the importance of historical knowledge in business

The Importance of The Importance of Historical Knowledge in Historical Knowledge in

BusinessBusiness

Dr. Peter CullenDr. Peter Cullen

English Language and Culture For BusinessEnglish Language and Culture For Business

C ome and L ist en 4 your f ut ur e!

Business and t he E nglish Language E x per ience – S eminar S er ies



What is “historical knowledge”? What is “historical knowledge”? Understanding of the past – particularly in human Understanding of the past – particularly in human societiessocieties

Understanding of:Understanding of:

•timetime•changechange•human behaviourhuman behaviour•animal behaviouranimal behaviour•the environmentthe environment

•culture - product of behaviourculture - product of behaviour•meaningmeaning•messagemessage

contextcontextrelationshiprelationship



What is Business?What is Business?

Collins Dictionary: Collins Dictionary: a commercial or industrial a commercial or industrial establishmentestablishment

for:for:

production of goods and servicesproduction of goods and servicessalessalespurchasingpurchasingassistanceassistancefinancefinance

... and more! ... and more!



What are institutions?What are institutions?

Collins: an established custom, law or relationship in Collins: an established custom, law or relationship in community or societycommunity or society

i.e. i.e. - the family- the family- markets- markets- leadership- leadership- religion- religion - sport, infrastructure, education,- sport, infrastructure, education,

medicine, etc.medicine, etc.

BUSINESS IS AN INSTITUTIONBUSINESS IS AN INSTITUTION

Businesses and their Businesses and their stakeholders stakeholders form a process of form a process of significance creation about:significance creation about:

• Economic and financial valuesEconomic and financial values• Ethical and social valuesEthical and social values• Commerical valuesCommerical values• Symbolic valuesSymbolic values

Business and stakeholders are inter-dependentBusiness and stakeholders are inter-dependent

A business is a:A business is a: socio-technicalsocio-technicalpartially openpartially openpluri-purpose economicpluri-purpose economic

SYSTEMSYSTEM



A A business business is a:is a: socio-technicalsocio-technicalpartially openpartially openpluri-purpose economicpluri-purpose economic

SYSTEMSYSTEM

It is also a:It is also a:organicorganicself-regeneratingself-regeneratingrelationalrelationalcognitivecognitivedirecteddirected

SYSTEMSYSTEM

A Business is a A Business is a vitalvital system system



Business is a social Business is a social institutioninstitution AND a social AND a social systemsystem

It is a It is a dynamic structuredynamic structure

SOSO

It is a It is a historical structurehistorical structure

Business is the formalisation and standardisation of Business is the formalisation and standardisation of human economic behaviour.human economic behaviour.

this has a historythis has a history

this influences other types of history, behaviour, etc.this influences other types of history, behaviour, etc.



Does business need history?Does business need history?

YES!YES!All human structures and systems benefit from an All human structures and systems benefit from an

understanding of each other.understanding of each other.

As a system – business must understand change.As a system – business must understand change.

Douglas North: “political-economic systems are KNOWN Douglas North: “political-economic systems are KNOWN to no-one in their entirety, but human beings to no-one in their entirety, but human beings construct elaborate beliefs about those realities”.construct elaborate beliefs about those realities”.

How can we understand belief? Does belief change?How can we understand belief? Does belief change?



As a As a vital systemvital system, business must understand:, business must understand:

belief: belief: principles accepted without proofprinciples accepted without proof

values: values: the allocation of significance to belief and the allocation of significance to belief and practicepractice

learning:learning: the transmission of belief, values, the transmission of belief, values, practicepractice

practice:practice: the production of actions the production of actions

- within the locale or region of location- within the locale or region of location

- within the locale or regions of its - within the locale or regions of its stakeholdersstakeholders

- over time- over time



Learning culture:Learning culture:Pierre Bourdieu and Pierre Bourdieu and fieldfield, , habitus, doxahabitus, doxa

FieldField:: the arena of social interaction – verticle the arena of social interaction – verticle and horizontal – constituted by the and horizontal – constituted by the relational differences of social agents.relational differences of social agents.

HabitusHabitus: : lasting aquired schemes of perception, lasting aquired schemes of perception, thought and action internally developed by thought and action internally developed by social agents in reaction to objective social agents in reaction to objective conditions (i.e. of field).conditions (i.e. of field).

DoxaDoxa:: deep-founded, unthought beliefs that deep-founded, unthought beliefs that inform an agent’s actions in the inform an agent’s actions in the fieldfield. . Universal Universal

concepts. These propagate the structure of concepts. These propagate the structure of the the field.field.



Human institutions and systems have always Human institutions and systems have always existedexisted

what does historical understanding require?what does historical understanding require?

