D. G. Brian Jones & David D. Monieson

Early Development of thePhilosophy of Marketing Thought

An extensive study of archival materials is used to examine the philosophic origins of marketing thoughtat two centers of early development, the University of Wisconsin and the Harvard Business School. Evi-dence suggests that the German Historical school of economics provided much of the philosophic foun-dation of the discipline.

IN this article, we attempt to examine some of thecurrents from which twentieth century marketing

thought emerged in order to provide a correct accountof its philosophic origins. Marketing historians haveidentified the first associations, books, and articlespertaining to marketing as we know it today (Bartels1962). However, these elements reflect marketing onceit had been labeled as such. We do not take issue withthe accepted wisdom about who the first marketingscholars were, what constitutes the earliest marketingliterature, or which university courses were the firstin the field of marketing. Nor do we attempt to re-define marketing as it was conceived initially. Thesefacts about the early history of marketing ideas werecertainly considered. However, ideas do not developin a vacuum. We therefore look beyond this patch-work of surface facts and identify some common

D. G. Brian Jones is Assistant Professor of Marketing, School of Busi-ness Administration, University of Prince Edward Island, Charlottetown.David D. Monieson is Nabisco Professor of Marketing, School of Busi-ness, Queen's University, Kingston, Ontario. The authors thank RonaldSavitt, Stanley Shapiro, George Fisk, Stanley Hollander, Thomas Kin-near, and two anonymous JM reviewers for constructive comments, andthe Summer Research Program of the School of Business, Queen's Uni-versity, for funding in connection with the research.

threads. More precisely, the purpose of our article isto identify and describe some of the philosophic un-derpinnings of marketing.

MethodSignificant historical research involves the collection,analysis, and reporting of primary data (Savitt 1983,p. 30). Therefore, archival research was an essentialpart of our study. Previous historical research in mar-keting has identified the significant contributors to thediscipline (Bartels 1951, p. 4; Converse 1959; Wrightand Dimsdale 1974), the earliest published literature(Converse 1933; Hagerty 1936), and the first univer-sity courses (Maynard 1941; Monieson 1981, p. 14).This literature provided many potential sources of pri-mary data.

Inasmuch as the University of Wisconsin and Har-vard University were the original centers of influenceon the development of marketing thought (Bartels 1962,p. 34), those two institutions were chosen as the ma-jor sites of primary research. The collections of EdwinFrancis Gay, first dean of the Harvard Business School,and of Richard T. Ely, first director of the School ofEconomics at the University of Wisconsin, were ma-

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jor sources of data, as were the collections of severalother scholars associated with those institutions (seeReferences section). Specifically, data sources in-cluded diaries, journals, correspondence, autobiogra-phies, school essays, research notes, and unpublishedpapers and books.

We do not compare the influences derived fromeconomics with those possible from other social sci-ences. Such a task is beyond the scope of our study.Instead, we limit our focus to the major influencesapparent through economics at two original centers ofdevelopment of marketing thought.

Origins of the InstitutionalApproach

During the nineteenth century many American stu-dents seeking higher education were attracted to Ger-many. Various estimates place the number of Amer-ican students there between 1820 and 1920 atapproximately 10,000 (Herbst 1965, p. 1; Thwing1928, p. 40). This academic migration was impres-sive, not only in absolute numbers, but also in relationto the American attendance at other European insti-tutions (Thwing 1928, p. 76).

In American colleges the emphasis was on uni-formity and discipline. Instruction followed the lec-ture-and-recitation method. By contrast, the Germanuniversities were professional schools. They providedan atmosphere of academic freedom and equality be-tween students and professors. When the first busi-ness school associated with the University of Berlinbegan classes in 1906, seminars rather than lectureswere thought to be a partial answer to the unique ed-ucational needs of business students (Redlich 1957,p. 62). During the 1890s and perhaps even earlier,students in economics often went on excursions tovarious industrial establishments to study firsthand theinstitutional forces in the economy (Brooks 1906). Theacademic atmosphere in Germany created in Ameri-can students a "craftsman's regard for technical ex-pertise, an unfailing respect for accuracy, and a con-cern for the application of knowledge and skills to socialends" (Herbst 1965, p. 19).

In the latter part of the nineteenth century, a sci-entific model of historicism, which became identifiedwith the Historical school, began to dominate the so-cial sciences in Germany (Herbst 1965). The Histor-ical school of economics emerged during the middleof the nineteenth century as a reaction to classical eco-nomic thinking (Myles 1956). The founders of theHistorical school were dissatisfied with the inabilityof classical economics to resolve the problems asso-ciated with the rapid growth of the German economyat that time, such as poverty, industrial development.

and development of a banking system (Hildebrand1848). This preoccupation with solving real economicproblems was to reinforce a unique and consistent setof philosophic assumptions about teaching as well asstudying economics. The Historical school was dis-tinctive for its historical, statistical methodology (e.g.,Roscher 1843), its pragmatism (e.g., Conrad 1868),and its ideals (Herbst 1965, p. 145), rather than fortheoretical or conceptual ideas.

