Modern-day business administration as the individual discipline in the field of economics that we know today originated at Handelshochschule Leipzig (Leipzig College of Commerce, HHL) in 1898. So the school is the “cradle of German business administration”. If Germany had not seen the founding of special commercial colleges between 1898 and 1919, the societal and, more importantly, the economic situation would certainly have lead to this discipline being established at the universities.
The term “cradle” refers solely to the fact that the Leipzig-based initiators were the first to bring to life an unprecedented academic institution at the time. The founding fathers had no idea whether their experiment would be successful or end in disaster. In the end though, they were rewarded for their courage since the new institution was accepted.
Soon, the initial skepticism dwindled away in other places as well and more and more people became interested in these programs.
For business schools founded in the early 20th centuries such as St. Gallen (1900), Cologne (1901), Frankfurt (1901) or Berlin (1906), the risk was minimal because they were able to benefit from the experiences of the Leipzig pioneers.
Being one of the first students at Handelshochschule Leipzig, enrolling in April 1898, Eugen Schmalenbach is today considered the founder of business administration in Germany. His scientific work influenced future academics in Germany and abroad more than anybody else before or after him.
When we talk about fixed and proportional costs and how they affect a company when employment changes, these findings, considered self-evident today, go back to the Schmalenbach’s work. He played an important role in the development of the chart of accounts joining financial accounting, cost accounting and short-term profit and loss accounts. His basic teaching is the call for the valuation of business activities in a future-oriented manner because a merchant will give nothing for what once was – an insight which eventually was completely accepted during the economic crisis when it became apparent how worthless unused substance would have to remain.
It may be characteristic that the young Schmalenbach, after spending the first years of his working life in his father’s company, enrolled at the newly founded business school in Leipzig in 1898. After graduating, he started work at Leipzig University, becoming the assistant of renowned German economist Karl Bücher. Following his suggestion, Schmalenbach joined the new business school in Cologne in 1903 where he became a professor in ordinary in 1906. Half a century, almost until his death in 1955, he worked in Cologne. Even when he was forced to resign from teaching during the Nazi period –his wife was Jewish – Schmalenbach continued his work, especially within the framework of the Schmalenbach-Vereinigung (Schmalenbach Society) founded by students and friends in 1932.
More information about Eugen Schmalenbach can be found in the article “Eugen Schmalenbach and the Leipzig School of Commerce” by HHL Dean Prof. Dr. Andreas Pinkwart.
Photo: Schmalenbach-Vereinigung (Schmalenbach Society)