Analysis of structuresAnalysis of structuresAnalysis of interactionAnalysis of interactionAnalysis of dynamics and Analysis of dynamics and change – in communities/societychange – in communities/societyInclusive factor contextualisationInclusive factor contextualisation

It requires a logic for:It requires a logic for:

identification of questionsidentification of questionsanalysis of informationanalysis of informationcommunication of learned informationcommunication of learned information



Historical understanding provides tools for understanding Historical understanding provides tools for understanding change over timechange over time

in: in: structuresstructuressystemssystems

this helps identify this helps identify function function in society.in society.

Lucien Febvre (1922)Lucien Febvre (1922)human societies develop in relation to environmentshuman societies develop in relation to environments

Fernand Braudel (1947)Fernand Braudel (1947)time changes at three levels:time changes at three levels:

event, conjucture, long-termevent, conjucture, long-term





Observed environments change according to Observed environments change according to Braudel’s construct:Braudel’s construct:

i.e. global warming:i.e. global warming:

long term patterns (40,000 year glacial cycles)long term patterns (40,000 year glacial cycles)conjunctural patterns – last 150 years = +.5°C conjunctural patterns – last 150 years = +.5°C event patterns – last 3 years – polar ice meltingevent patterns – last 3 years – polar ice melting

Agricultural societies changes dramatically with Agricultural societies changes dramatically with environmental cycles at all three rates.environmental cycles at all three rates.

What about industrial societies?What about industrial societies?What about service sector societies?What about service sector societies?

Industrialisation has increased the rate of change in Industrialisation has increased the rate of change in human societieshuman societies

It has increased rates of productionIt has increased rates of productionIt has increased rates of distributionIt has increased rates of distributionIt has permitted increased rates of consumptionIt has permitted increased rates of consumption

It has increased rates of capital circulationIt has increased rates of capital circulationIt has increased rates of information circulationIt has increased rates of information circulation

HOW?HOW?



The adoption of industrial processes decreased our The adoption of industrial processes decreased our the perception of uncertainty in society 1840 – the perception of uncertainty in society 1840 – 1940. (telegraph to WWII)1940. (telegraph to WWII)

Industrialisation increased our expectations of Industrialisation increased our expectations of predictability – scientific laws about societypredictability – scientific laws about society

1° in economics: Kondratieff and Keynes1° in economics: Kondratieff and Keynes(long-term economic cycles and the “General (long-term economic cycles and the “General Theory”)Theory”)

This is structured knowledge, learning, and cultureThis is structured knowledge, learning, and culture

The base of our economic culture today is still the The base of our economic culture today is still the industrial-oriented knowledge of the 1930’sindustrial-oriented knowledge of the 1930’s



Industrialisation has allowed many societies to move Industrialisation has allowed many societies to move wealth generation to the service sector – wealth generation to the service sector –

creating enormous value added in IT and information creating enormous value added in IT and information industries.industries.

We have a culture of predictability but access to massive We have a culture of predictability but access to massive volumes of information.volumes of information.

We no longer suffer the problem of lack of message.We no longer suffer the problem of lack of message.



Business has internalised the production and Business has internalised the production and management of messagemanagement of message

MarketingMarketing

AdvertisingAdvertising

Business CommunicationsBusiness Communications

Customer SupportCustomer Support

Internal ManagementInternal Management

So business has internalised cultural So business has internalised cultural understandingunderstanding





For example: Naomi Klein claims that branding is not For example: Naomi Klein claims that branding is not only marketing – its production.only marketing – its production.

This reflects Bourdieu: interaction between This reflects Bourdieu: interaction between

belief, learning, productionbelief, learning, production

This interaction requires timeThis interaction requires time(interpretation, memory, application)(interpretation, memory, application)

Understanding this interaction requires analysis of Understanding this interaction requires analysis of contextual change over timecontextual change over time

Problem:Problem:

North suggests that institutions develop to minimise North suggests that institutions develop to minimise uncertaintyuncertainty in human and human/environmental in human and human/environmental interaction.interaction.

So institutions are inherently slow to change.So institutions are inherently slow to change.

This places a social brake on learning.This places a social brake on learning.

Our culture learns institutionally (that’s why you’re Our culture learns institutionally (that’s why you’re here).here).

But people do not always But people do not always behavebehave institutionally, and institutionally, and different societies learn and behave differently, different societies learn and behave differently, leading to different interpretation and different leading to different interpretation and different significance (values)significance (values)



GlobalisationGlobalisation

Since the 1960’s American companies have cut costs by Since the 1960’s American companies have cut costs by moving production processes overseas.moving production processes overseas.

Since the 1980’s free-market economics has created Since the 1980’s free-market economics has created massive value-added in management and financial massive value-added in management and financial services – driving the information/IT market.services – driving the information/IT market.

