Why study the commercial and financial decisions of the past? “Quite simply, adding historical context to students’ exploration of management helps them better understand the challenges of business leaders today,” says Professor Cheryl McWatters of the Telfer School of Management.
Students of business history appreciate that the business problems of the present day did not begin in the 21st century. Performance incentives, for example, are not a recent invention. Since the early days of marine trade, in order to be trusted with cargos of goods, traders, their officers, and crews had contracts setting out, amongst other things, their salary and “incentives” based on what and where they could sell; all of which was built into the deal, explains Dr. McWatters, who researches commercial and financial history as the Father Edgar Thivierge Chair in Business History (cross-appointed to the Department of History). “The problems and the decision processes seen in earlier eras of commerce — why did people invest, why did they not invest, how did they evaluate risk — were not so different from those evident today.”
Over the winter term recently ended, MBA students in Dr. McWatters’s electives on the history of business had an opportunity to discover that for themselves. They explored the emergence of capitalism, and in particular the role of entrepreneurs, government, financiers, and market players. In a second course, they examined the origins and development of business in Canada with a focus on the contextual factors that have shaped the economy and environment. The students came to appreciate that earlier business practices, trade networks, and credit networks that made commerce happen were often highly sophisticated.
“The class enabled me to not only enhance my knowledge of business, but develop a number of transferable skills—critical thinking skills, research skills, and writing skills,” says Susana Lee, a student in the joint MBA/JD program.” Having the opportunity to debate the ethics of business decisions in the past in light of their societal impacts was also particularly valuable, she added. “Professor McWatters encouraged us to continuously question and re-examine some of our assumptions about the past.”
Dr. McWatters’s history courses are complimentary with other courses in the MBA curriculum designed to encourage students to examine the ethical issues buried in case problems, says MBA Program Director Michael Miles. They provide “tremendous context to explain why we struggle with some of the things we struggle with today.” He visited Dr. McWatters’s classes on a couple of occasions and came away “very impressed” with the high calibre of student presentations and “lively and informed discussions.” “The students recognized that knowing how business practices developed and being able to assess and debate their implications, good or bad, is tremendously valuable in a global business context.”
Dr. McWatters encourages her students to see how business people in the past made decisions based on the information that was in front of them. “That’s a different approach than telling people, ‘if you don’t know history, you will repeat the same mistakes.’ We may not think that they made the right decision, but they did make choices, and we can try to reconstruct and assess their reasoning.”
By assessing and synthesizing the evidence in this way, the students strengthen their ability to make informed judgments about strategic choices and their consequences, Dr. McWatters says. “All this helps them deal more effectively with the changing organisational environment that they will face as business leaders.”
Dr. McWatters recently co-authored, with Yannick Lemarchand, “Credit and Debt” (2013), part of the series Oxford Bibliographies in Atlantic History. Read more about Cheryl McWatters’ research.