A steady stream of German-trained economists be-gan returning to North America during the 1870s. Co-lumbia University hired J. B. Clark, R. Mayo-Smith,and E. R. A. Seligman. To the University of Penn-sylvania went S. N. Patten, J. F. Johnson, E. J. James,R. P. Falkner, and E. R. Johnson. This movementalso included F. W. Taussig and Edwin Francis Gay,who both went to Harvard, and Richard T. Ely andHenry C. Adams, appointed to positions at JohnsHopkins University. Later, Ely and Adams moved tothe University of Wisconsin and University of Mich-igan, respectively. These individuals were among themost influential Americans to train under the GermanHistorical school. Others followed until the onset ofWorld War I, but the infiuence was probably strongestduring the 1870s and 1880s (Dorfman 1955, p. 24).There are no estimates of the number of economistswho trained in Germany during that period, but thetotal appears to have been substantial (Famam 1908;Myles 1956, Appendix 2).

Richard T. Ely was a vocal and enduring discipleof the Historical school. On returning from Germany,he accepted a position at Johns Hopkins Universityand established a reputation as one of America's mostreform-minded economists. Ely led an attack on or-thodox economic doctrine, ideology, and methodol-ogy. In "The Past and Present of Political Economy,"Ely proclaimed the succession of the "New School,"the German Historical school, over the old school oforthodox, classical economics (1884). He criticizedthe rigidity and determinism of classical economics aswell as its oversimplified notion of economic man(1884, p. 10-12). Ely claimed enthusiastically that"the younger men in America are clearly abandoningthe dry bones of orthodox English political economyfor the methods of the German school" (1884, p. 64).

In 1885 Ely led a group of German-trained econ-omists in forming the American Economic Associa-tion (AEA). In its founding statement of principlesand in its early publications, the AEA revealed theinfiuence of the German Historical school (Ely 1936,p. 144). According to Ely, the formation of the AEArepresented both a protest against the system of lais-sez-faire economics and an emphasis on historical andstatistical study (Ely 1931, Appendix B).

In 1892 Ely became the first director of the newSchool of Economics at the University of Wisconsin.

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Ely's belief in a strong role for the state in certainspheres of industrial activity fit well with the uniquephilosophy of education at the University of Wiscon-sin. That philosophy was represented by the term"Wisconsin Idea," which stood essentially for bettergovernment through better education. It involved a closeworking relation between the university and the stategovernment whereby academic experts gave adviceon matters of administration. More generally, theWisconsin Idea was part of the Progressive Movementfor which the state became noted during the late nine-teenth century. Ely, later described as a "barometerof Wisconsin Progressivism" (Rader 1966, ch. 7),seemed to have been a perfect choice to head the newSchool of Economics at Wisconsin.

In 1904 Ely invited John R. Commons, who hadbeen his student at Johns Hopkins, to join the facultyat Wisconsin. Commons was to become one of Amer-ica's most notable institutional economists and his workbecame a legendary part of the Wisconsin Idea. Com-mons also was known for his pragmatic approach toteaching. He often brought civil servants, union of-ficials, and other practitioners into his classroom tospeak to students. Ely, too, followed this principle ofpedagogical pragmatism by employing the seminarmethod, with which he had become familiar in hiscourse work in Germany. He cited his German edu-cation for the realization that book knowledge andpractical experience must be combined, especially forbusiness education (Ely, undated). He also liked toquote Commons that "academic teaching . . . is merelybrains without experience; the practical extreme[however] is experience without brains; one is half-baked philosophy, the other is rule of thumb" (Ely1938, p. 186).

For graduate research, Ely felt the most appropri-ate topics were ones that were historical and descrip-tive. Theses supervised by Ely certainly reflected thisnotion—for example, B. H. Hibbard's (1902) "TheHistory of Agriculture in Dane County, Wisconsin,"Paul Nystrom's (1914) "Retail Distribution of Goods,"and Theodore Macklin's (1917) "A History of the Or-ganization of Creameries and Cheese Factories in theU.S." In addition, for one of his graduate courses ineconomics offered in 1899, Ely kept a book that listedsuitable topics for student papers. These topics in-cluded "The Economic Effects of Changes in Fash-ion," "Advertising Considered From an EconomicStandpoint," and "Competition in Advertising and Ef-fects of Trademarks." Graduate students carried outthese studies by applying an inductive method, adopt-ing a historical perspective, and maintaining a con-cern for the general welfare of society in their searchfor solutions to economic (often marketing) problems.In this way, many of Ely's students were applying theinstitutional approach to the study of marketing.

Applying the Institutional Approachto Marketing

Among the first students in economics at Wisconsinwere David Kinley (later head of the Economics De-partment at Illinois), E. D. Jones, Samuel Sparling,James Hagerty (later head of the Economics Depart-ment at Ohio State), M. B. Hammond (who later taughtunder Hagerty at Ohio State), H. C. Taylor, and B. H.Hibbard. These individuals also were among the firstnoted contributors to the development of marketingthought (Bartels 1951, p. 4).' Each had spent sometime studying in Germany, as it became Ely's habitto encourage his students to do so whenever possible.In this way a direct link was formed between the Ger-man Historical school and many of the earliest con-tributors to marketing thought.

