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The school was established in 1908. Initially established by the College of Humanities, it gained independent status in 1910 and became an independent administrative unit in 1913. The first dean was the historian Edwin Francis Gay (1867–1946). Yogev (2001) explained the original concept:
 
This School of Business and Public Administration was originally conceived as a diplomatic and government service school based on the French Academy of Political Science. The goal is a higher education institution that offers a Master of Arts degree in the humanities field with a major in business. In the course discussion, it is recommended to focus on specific business topics such as banking and railways… Professor Lowell said that the school will train qualified public managers that the government has to hire, so as to build a better public management institution… Harvard is opening a new path to educate young people to pursue business careers, just as its medical school trains doctors and the law department trains lawyers.
The business school took the lead in developing the case teaching method, drawing inspiration from this method of Harvard law education. Cases are usually descriptions of real events in the organization. Students are positioned as managers and face problems they need to analyze and provide advice.