Alfred P. Sloan Foundation

Industry Studies

What is Industry Studies?

The intellectual roots of industry studies can be traced to the economists Adam Smith (1723-1790) and Alfred Marshall (1842-1924), who demonstrated that the scientific foundation of economics and its social effects are enhanced by grounding analysis in the practical experience of industry and in the direct observation of production processes. Modern economics began with Adam Smith’s visit to a pin factory, which helped him explain how the division of labor worked (The Wealth of Nations, Chapter 1). In his preface to Industry and Trade (1919), Alfred Marshall explains that he had a career-long practice of visiting manufacturing plants so that he might be better informed by the experience:

"Nearly half a century has passed since I set myself the task to obtain some insight into industrial problems by obtaining leave to visit one or more representative works in each chief industry.  I tried to get such a knowledge of mechanical technique...as would enable me to understand the resources and the mode of operation of all elementary plants in general use; I sought also to study the relations between technique and the conditions of employment for men and for women."

In Memorials of Alfred Marshall, Arthur Pigou, a former student of Marshall’s, explains why this was important:

“What [Marshall] aimed at in all of this was to get, as it were, the direct feel of the economic world, something more intimate than can be obtained from merely reading descriptions, something that should enable one, with sure instinct, to set things in their true scale of importance, and not to put in the forefront something that is really secondary merely because it presents a curious problem for analysis.”

It is for such reasons we believe that the results of  industry studies research, grounded in observation and integrated with theory and analysis, contribute importantly not only to academic knowledge, but also to the industries studied and to public policy.

Scholars who pursue studies in this tradition come from a wide variety of disciplines such as management, the social sciences, industrial and labor economics, operations research, engineering, law and public policy.  They may focus their attention on particular industries or occupations, or conduct cross-industry analysis.  Whichever may be the case and from whatever disciplinary tradition, industry studies scholars make the kind of personal investment of time that is necessary to learn about the markets, firms, and institutions in the industry or industries they study.  This kind of engagement, which includes close interaction with industry practitioners and often includes direct observation at the plant or firm level, allows industry studies scholars to pursue academic research from a broad and deep basis of understanding about the subject of their analysis.  Its effect is evident in the selection of research questions, the methodologies employed, the nature of related analysis, and/or the interpretation of findings.