• Early Business Scandals


• Reporting on Education

Definition: Schools that are designed to teach people the skills and knowledge to be successful in business
Significance: The establishment of business schools changed the way many businesspeople were educated. Instead of entering apprenticeships, people attended schools where they followed a course of study designed to teach them business.
Before the mid-nineteenth century, an apprenticeship was required to learn to be a businessperson. The apprentice would begin as an office boy and work his way up in an organization. These apprenticeships were usually poorly paid and occasionally unpaid positions. During the 1830’s, private proprietary business schools began operating in major cities to provide, in a few months, the training that it might take an apprentice several years to learn. B. F. Foster, who had written books on accounting, started a commercial school in Boston in 1834 and then in 1837 moved to New York, where he started Foster’s Commercial Academy. Other authors of business books soon followed, starting schools in other eastern cities. Such schools were common by the start of the U.S. Civil War. Traditional colleges were reluctant to offer business courses, so the proprietary schools had a monopoly on the subject. The most successful of the proprietary schools were those owned by H. B. Bryant, H. G. Stratton, and Silas Packard. By the 1870’s, these names were almost synonymous with business education. In fact, companies competed to hire “Packard boys” and eventually “Packard girls,” because graduates of these schools, branches of which existed in many cities, were known to be well trained.

Early Business Scandals

During the late nineteenth century, a few universities began considering business schools. The first such school was established at the University of Pennsylvania in 1881, when Joseph Wharton made a contribution to support it. The University of Chicago followed in 1898, Dartmouth in 1899, and New York University in 1900. Business education had become a legitimate subject taught at major universities.
The quality of collegiate business education was enhanced in 1916, when the first accreditation agency for business schools was established. The agency, the Association to Advance Collegiate Schools of Business (AACSB) International (formerly known as the American Association of Collegiate Schools of Business), traces its roots to a meeting at the University of Chicago in 1916. Representatives from seventeen business schools met to form an Association of Collegiate Schools of Business. This represented just over half of the thirty schools of business then housed in American universities. During the 1920’s, the number of business schools grew, and the number of Association to Advance Collegiate Schools of Business members increased as well. In 1925, the AACSB approved new membership standards, including that a school must offer courses in five areas: finance, accounting, business law, marketing, and statistics.
By the beginning of World War II, the AACSB had fifty-five members. By 1951, it had seventymembers, one-fifth of which had been admitted in the two preceding years. Member schools employed 2,790 business faculty, nearly double the number employed five years earlier.

1 Harvard University
2. Stanford University
3. University of Pennsylvania (Wharton)
4. Massachusetts Institute of Technology (Sloan)
5. Northwestern University (Kellogg)
6. University of Chicago (tied)
7. Dartmouth College (Tuck)
8. University of California, Berkeley (Haas)
9. Columbia University
10. New York University (Stern)

Reporting on Education

The 1950’s ended with the publication of two major studies: the report by Robert Aaron Gordon and James Edwin Howell, Higher Education for Business (1959), and the report by Frank C. Pierson and others, The Education of American Businessmen: A Study of University-College Programs in Business Administration (1959). These major studies, which had been funded by the Carnegie and Ford Foundations, would do much to professionalize business schools during the 1960’s.
The 1960’s was a busy time in business education, partly because the impact of the independent 1959 reports was immediate and substantial. The two foundation reports gave business schools a focus and a mission for at least the next decade and perhaps longer. Because schools began to implement the recommendations of the two reports, business education began to achieve a degree of legitimacy in the larger higher education community. Major universities had been dominated by the arts and sciences, and business schools had ranked somewhere below colleges of education and agriculture. What had previously been viewed as vocational programs achieved high levels of respect on university campuses, and faculty shared in the respect by becoming among the most highly paid employees at most universities. This rise in status can be attributed to the two 1959 foundation reports.
In 1984, on the twenty-fifth anniversary of the Pierson and the Gordon and Howell reports, the AACSB commissioned Lyman W. Porter and Lawrence E. McKibbin to reexamine the state of business education. Their report, Management Education and Development: Drift or Thrust into the Twenty-first Century? (1988), was the most significant publication in the history of the Association to Advance Collegiate Schools of Business. Unlike the 1959 studies, Porter and McKibbin found that business schools were more esteemed than they had been in the earlier period, but many faculty had used that sense of appreciation to justify complacency and self-satisfaction—attributes that threatened the continued existence of effective business education. As with the 1959 reports, the Porter and McKibbin study was to be the foundation for much of what business schools would do in the future.
The period from the late 1960’s through the first decade of the twenty-first century has been a time of spectacular growth for business schools. In 1966, the AACSB had 106 member schools, all of which were accredited. By 2006, the organization had more than 1,000 member schools, of which 506 were accredited. By 1966, member schools typically granted 23,000 bachelor’s degrees and 6,600 master’s degrees in business each year. By 2008, AACSB members were granting more than 210,000 bachelor’s degrees in business and more than 104,000 master’s degrees per year.


Professor Brian Bushee lectures in 2006 at Wharton, the first business school in the United States. (AP/Wide World Photos)
Further Reading
The American Association of Collegiate Schools of Business, 1916-1966. Homewood, Ill.: Richard D. Irwin, 1966. This history covers most changes in business education during the early twentieth century.
Flesher, Dale L. The History of Association to Advance Collegiate Schools of Business International. Tampa, Fla.: AACSB International, 2007. This volume covers the history of business schools and their relationship to the accreditation agency during the period from 1916 to 2006.
Pierson, Frank C. The Education of American Businessmen: A Study of University-College Programs in Business Administration.NewYork: McGraw-Hill, 1959. This book of more than seven hundred pages summarizes the findings of a survey, sponsored by the Carnegie Foundation, of business education during the late 1950’s.
Porter, LymanW., and Lawrence E. McKibbin. Management Education and Development: Drift or Thrust into the Twenty-first Century? New York: McGraw- Hill Book Company, 1988. Excellent overview of business education during the late 1980’s.
Previts, Gary J., and Barbara Dubis Merino.AHistory of Accountancy in the United States. Columbus: Ohio State University Press, 1998. Includes a history of nineteenth century accounting education.
See also: Coin’s Financial School; Education; Junior Achievement; Management theory; Washington, Booker T.