BH Questions
1. What is an enterprise and what is Business History? (question not asked up to now)
First of all, we can define enterprise as a central modern institution that acts dynamically, indeed it is able
to break the constraints of the market and of the technology, so that it is able to transform them. Modern
because from the second half of 19th century to today, the years after industrial revolution. Dynamic (able
to break…) Most impo consequence: able to transform them.
But it is impo to remember that this doesn’t mean there were no form of production organization before
industrial revolution and that not all theories consider the firm in this way, for example the neoclassical
ones consider it as a black box.
In light of such definition we can describe BH as a subset of economic history. Bh was born in 1920s in USA,
from 1925 on. The reason behind the emerge of bh in the context of the US is –because big business arose
in Us (second half 19th) –because this subject appeared in Harvard School for the first time (not inside the
historical field) (the rise and spread of the first business schools at the beginning 19th century) . The main
scope of BH is to answer the question: why are some countries rich and other not? So that, thanks to
comparative analysis it is possible to analyse this issue. We have to underline the fact that without
historical perspective it is difficult to understand nowadays’ issues. Its original aim was to investigate
changes in the firm. So that we can say it is a discipline that has flexible boundaries and important
macroeconomic consequences, it is so wide that it’s difficult to have an exhaustive picture of it.
If we talk about the history of this subject, Italian historians has always considered it with suspicion, as
another kind of microhistory.
So that we can say Bh
• Studies the life of enterprise (and the problem inside the industrial sector)
• Focuses on organizational issues and business dynamics so that analyse how each firm growths we
can understand the economic development
• Analyses the links between enterprise and –society-institution-political enviroment-culture….
• Studies the country development trajectories
In light of this consideration, we can adjust the definition of the enterprise. It is one of the fundamental
organizational structure of our society, an economic institution (since it produces and trades good and
services). But we have to take into account that it is also a community of people who produce richness that
goes into the society in form of salary, taxes and so on. But the enterprise is not always a positive actor, but
can cause problems and damages to enviroment, to society but can also affect political choice. To sum up,
the firm can be considered as a paradigm of modern society.
2. Let’s talk about the theories of the firm (not asked yet)
First of all, the main aim of the theories of the firm is to explain how and why a firm grows. Normally, the
theories try to cover this topics: existence, boundaries, organization, firm’s action and performance and
evidence.
The mainstream point of view is the neoclassical synthesis (which group the neoclassical economy and the
Keynesians theories). Neoclassical economy is based on 3 assumptions: people have rational preferences,
individuals maximize their utility and there aren’t information asymmetries.
Before this kind of theories, there was the classical one, whose fathers were Adam Smith and so on for ex.
A very relevant historical issue is the change between classical and neoclassical economy, that is called
marginal revolution. This change is frequently deal from important economist, for example
• William Stanley Jevons: Theory of political economy 1871
• Carl Menger: Principles of economics 1871
• Leon Walras: Element of pure economics 1874-77
To better understand the marginalist approach, we have to say that the firm has a different meaning. It is
only a subject that produces goods to satisfy consumers’ needs. Each firm is autonomous and every firm
transform input into output but taste and needs of consumer are fixed, as well as the technology and the
structure of the market so can the firm can’t influence them but can be influenced by them. In this view,
the firm is like a black box which is influences by external enviroment but in which prices, information and
technology are given and where informational asymmetries don’t exist.
What defines the firm in a unique way is the production function, if you know it you can know also how
