education in the United States.
  • citation-type="booksimple"

    xlink:type="simple">Heaton, Herbert. A Scholar in Action: Edwin F. Gay. New York: Greenwood Press, 1968. A biography of the bold, imaginative, and scholarly first dean of the Harvard Business School. Provides interesting background information about this educational administrator whose early advocacy for the problem approach and business research aided the development of the profession of management.
  • citation-type="booksimple"

    xlink:type="simple">Pierson, Frank C., et al. The Education of American Businessmen. New York: McGraw-Hill, 1959. Chapter 3 provides excellent historical information about American business schools from their origins through the early 1950’s. Valuable as an overview while also providing interesting insights into the origin and growth—and often decline—of early American collegiate business schools.
  • citation-type="booksimple"

    xlink:type="simple">Veysey, Lawrence R. The Emergence of the American University. Chicago: University of Chicago Press, 1965. Authoritative study of the social and cultural forces that helped transform the American university into a modern institution at the beginning of the twentieth century. Places business education in its larger cultural and intellectual context. Suitable for both serious scholars and generalists.

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