In 1894, for example, Jones, Sparling, andHammond traveled together to Germany to study eco-nomics. Edward David Jones, though recognized forteaching the first university course in marketing (Bartels1951, p. 3; Maynard 1941, p. 382), has been curi-ously overlooked by marketing historians. A recentbiographical sketch of Jones describes his consider-able contributions to the marketing literature and toteaching (Jones 1987). For example, Jones wrote aboutthe evolution of marketing methods (Ely 1903), theefficiency of the marketing process (1912a), distrib-utive justice (1911b), and the functional approach tomarketing (1911c, 1912b, 1913a). He believed thatmarketing courses were basic to an education in busi-ness, along with instruction in administration and ac-counting/finance. To teach business, however, he be-lieved that scientific investigation was necessary todiscover the general principles of those subjects. Headded that the appropriate methodology for such studyis "the inductive form of the scientific method" (1913b,p. 188). Jones used that method in his own researchin marketing, gathering historical, descriptive casestudies of marketing processes.

Between 1911 and 1914 Jones published a seriesof articles in Mill Supplies that were remarkable forthe tone in which they were presented as well as forthe principles and concepts of marketing they identi-fied. In the opening piece, "The Larger Aspects of

We do not discuss L. D. H. Weld because no strong, direct linkscould be demonstrated between Weld and either of the two Americaninstitutions used as data collection sites. However, we can speculateon Weld's indirect connection with the Geiman Historical school byvirtue of his having studied economics at the University of Illinois(MA Economics 1907) and Columbia (PhD 1908) and having taughtat Wharton (1909-1910). Both Columbia and Pennsylvania were pop-ular with German-trained economists during the late nineteenth cen-tury. The University of Illinois also had the potential for such influ-ence through George Fisk, Simon Litman, and David Kinley (Figure1). An institutionalist and prominent early marketing scholar. Weldmay have been influenced through his association with these institu-tions.

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Private Business," Jones stated that his purpose inpresenting the work was to examine "some marketingproblems," the most general of which, in Jones' es-timation, was the apparent inefficiency of the mar-keting process (1911a, p. 2). For example, in the re-tail trade Jones had determined that marketing activityadded 50% to the cost of goods and he felt that muchof the added cost was waste due to advertising and anoverabundance of retail stores (1912c, p. 461).

Jones believed that a philosophy or science ofbusiness, and similarly of distribution or marketing,could be developed. It would require the developmentof principles based on empirical data and would bepracticed by professionals whose objective would beto promote the general welfare (Ely 1918). This visionof science was similar to that held by his mentor,Richard T. Ely, and by the German Historical schoolunder which Jones had also studied.

Samuel Sparling returned from Germany with Jonesto complete a thesis on public administration. He thentaught that subject at Wisconsin until 1909. In 1906Sparling published Introduction to Business Organi-zation. In that volume (p. 3-4) he described how hebelieved a science of business could be developed:

Science is based upon accumulated experience. Clas-sification is the result of a comparison of differencesand similarities. . . . We may describe and classifythe facts of business in such a way as to indicate theirunderlying tendencies and principles.

Sparling classified all business activity as extrac-tive, manufacturing, or distributive. Distribution wasdivided further into marketing activities that facilitateexchange. Marketing proper was defmed as "thosecommercial processes which are concerned with thedistribution of raw materials of production and the fin-ished output of the factory. . . . Their function is togive additional value to these commodities throughexchange" (p. 17).

In the section of Sparling's book covering "Or-ganization of Distributive Industries" are chapters onthe evolution of the market, exchanges, direct selling,wholesaling and retailing, traveling salesmanship, themail-order business, advertising, and credits and col-lections. Sparling clearly viewed marketing as part ofa science of business that would be developed by fol-lowing the methodology of the German Historicalschool, that is, by using an inductive, comparative,historical approach. With its extensive discussion ofmarketing-related topics. Sparling's book later wascredited by James Hagerty (1936, p. 22) as one of theearliest contributions to the literature of marketing.

Hagerty himself was a student of Ely's and alsostudied in Germany. Of this training he later com-mented, "I believe that I have been influenced as muchby American as by German teachers in the methodsof the German economists. I make to mention Pro-

fessor Ely especially whose influence has been in thatdirection" (1906).

Another of Ely's students, Henry C. Taylor, waseven clearer on the influence of Ely and the GermanHistorical school. Following Ely's advice, Taylor wentto England in 1899, then to Germany where he stud-ied under Johannes Conrad at the University of Halleand Max Sering at the University of Berlin. Conrad'scourses in agricultural economics were described byTaylor as "historical and descriptive in character,"concentrating on the political economy of agriculturerather than on the technical aspects of farming. AtBerlin he also took courses firom Wagner and SchmoUerof the Historical school.

When Taylor returned from Germany to Wiscon-sin in 1901, he began teaching economic history andeconomic geography. One of Taylor's first moves wasto give the course in economic geography more em-phasis on agriculture and marketing. As he later de-scribed it (1941, p. 23):

From two-thirds to three-quarters of the time in thecourse in economic geography was sjjent in describ-ing where each of the important agricultural productswas grown, where it was consumed, and the tran-sportion, merchandising, and processing which itunderwent as it passed from producer to consumer.

