The decades around the turn of the nineteenth century were years of rapid industrial expansion in Sweden, which in turn led to a need for trained managers and staff. Swedish industry and commerce were quick to recognize the importance of specialized education in business practices, and the Stockholm School of Economics Association was thus formed in 1906 for the express purpose of establishing a School of Business in Stockholm based on the model of schools established in North America and elsewhere in Europe.

Three years later (in 1909) the Stockholm School of Economics opened its doors to its first 110 students. This was possible thanks to the involvement of influential business leaders (K.A. Wallenberg, Olof A. Söderberg and Joseph Nachmanson among others), support from the City of Stockholm, government funding and donations from private endowments. The original course of study was for two years. The School was located on Brunkebergstorg in central Stockholm in a commercial building known as Brunkebergs hotell.