““The world has gotten smaller” – management has The world has gotten smaller” – management has decreased its expectations of time involved in decreased its expectations of time involved in communication.communication.



Stress on western financial structures over the past 40 Stress on western financial structures over the past 40 years have pushed other countries to develop high-years have pushed other countries to develop high-performance financial and production systems along performance financial and production systems along the western model.the western model.

DubaiDubai Sao PaoloSao PaoloShanghai Hong KongShanghai Hong KongMumbai SingaporeMumbai Singapore

How do we minimise the uncertainties when these How do we minimise the uncertainties when these cultures are so different? cultures are so different?

How do we understand the role of western business in How do we understand the role of western business in the global arena?the global arena?



Not all societies, not all areas of society, and not all Not all societies, not all areas of society, and not all institutions can shorten the time-frame of institutions can shorten the time-frame of communications, production, distribution.communications, production, distribution.

Economic sectors: agriculture, industry, servicesEconomic sectors: agriculture, industry, services

In a structural sense, not all economic regions and In a structural sense, not all economic regions and systems have the same capabilities for performance.systems have the same capabilities for performance.

i.e. Italy and the US or Italy and Iraqi.e. Italy and the US or Italy and Iraq

What are the differences?What are the differences?

Why are there differences?Why are there differences?





Today, differences in regional economic performance Today, differences in regional economic performance are considered in relation to the “path to are considered in relation to the “path to industrialisation” taken by any state or region.industrialisation” taken by any state or region.

This is called “path dependence”.This is called “path dependence”.

Path dependence theory introduces “dynamic” Path dependence theory introduces “dynamic” analysis” of society. As a theory, it began as a way of analysis” of society. As a theory, it began as a way of explaining different “paths” to industrialisation.explaining different “paths” to industrialisation.

The problem is: relatively static institutions are self-The problem is: relatively static institutions are self-renewing, creating an “institutional culture” that renewing, creating an “institutional culture” that puts itself at the centre of socialisation and puts itself at the centre of socialisation and behaviour.behaviour.

Path dependence theory (Paul David, 2002 for an Path dependence theory (Paul David, 2002 for an overview) DOES add dynamic analysis to economic overview) DOES add dynamic analysis to economic understanding,understanding,

BUTBUT

uses our concept of industrialised and/or post- uses our concept of industrialised and/or post- industrialised society as its “industrialised society as its “measuremeasure” of the path.” of the path.

Our major economic institutions, the World Economic Our major economic institutions, the World Economic Forum, the IMF, the World Bank, the World Trade Forum, the IMF, the World Bank, the World Trade Organisation, etc. have globalised a western Organisation, etc. have globalised a western standard with the support of Nation-States.standard with the support of Nation-States.

i.e. our concept of money, our financial structures, our i.e. our concept of money, our financial structures, our culture of written contracts, our cultural expectations of culture of written contracts, our cultural expectations of propriety, negotiation, democracy, time (such as the propriety, negotiation, democracy, time (such as the quarterly report).quarterly report).



Like the experiment of the European Union, each Like the experiment of the European Union, each member of a global economy participates in that member of a global economy participates in that economy according to its own development – which economy according to its own development – which may or may not have previously included interaction may or may not have previously included interaction with western Europe or North America (most have)with western Europe or North America (most have)

Formal and informal institutions are not immediately Formal and informal institutions are not immediately comparable.comparable.

The European model is not the first, nor the only model The European model is not the first, nor the only model of world systems.of world systems.

Western societies must understand their role in global Western societies must understand their role in global interaction. Western institutions must update their interaction. Western institutions must update their learning regarding this – partially by better learning regarding this – partially by better understanding our peripheral past.understanding our peripheral past.





The logic of historical inquiry is the only intellectual The logic of historical inquiry is the only intellectual means in western culture of approaching the means in western culture of approaching the problems created by path dependency and problems created by path dependency and institutional learning lag.institutional learning lag.

WHY? WHY?

Because any historical inquiry demands an analysis of Because any historical inquiry demands an analysis of context and contextual change over time.context and contextual change over time.

True, this may be very limited – but it involves multi-True, this may be very limited – but it involves multi-variate temporal analysis.variate temporal analysis.

Historical understanding combines an understanding Historical understanding combines an understanding of time, place, language, behaviour, institutions and of time, place, language, behaviour, institutions and change.change.



Historical knowledge is the best approach we Historical knowledge is the best approach we have for understanding differences between have for understanding differences between communities and societies – essential in communities and societies – essential in globalised business contexts.globalised business contexts.

Oh yeah, why are you here?Oh yeah, why are you here?

the importance of historical knowledge in business

Education