The Importance Of Historical Knowledge In Business


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An analysis of the role of historical knowledge in understanding business and business processes within society.

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The Importance Of Historical Knowledge In Business

  1. 1. The Importance of Historical Knowledge in Business Dr. Peter Cullen English Language and Culture For Business
  2. 2. <ul><li>What is “historical knowledge”? </li></ul><ul><li>Understanding of the past – particularly in human societies </li></ul><ul><li>Understanding of: </li></ul><ul><li>time </li></ul><ul><li>change </li></ul><ul><li>human behaviour </li></ul><ul><li>animal behaviour </li></ul><ul><li>the environment </li></ul><ul><li>culture - product of behaviour </li></ul><ul><li>meaning </li></ul><ul><li>message </li></ul>context relationship
  3. 3. What is Business? Collins Dictionary: a commercial or industrial establishment for: production of goods and services sales purchasing assistance finance ... and more!
  4. 4. <ul><li>What are institutions? </li></ul><ul><li>Collins: an established custom, law or relationship in community or society </li></ul><ul><li>i.e. - the family </li></ul><ul><li>- markets </li></ul><ul><li>- leadership </li></ul><ul><li>- religion - sport, infrastructure, education, </li></ul><ul><li> medicine, etc. </li></ul><ul><li>BUSINESS IS AN INSTITUTION </li></ul>
  5. 5. <ul><li>Businesses and their stakeholders form a process of significance creation about: </li></ul><ul><ul><ul><ul><li>Economic and financial values </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Ethical and social values </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Commerical values </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Symbolic values </li></ul></ul></ul></ul><ul><li>Business and stakeholders are inter-dependent </li></ul><ul><li>A business is a: socio-technical </li></ul><ul><li>partially open </li></ul><ul><li>pluri-purpose economic </li></ul><ul><li>SYSTEM </li></ul>
  6. 6. <ul><li>A business is a: socio-technical </li></ul><ul><li>partially open </li></ul><ul><li>pluri-purpose economic </li></ul><ul><li>SYSTEM </li></ul><ul><li>It is also a: </li></ul><ul><li>organic </li></ul><ul><li>self-regenerating </li></ul><ul><li>relational </li></ul><ul><li>cognitive </li></ul><ul><li>directed SYSTEM </li></ul><ul><li>A Business is a vital system </li></ul>
  7. 7. <ul><li>Business is a social institution AND a social system </li></ul><ul><li>It is a dynamic structure </li></ul><ul><li>SO </li></ul><ul><li>It is a historical structure </li></ul><ul><li>Business is the formalisation and standardisation of human economic behaviour. </li></ul><ul><li>this has a history </li></ul><ul><li>this influences other types of history, behaviour, etc. </li></ul>
  8. 8. <ul><li>Does business need history? </li></ul><ul><li>YES! </li></ul><ul><li>All human structures and systems benefit from an understanding of each other. </li></ul><ul><li>As a system – business must understand change. </li></ul><ul><li>Douglas North: “political-economic systems are KNOWN to no-one in their entirety, but human beings construct elaborate beliefs about those realities”. </li></ul><ul><li>How can we understand belief? Does belief change? </li></ul>
  9. 9. <ul><li>As a vital system , business must understand: </li></ul><ul><li>belief: principles accepted without proof </li></ul><ul><li>values: the allocation of significance to belief and practice </li></ul><ul><li>learning: the transmission of belief, values, practice </li></ul><ul><li>practice: the production of actions </li></ul><ul><li> - within the locale or region of location </li></ul><ul><li>- within the locale or regions of its stakeholders </li></ul><ul><li>- over time </li></ul>
  10. 10. <ul><li>Learning culture: </li></ul><ul><li>Pierre Bourdieu and field , habitus, doxa </li></ul><ul><li>Field : the arena of social interaction – verticle and horizontal – constituted by the relational differences of social agents. </li></ul><ul><li>Habitus : lasting aquired schemes of perception, thought and action internally developed by </li></ul><ul><li>social agents in reaction to objective conditions (i.e. of field). </li></ul><ul><li>Doxa : deep-founded, unthought beliefs that inform an agent’s actions in the field . Universal </li></ul><ul><li>concepts. These propagate the structure of the field. </li></ul>
  11. 11. <ul><li>Human institutions and systems have always existed </li></ul><ul><li>what does historical understanding require? </li></ul><ul><li>Analysis of structures </li></ul><ul><li>Analysis of interaction </li></ul><ul><li>Analysis of dynamics and change – in communities/society </li></ul><ul><li>Inclusive factor contextualisation </li></ul><ul><li>It requires a logic for: </li></ul><ul><li>identification of questions </li></ul><ul><li>analysis of information </li></ul><ul><li>communication of learned information </li></ul>
  12. 12. <ul><li>Historical understanding provides tools for understanding change over time </li></ul><ul><li>in: structures </li></ul><ul><li>systems </li></ul><ul><li>this helps identify function in society. </li></ul><ul><li>Lucien Febvre (1922) </li></ul><ul><li>human societies develop in relation to environments </li></ul><ul><li>Fernand Braudel (1947) </li></ul><ul><li>time changes at three levels: </li></ul><ul><li>event, conjucture, long-term </li></ul>
  13. 13. Observed environments change according to Braudel’s construct: i.e. global warming: long term patterns (40,000 year glacial cycles) conjunctural patterns – last 150 years = +.5°C event patterns – last 3 years – polar ice melting Agricultural societies changes dramatically with environmental cycles at all three rates. What about industrial societies? What about service sector societies?
  14. 14. <ul><li>Industrialisation has increased the rate of change in human societies </li></ul><ul><li>It has increased rates of production </li></ul><ul><li>It has increased rates of distribution </li></ul><ul><li>It has permitted increased rates of consumption </li></ul><ul><li>It has increased rates of capital circulation </li></ul><ul><li>It has increased rates of information circulation </li></ul><ul><li>HOW? </li></ul>