The text used in this course was Volume VI of theReport of the United States Industrial Commission of1900, entitled, "Distribution and Marketing of FarmProducts" (Taylor 1941, p. 23). It provided descrip-tions of the distribution of cereals, cotton, and dairyproducts and of the marketing of livestock, as well asa discussion of the significance of cold storage andrefrigeration in the marketing of perishable products.In Taylor's opinion (Taylor and Taylor 1974, p. 517),Volume VI of the Industrial Commission Report was:

. . . by all odds the bet book on agricultural mar-keting available to students of agricultural economicsat the beginning of the twentieth century. . . . Thefacts assembled and the methods of presentation madeit possible for the reader to develop in his mind afairly clear picture of marketing processes and price-making forces.

In presenting statistical facts from original and officialsources in a descriptive way, the approach used in thatreport was consistent with the general approach to thestudy of economics at Wisconsin.

In 1906, as the interest of Wisconsin farmers inthe activities of middlemen grew, Taylor began study-ing the cooperative creameries and cheese factories insouthern Wisconsin. In 1910 he published an articleon the prices of farm products. Taylor's conclusionsabout the prices of eggs, butter, and cheese were con-sistent with the notion that middlemen serve an es-sential function for which a price must be paid.Nevertheless, there was continued skepticism and the

Early Development of the Philosophy of Marketing Thought / 105

state legislature wanted further investigation.As part of those investigations, two senior stu-

dents in agricultural economics were given the task ofstudying the marketing of Wisconsin cheese. To-gether with Taylor, in 1913, they published the resultsof their investigations as "The Marketing of Wiscon-sin Cheese" (Taylor, Schoenfeld, and Wehrwein 1913).Using extensive descriptive statistics and maps, theyillustrated where cheese was produced and where itwas consumed. Most of the study, however, de-scribed the middleman processes: the advantages anddisadvantages of a cheesemaker versus a sales agentin carrying out the selling function, the various typesof retailers and wholesalers, the operation of dairyboards, retail prices, and the services rendered by var-ious middlemen. Taylor commented that "while ourfindings tended to sober those persons who had beenspeaking excitedly about the marketing problem, theymade it perfectly clear that, in certain stages in themarketing of Wisconsin cheese, the agencies were notfunctioning satisfactorily" (1941, p. 16).

This early research on the marketing of Wisconsincheese was significant in several ways. It signified thebeginning of a specialization by the Department ofAgricultural Economics in marketing and coopera-tives, which is considered to be its single most im-portant contribution to the study of agriculture (Pulver1984, p. 7). Also, a fiurry of graduate research in-spired by this initial study led to numerous theses inagricultural marketing, including G. S. Wehrwein's(1913) "The Dairy Boards of Wisconsin," W. A.Schoenfeld's (1914) "Seasonal and Geographical Dis-tribution of Wisconsin Cheddar Cheese for the Year1911," H. R. Walker's (1915) "The CooperativeMarketing of Livestock in Wisconsin," E. T. Cusick's(1916) "The Raising and Marketing of Wisconsin To-bacco," and P. A. C. Eke's (1920) "Marketing Wis-consin Potatoes."

This research led to the retum to Wisconsin of B. H.Hibbard (from the University of Iowa) in 1913 andTheodore Macklin (from Kansas State College) in 1917as faculty members in agricultural economics to spe-cialize in cooperation and marketing (Taylor 1941,p. 19). Hibbard, Taylor, and several of the graduatestudents in the department published a series of stud-ies including "Agricultural Cooperation" (1914),"Markets and Prices of Wisconsin Cheese" (1915),"The Marketing of Wisconsin Butter" (1915), "Co-operation in Wisconsin" (1917), and "Marketing Wis-consin Milk" (1917). The latter study led to a thesisand subsequent book entitled The Marketing of WholeMilk (1921), by H. E. Erdman. That book, as well asHibbard's (1921) The Marketing of AgriculturalProducts and Macklin's (1921) Efficient Marketing forAgriculture, were seminal contributions to the mar-keting literature.

Taylor observed that the series of articles pub-lished between 1913 and 1917 all followed a commonpattern. Each study was designed "to picture the mar-keting process clearly in order that the true characterof the problems of marketing might be discovered"(1941, p. 22). Each study proceeded from a perceivedmarketing problem and the method was always thesame: to observe the facts, to look and see, and thenformulate principles and recommendations.

Erom its inception in 1892, the School of Eco-nomics at the University of Wisconsin developed aninstitutional approach to the study of economics. Thisapproach included an inductive, statistical methodol-ogy with a historical perspective and a concern for theapplication of knowledge and skills to social ends. Di-rectly and indirectly this approach was derived fromthe German Historical school of economics. There-fore, as a center of the early development of market-ing thought, the University of Wisconsin provided theemerging discipline with a distinctive and well-developed philosophic foundation.

Origins of Scientific MarketingManagement

Harvard University, and in particular the GraduateSchool of Business, was the other center of early in-fiuence on the development of marketing thought.Founded in 1908, the School was based on a visionof business as a profession, an art, and a science. Assuch, it became one of the first truly academic,professional business schools in the world.

