Do Business Schools Need to go Back to School?

In addition to introducing the concept of social value into the curriculum in various innovative ways to counter-balance the shareholder value principle, business schools need to strike an academic balance between utilitarian objectives and critical, out-of-the box thinking.  What this crisis has shown is that MBA education as a post-graduate degree has had very little, if any, self-doubt in its curriculum.  Of course too much self-doubt leads to indecisiveness and inaction.  But unchecked and self-righteous certitude can bring us down as it lacks a critical balance, which was amply in evidence during this crisis.

There was almost religious belief in the market’s ability to deliver solutions to complex economic problems.  Recent financial innovations such as synthetic securitization, credit default swaps, and managerial remuneration packages were believed to be universally applicable scientific solutions to the problems of finance.  Business school teaching needs to examine the limits of what the market economy can deliver to all stakeholders and reflect this in research and engagement with business.

In the eyes of the society at large, bankers with large bonuses who brought down their banks and caused a historical economic crisis are currently being scapegoated for the world’s current financial and economic problems. Though this seems unfair, it is not, however, unfair to ask the question whether it was a lack of critiquing of the claims of modern finance and management that played a major role in the current crisis.

It is not incorrect to say that most business school teaching instills certitude and is prescriptive in most subjects from strategy to finance.  In many ways this mode of teaching is suited to the vocational aspects of MBA education and serves the interests of all MBA constituencies well.  Of course the managerial relevance of MBA teaching is important and the MBA is not a research degree that leads to an academic career.  Nevertheless there is a tendency to cloud business school teaching with scientific discourse mostly borrowed from physical sciences.

However, most business school subjects have affinity with humanities subjects rather than science, where knowledge is usually treated as historical and contingent.  Therefore the so-called Faustian pact of business schools with self-interest can and should be broken by introducing to the curriculum subjects like history of science and history of business.  Also the emphasis on markets needs to be balanced with considerations about the broader social context of business.

Social responsibility, ecological concerns and social innovation are already on many business school curricula but more investment in these areas is needed.  Method of thinking is equally important.  Business schools should introduce critical thinking on the curriculum for students to be aware that what they learn may not be applicable to all situations at all times.  Students should be encouraged to apply critical thinking on all courses and must be made aware of the normative nature of most social science based courses to which MBA courses belong.  Students should be intellectually equipped to deal with complications rather than trained to simplify complex business issues.

One such simplification that has dominated most MBA teaching is the assumption that shareholder value is something that is achievable and can solve the problems of economic efficiency, prosperity and growth all at once.  We have seen ample examples of corporate misbehaviour and excessive remuneration in banking that encouraged risky behaviour justified by shareholder value rhetoric.  Business school teaching that is based on shareholder value maximization can easily turn it into an ideology where truth becomes a victim of good intentions.  This crisis has shown that the vocational and professional priorities on MBA courses that form the basis of educational objectives need to balanced with critical and reflective thinking habits.