  15. 15. <ul><li>The adoption of industrial processes decreased our the perception of uncertainty in society 1840 – 1940. (telegraph to WWII) </li></ul><ul><li>Industrialisation increased our expectations of predictability – scientific laws about society </li></ul><ul><li>1° in economics: Kondratieff and Keynes </li></ul><ul><li>(long-term economic cycles and the “General Theory”) </li></ul><ul><li>This is structured knowledge, learning, and culture </li></ul><ul><li>The base of our economic culture today is still the industrial-oriented knowledge of the 1930’s </li></ul>
  16. 16. <ul><li>Industrialisation has allowed many societies to move wealth generation to the service sector – </li></ul><ul><li>creating enormous value added in IT and information industries. </li></ul><ul><li>We have a culture of predictability but access to massive volumes of information. </li></ul><ul><li>We no longer suffer the problem of lack of message. </li></ul>
  17. 17. <ul><li>Business has internalised the production and management of message </li></ul><ul><li>Marketing </li></ul><ul><li>Advertising </li></ul><ul><li>Business Communications </li></ul><ul><li>Customer Support </li></ul><ul><li>Internal Management </li></ul><ul><li>So business has internalised cultural understanding </li></ul>
  18. 18. For example: Naomi Klein claims that branding is not only marketing – its production. This reflects Bourdieu: interaction between belief, learning, production This interaction requires time (interpretation, memory, application) Understanding this interaction requires analysis of contextual change over time
  19. 19. <ul><li>Problem: </li></ul><ul><li>North suggests that institutions develop to minimise uncertainty in human and human/environmental interaction. </li></ul><ul><li>So institutions are inherently slow to change. </li></ul><ul><li>This places a social brake on learning. </li></ul><ul><li>Our culture learns institutionally (that’s why you’re here). </li></ul><ul><li>But people do not always behave institutionally, and different societies learn and behave differently, leading to different interpretation and different significance (values) </li></ul>
  20. 20. <ul><li>Globalisation </li></ul><ul><li>Since the 1960’s American companies have cut costs by moving production processes overseas. </li></ul><ul><li>Since the 1980’s free-market economics has created massive value-added in management and financial services – driving the information/IT market. </li></ul><ul><li>“ The world has gotten smaller” – management has decreased its expectations of time involved in communication. </li></ul>
  21. 21. <ul><li>Stress on western financial structures over the past 40 years have pushed other countries to develop high-performance financial and production systems along the western model. </li></ul><ul><li>Dubai Sao Paolo </li></ul><ul><li>Shanghai Hong Kong </li></ul><ul><li>Mumbai Singapore </li></ul><ul><li>How do we minimise the uncertainties when these cultures are so different? </li></ul><ul><li>How do we understand the role of western business in the global arena? </li></ul>
  22. 22. <ul><li>Not all societies, not all areas of society, and not all institutions can shorten the time-frame of communications, production, distribution. </li></ul><ul><li>Economic sectors: agriculture, industry, services </li></ul><ul><li>In a structural sense, not all economic regions and systems have the same capabilities for performance. </li></ul><ul><li>i.e. Italy and the US or Italy and Iraq </li></ul><ul><li>What are the differences? </li></ul><ul><li>Why are there differences? </li></ul>
  23. 23. Today, differences in regional economic performance are considered in relation to the “path to industrialisation” taken by any state or region. This is called “path dependence”. Path dependence theory introduces “dynamic” analysis” of society. As a theory, it began as a way of explaining different “paths” to industrialisation. The problem is: relatively static institutions are self-renewing, creating an “institutional culture” that puts itself at the centre of socialisation and behaviour.
  24. 24. <ul><li>Path dependence theory (Paul David, 2002 for an overview) DOES add dynamic analysis to economic understanding, </li></ul><ul><li>BUT </li></ul><ul><li>uses our concept of industrialised and/or post- industrialised society as its “ measure ” of the path. </li></ul><ul><li>Our major economic institutions, the World Economic Forum, the IMF, the World Bank, the World Trade Organisation, etc. have globalised a western standard with the support of Nation-States. </li></ul><ul><li>i.e. our concept of money, our financial structures, our culture of written contracts, our cultural expectations of propriety, negotiation, democracy, time (such as the quarterly report). </li></ul>
  25. 25. <ul><li>Like the experiment of the European Union, each member of a global economy participates in that economy according to its own development – which may or may not have previously included interaction with western Europe or North America (most have) </li></ul><ul><li>Formal and informal institutions are not immediately comparable. </li></ul><ul><li>The European model is not the first, nor the only model of world systems. </li></ul><ul><li>Western societies must understand their role in global interaction. Western institutions must update their learning regarding this – partially by better understanding our peripheral past. </li></ul>
  26. 26. The logic of historical inquiry is the only intellectual means in western culture of approaching the problems created by path dependency and institutional learning lag. WHY? Because any historical inquiry demands an analysis of context and contextual change over time. True, this may be very limited – but it involves multi-variate temporal analysis. Historical understanding combines an understanding of time, place, language, behaviour, institutions and change.
  27. 27. Historical knowledge is the best approach we have for understanding differences between communities and societies – essential in globalised business contexts. Oh yeah, why are you here?