As at Wisconsin, the seeds of teaching and re-search in marketing at Harvard were planted by theEconomics Department. For example, the Harvardeconomists Frarik W. Taussig and Edwin Francis Gayhave been recognized for their contribution to the de-velopment of marketing thought (Bartels 1951, p. 4).Both were instrumental in the planning of the HarvardBusiness School and Gay became the School's firstdean. As dean of the Business School, Gay was themajor instigator of research and teaching in market-ing.

Taussig studied at the University of Berlin in 1879and 1880. He was less enthusiastic than some, how-ever, about the ideas of his German teachers, claiming(1906) to have been infiuenced more by AlfredMarshall. During the early twentieth century manyAmerican marketing scholars turned to the more de-ductive approach of the neoclassical economists suchas Marshall in their attempts to develop marketingtheory (Sheth and Gross 1988, p. 10). The most pop-ular sources of these ideas were Marshall's Principlesof Economics (1890) and Industry and Trade (1919).

In 1911 Taussig published his own Principles ofEconomics. Nonetheless, he was an economic histo-

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rian, as demonstrated in his first book, Tariff Historyof the United States (1886). Though he may have beeninfluenced more by Alfred Marshall, he would at leasthave appreciated tiie positive contributions of the His-torical school. As Marshall himself stated (Pigou 1956,p. 165):

It would be difficult to overrate the importance of thework that has been done by the great leaders of thisschool in tracing the history of economic habits andinstitutions.

Taussig was also a friend and colleague of IgnazJastrow, who became the first Rector of the businessschool founded at Berlin in 1906. Under Jastrow theBerlin Handelshochschule shared an educational phi-losophy with Harvard that "focused on the real worldof business and at the same time was truly academicin nature" (Redlich 1957, p. 35).

As a member of the committee formed in 1906 byHarvard President Charles W. Eliot to plan the Har-vard Business School, Taussig singled out the Ger-man business schools for comparison with existingAmerican ones. He wrote the following comments toGay in 1907:

The movement for advanced instruction of this kindis active throughout the world, most so in Germanyand in the U.S. In Germany it has resulted in at leasttwo large institutions of high grade, liberally sup-ported at Berlin and Cologne. In this country, theUniversities of Pennsylvania, Michigan, Wisconsin,Illinois, California and Dartmouth College.

Undoubtedly, Taussig's opinions about the formationof the Business School were influenced by his famil-iarity with developments in Germany and by his owntraining there.

Much more profound was the impact of the School'sfirst dean, Edwin Francis Gay, on the development ofmarketing thought. Like Taussig, Gay was very fa-miliar with developments in Germany. He had studiedhistory at the University of Leipzig during 1890-91,then political economy at the University of Berlin ftom1891 to 1893 under Wagner and Schmoller of the His-torical school. He later studied in Zurich during 1894before returning to Berlin to finish his doctoral degreeunder Schmoller in 1901-02. According to Heaton(1949, p. 12-13):

It was Schmoller who really fired Gay's enthusiasm:first by belief that economics could be made into areal social science by being brought into close rela-tion with psychology, ethics, history and politicalscience; second, by his faith, accompanied by hope,charity and hard work—that economics could beconverted into an inductive science through the pa-tient study of economic phenomena past and present.. . . Private conversations with Schmoller wereamong Gay's treasured memories of his Berlin days;the phrase "Schmoller says" appears occasionally inletters when Gay was interpreting some part of theEuropean scene; and when Gay began to have grad-uate students of his own he tried to model his treat-

ment of them on the example of his German master.

Indeed, Gay once commented, "If I could only trans-fer some of Schmoller's qualities into my work as ateacher I would be happy" (Heaton 1949, p. 61). Thatwish app£irently was realized. One of Gay's studentsin economic history later observed that "he was notgiven to vague theorizing . . . hardly ever paused togeneralize" (Cole 1970, p. 34).

Gay credited the German Historical school forfounding the discipline of economic history (1941).He singled out Wilhelm Roscher as the "original for-mulator" of the Historical school and cited Karl Knies'principle of historical relativity as well as the use ofa comparative method as highlights of the school'scontribution to research methodology. He also rec-ognized the intense struggle of the Historical econo-mists, especially Schmoller, with the manner in whichgeneralizations could be developed from the mass ofeconomic facts being collected, summarized, and syn-thesized. The reason for that struggle was the inherentcomplexity of economic events. Gay commented (1923,p. 2) that:

. . . the longer I live, the more inclined I am to agreewith the late Professor Schmoller of Berlin that theworld of political, social-psychological, and eco-nomic phenomena is a terribly complicated business.

Nevertheless Gay maintained, as the Historical schoolhad, that the ultimate objective of inductive researchis to produce generalizations and principles. Consis-tent with his German training. Gay believed that thescientific principles and generalizations of businessshould be "built up by observation and induction fromwidely gathered and carefully sifted facts" (1927a).

In Gay's words, the Harvard Business School wasto become a "simple scientific endeavor" (Cniikshank1987, ch. 2). This modest objective, however, was tolead to some fundamental achievements that becameHarvard's principal contributions to the developmentof marketing thought. First, Gay had to determine whatwas essential to be taught; he had to define the subjectmatter of business. Second, he had to determine howthat subject matter would be taught.

Gay's answer to the first of these challenges wasto divide business into "two fundamental functions ofindustrial management [production] and commercialorganization or marketing" (Gay quoted by Hanford1954, p. 7). During the time when the Business Schoolwas being planned, Frederick W. Taylor and his as-sociates were developing a body of knowledge aboutthe industrial management aspect of business and Gayadopted it enthusiastically for the School. Taylor usedtime and motion studies of work activity and the de-tailed observation and measurement of work to de-velop his principles of scientific management. Thoseprinciples were considered scientific because they were

Early Development of the Philosophy of Marketing Thought / 1 0 7

"generalized rules of conduct based on law . . . asummary statement of fact or a description of a ten-dency common to a class of things" (Thompson 1917,p. 5). Apparently, as a member of a committee draft-ing a detailed plan of programs, courses, and arrange-ments. Gay was searching for and identifying mate-rials for the Business School's courses. Taylor's seminalarticles on the "Art of Cutting Metals" (1906) and"Shop Management" (1903) were among the first tobe noted in that connection (Gay 1907).

Industrial management was only one of the twobasic functions of business. The other, as Gay definedit, was distribution or marketing. When the Schoolopened in 1908, there were three required courses:Principles of Accounting, Commercial Contracts, andEconomic Resources of the United States. Accordingto Copeland (1958, p. 3), the general idea for the lat-ter course was developed by Gay on the basis of hisbackground in economic history and his interest inmarketing methods. The course first was taught byPaul Cherington and later (in 1914) evolved into thecourse titled "Marketing."

The distinctive philosophy of marketing sciencebeing developed at Harvard was manifested in threespecific forms: the case method of teaching, the Bu-reau of Business Research, and Arch W. Shaw's de-scription of the basic functions of marketing.

The Case Method

The case method often is cited as a significant anddistinctive contribution of Harvard to the developmentof marketing thought. On the basis of his 1945 surveyof marketing scholars. Converse reported that the casemethod was voted one of the most important conceptsor techniques in marketing (1945, p. 20). Bartels alsoconcluded that the case method was Harvard's "prin-cipal contribution throughout the years to the devel-opment of marketing thought" (1951, p. 11) and citedCopeland (1920), Tosdal (1921), McNair and David(1925), and Borden (1927) as examples.

Consistent with his vision of business as a profes-sion, a science, and an art. Gay recognized from theoutset the need for a unique means of teaching busi-ness (1908, p. 161):

The teacher of business . . . must discover the fun-damental principles of business system, and then, ina scientific spirit, teach not only those principles, butthe art of applying them after investigation, to anygiven enterprise. This means, then, that new coursesof study must be organized and that a laboratory-sys-tem of instruction must, as far as possible, be intro-duced.

The term "laboratory method" was derived from themethod of teaching in the natural sciences on whichthe seminar method, used so successfully in Ger-many, was modeled. In a 1927 speech about the

founding of the Business School, Gay further de-scribed this conception of the laboratory method as an"experimental laboratory studying genetically andtheoretically the institutions and processes of our eco-nomic organization and practically [applying] the newinsights for the continued betterment of our businesspractise" (1927b, p. 400).

Another emphasis in Gay's early thinking aboutbusiness training was the role of historical study. Cer-tainly here his training under the Historical school wasinfluential. The following reflections were jotted downin Gay's personal journal in 1910 shortly after theSchool opened.

For most business men do not know enough historyto make analogies, those who do, know enough tomake analogies. . . . Some influence of the histor-ical method in spirit. Gaining of perspective, real-ization of changing character of institutions appar-ently stable . . . sense of proportion . . . relationto principles . . . realization of complexity and in-terrelations and their modification of too rigid andsimple standards of judgement.

Though these notes are only fragments of Gay's think-ing on the matter, they indicate the importance he at-tributed to historical study in a business school. Thereinlay the foundation of the case method at the HarvardBusiness School. As Harvard business historian AlfredChandler recently observed, "Don't forget, the heartof this school's curriculum has always been the casestudy, and the case study is precisely what a historiandoes, what a historian is trained to do" (Kantrow 1986,p. 82).

Research in Marketing

Gay's training as an economic historian probably in-fluenced his views on research methodology even morethan those on pedagogy. Much of that methodologicalperspective is described in the preceding section. Thefirst clear example of its application to the field ofmarketing, however, was probably the Bureau ofBusiness Research. The Bureau was formed in 1911with the financial assistance and urging of Arch W.Shaw.

In 1911 Gay remarked to Shaw, "What is neededis a quantitative measurement for the marketing sideof distribution," to which Shaw replied in writing, "Iwish to give for use in this School a fund which shallbe applied for the purpose of investigation of businessproblems, primarily for the problem of distribution ofproducts" (Cruikshank 1987, p. 59). The result ofShaw's initiative was the establishment of the Bureauof Business Research under the direction of staffmembers of the Business School.

The first director of the Bureau was Seldin O.Martin and the first studies carried out were of theshoe industry. As Martin explained (1916, p. 266):

108/Journal of Marketing, January 1990

The field of marketing seemed especially promisingfor research. It has apparently received less scientificattention than production in the field of manufactur-ing at least. Why was there such a variety of methodsof selling and in channels of distribution? The con-crete fact that from one-fourth to one-half of the retailselling price of an article is consumed in getting thearticle from the producer to the consumer seemed ofitself worthy of study without prejudice for or againstthe existing order.

In the more industrialized economy of the easternUnited States, the distribution or marketing problemsbeing studied were different from those of the Mid-west. Whereas agriculture provided most of the sub-ject matter for research on marketing problems at theUniversity of Wisconsin, retailing and manufacturingwere the focus of similar work at Harvard. Hence,studies of the shoe industry were the first to be carriedout and were followed by the study of grocery retail-ing. Following from this research, classroom discus-sion in marketing courses often centered on such top-ics as the department store, retailers' work and methods,and marketing problems as factors in industrial de-velopment.

The problems studied at Harvard were also dif-ferent from those studied at Wisconsin in that theywere the problems faced by individual marketingmanagers. In Arch W. Shaw's words, they were con-cerned with the "how to" of marketing. Marketingscholars at Wisconsin tended to be more concernedwith whether the entire system was working "prop-erly." At Harvard the emphasis was on the marketingpolicies of business firms.

In commenting on the research being carried outby the Bureau, Gay drew a parallel between the re-search methodology of the School and its pedagogy(1912a, p. 1215-17):

There are laboratories for the natural sciences bothpure and applied; there are agricultural experimentstations for the fanner; why not a laboratory for busi-ness? The primary object of this research is the de-velopment of instruction in the school. But it shouldalso give to the business man a partial basis forjudgement in meeting his particular problems.

This use of an inductive, historical method was notconfined to the Bureau of Business Research, though.One of the earliest student research papers to applythe historical approach was one that identified the ba-sic functions of marketing.

Basic Functions of Marketing

The concept of "marketing functions" has been hailedas one of the most significant theoretical develop-ments of early contemporary marketing thought (Huntand Goolsby 1988). Indeed, it has been compared withthe discovery of atomic theory (Converse 1945, p. 19).There is some consensus that Arch W. Shaw origi-nated the functional approach in his 1912 article, "Some

Problems in Market Distribution (Converse 1945, p. 18;Faria 1983, p. 162; Hunt and Goolsby 1988, p. 36).Shaw used the term "functions" to refer to acts orservices performed by middlemen (1912, p. 731). Indescribing these as "general" functions, Shaw clearlyhad in mind that they were universal, that the perfor-mance of such functions was a principle or law-likegeneralization of marketing. To study such marketingproblems, Shaw advocated what he called the "lab-oratory method," which included the use of obser-vation, statistics, comparison, and an historical per-spective (1912, p. 754). The product of such a scientificmethod, in Shaw's view, would be general principles,exemplified by the functions of middlemen.

On the surface Shaw's 1912 statement of market-ing functions appears to be a series of simple asser-tions. In fact, Shaw had used the laboratory methodin the form of a historical, statistical study of the roleof merchants in the British economy. The findings ofthat study led to the writing of "Some Problems inMarket Distribution." As a student of Gay's in 1910,Shaw undertook a research project that led directly tohis seminal 1912 article. Shaw (1950) described thatsequence of events in the following way:

Dean Gay of Harvard had the knack of challengingthe energies of students. In one of his lectures on theeconomic history of England he put special emphasison the contribution of the merchant in the extensionof the British economy both at home and around theworld. The emphasis to me was, in effect, a chal-lenge to trace the development of distribution stageby stage starting with the role of the British merchantas the handicraft period came to a close. . . . So itseemed of significance also to trace through the func-tions supplementing those of the merchant, which to-gether with his functions made up the compound ofthe British economy and then to search for some sim-ple concept by means of which these functions wouldfall naturally into definite classifications and theirinterdependence disclosed.

At about the same time as Shaw's 1912 article waspublished. Gay presented an address to the AmericanHistorical Association in which he stated (1912b, p. 7):

One of the most interesting problems which the his-torian of domestic trade will face is that of the or-ganization of the domestic market, and with this goesthe study of the middleman, the morphology of themerchant. . . . It is of importance to know how thisorthodox system of market distribution came into ex-istence, what needs it met, how far and in what in-dustries those needs have persisted. We ought to knowmore definitely what has been the evolution of themerchant and his various functions.

Gay's research agenda apparently had been acceptedby Shaw, as was evident in the latter's description ofthe evolution of distribution in England and in hisseminal article on the basic functions of marketing.

Gay's use of the term "morphology" in his ad-dress is especially interesting as it reflects a tendencyto anthropomorphize the phenomena of economics, a

Early Development of the Philosophy of Marketing Thought / 109

tendency very characteristic of the German Historicalschool. For example, in his lecture notes on the His-torical school, Gay often referred to their "organicconception of society" (undated). In fact, WilhelmRoscher referred to the historical method as yieldingthe anatomy and physiology of the economy (1878,p. I l l ) :

Our aim is simply to describe man's economic natureand economic wants, to investigate the laws and thecharacter of the institutions which are adapted to thesatisfaction of these wants, and the greater or lessamount of success by which they have been attended.Our task is, therefore, so to speak, the anatomy andphysiology of social or national economy.

But for the last sentence, that quotation could haveappeared in any modem-day marketing text. Simi-larly, Gay saw the task of marketing scholars to bethe description of the morphology of the merchant.Shaw's contribution in that area was the basic func-tions of middlemen.

ConclusionDuring the early part of the twentieth century, whenmarketing thought began to emerge in its contempo-

rary form. North American economics was dividedfairly clearly into neoclassical and institutional schoolsof thought (Amdt 1981, p. 38). Neoclassical econom-ics was the offspring of English classical economics.Institutionalism has been traced to the German His-torical school of economics (Dorfman 1955; Myles1956).

The German Historical school developed a partic-ular version of a positivistic philosophy of science.Their approach to economics might well be consid-ered a paradigm or a research tradition. That researchtradition was an inductive-statistical version of posi-tivism. It combined the exploratory, descriptive, pro-cess orientation of nineteenth century German Ideal-ism with a faith in the objectivity of facts and a concemwith problem solving. Together, these intellectualthreads were woven into a relatively sophisticated vi-sion of science, one that was used by scholars at theUniversity of Wisconsin and at Harvard to intellec-tualize marketing practice.

The courses taught and literature written by manyof the earliest marketing scholars at the University ofWisconsin and the Harvard Business School reflected

FIGURE 1The Intellectual Genealogy of Marketing

JENA(1861-78)Hiidebrand

JOHN HOPKINSUNIVERSITY

R.T. Ely *f—W.A.Scott

— H.C. Taylor *

HALLE( -1915)J. Conrad

-WISCONSIN

- S.E. Sparling *- B. H. Hibbard *

-J.R. Contimons

ROYAL STATS.BUREAU

E. Engel

HEIDELBERG LEIPZIG BERLIN(1865-98) (1848-94) (-1917) (1882-1917)K. Knies W. Roscher A. Wagner G. Schmoller

H.C. Adams * •

MICHIGAN

E.D.Jones *

S. Litman *• David Kinley * — i

• G.M. Fisk * I

F.W. Taussig *E.F. Gay *

HARVARD

R.S. Butler-

ILLINOIS

— P.H. NystromPG. Holden

— T. Macklin— H.H. Comish -'— F. L. Vaughan •

IP.D. Converse

NEW YORK

H.E. Agnew

M.B. Hammond '

J.E. Hagerty *

OHIO STATE

H.H. Maynard -T.N. Beckman -'

P.T Cherington

W.C. Weidler— L.D.H. Weld

NORTHWESTERNI

F.E. ClarkP.W. Ivey

A.W. ShawM.T. Copeland

H.R. Tosdal *M.P McNair

* Studied in Germany.

1 1 0 / Journal of Marketing, January 1990

the philosophic assumptions and ideals we have de-scribed. This evidence, combined with the fact thatmany of the early marketing scholars actually studiedin Germany under the Historical school or underAmerican economists who had studied there and whohad adopted that philosophic position, would be enoughto suggest that the German Historical school provideda philosophic foundation for many of our early mar-keting scholars (Figure 1). In addition, several schol-ars clearly identified with the field of marketing, aswell as economists with a major interest in marketing,explicitly acknowledged that the German Historicalschool influenced their thinking.^

We do not suggest that scholars at these two in-stitutions were not influenced by other individuals orideas not associated with the Historical school. TheProgressive Movement and the relatively large Ger-

^We speculate that marketing courses may actually have been of-fered in Germany before those offered at American institutions aroundthe tum of the century. A report sent to Benjamin Hibbard at theUniversity of Wisconsin from the American Consulate-General in Berlinindicates that courses in agricultural marketing were offered as earlyas 1912 and possibly earlier (Thakara 1913). A course description inthe 1912/13 catalogue for the University of Berlin read (Thakara 1913,p. 5):

General course in business management. Includes credit,competition, speculation, the methods and psychology ofadvertising, selling methods and organization tariff tech-

man population in Wisconsin at the tum of the centuryprovided a receptive environment for Ely's German-inspired institutionalism. Also, the relatively well-de-veloped doctrine of scientific management, togetherwith the popular philosophic movement of Pragma-tism at Harvard, undoubtedly reinforced the philoso-phy followed by Taussig and especially by Gay. Theextent of other such influences and the nature ofphilosophic underpinnings at other institutions in NorthAmerica are topics for further research. We examineonly the major sources of philosophic influence at thetwo recognized centers of early development of mar-keting thought.

Many marketing scholars today believe that thediscipline only recently has become aware of its un-derlying philosophy of science and, hence, to debatethe status of marketing as a science. Most date thebeginning of this discussion to Converse's 1945 ar-ticle. However, we now can see more clearly that theearliest scholars of this century believed marketingcould be developed into a science—one based largelyon the philosophy of the German Historical school.

nique. Organization of commercial establishments in par-ticular branches. The grain trade and the marketing of grain.

The report concluded, ". . . i n most, if not all, of the universitiesthere are opportunities for the study of various phases of economicsbearing in a broad way on the subject of marketing" (Thakara 1913,p. 2).

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