When the Harvard Business School was founded in 1908, the school became the first postgraduate school of business to require an undergraduate degree for admission. A future Harvard president Abbott Lawrence Lowell went on to call it a “great” but “delicate experiment.” Today, the school is indisputably a marriage between its prestige and intellectual pedigree and has been yielded as an institution that not only teaches the fundamentals of business education, but also provides its students an overwhelmingly “unrivalled opportunity”. As Duff McDonald puts it in his book “The Golden Passport: Harvard Business School, the Limits of Capitalism and the Moral Failure of the MBA Elite,” the school has become a “money machine unto itself.”
HBS had even helped the U.S. win World War II. The school was a brand of the military, and helped with statistical work in managing people, materials, getting them to the right place at the right time.
But, to many economists, its transgressions loom larger. For decades now, HBS has provided the ideological foundations for the junk-bond financing in hostile takeovers resulting in the rise of not-so-legitimate chief executives and corporate raiders – all in the left, right and center of a violent collapse. In fact, it has picked up steam in more recent decades starting with the avalanche of corporate accounting scandals of the 2000s; the shocking increase in the pay gap between chief executives and ordinary workers; and even the real estate crash and the ensuing financial crisis.
While the actions of many leaders remain a subject to spirited debate, many out of the most prestigious business schools are credited with extenuating the damage and saving the economy from an even worse catastrophe. Given the large number of business grads in high-ranking executive positions from some of the most prestigious business school, it’s inevitable that many would be ensnared in some sort of global catastrophe.
This raises the question: Do we need our business schools to play a part in helping more people who think about business rediscover a purpose rather than profit?
Business Education is a kind of cash cow
Critics of modern business education have vehement complaints. For instance, the chief executives of the Big Five are card-carrying M.B.A.’s. In recent years, top business schools have shipped more than 40 percent of graduates in to the world of finance. But, with the economy in disarray since 2008, and so many financial firms in the free falls, many educators and analysts are wondering if it is the way business students are taught may have contributed to the most serious economic crisis of the century.
Business school today have become, in many way, scientific and too detached from real world problems. Business grads are given a limited and distorted view of their role – they graduate with a sharp focus on maximizing shareholder value and only a limited understanding of ethical and social consideration essential to leadership. Many of these shortcomings have left high-ranking executives inadequately prepared to make decisions that might have helped mitigate the financial turmoil.
As a matter of fact, employers and headhunters also question the value of a management degree. What’s the point of a graduate degree if at the end of the day business schools are only minting morally detached, single-minded fortune seekers.
Back in 1950s, a study commissioned by the Ford and Carnegie Foundations noted that mediocre faculty and curriculum which narrowly focused on vocational skills has greatly added to the imbalances on campuses and in the economy.
In some of the top business schools, changes are under way in courses and curriculums. Business graduates are taught to be long-term economic stewards rather than agents who maximize the shareholder wealth.
Yet, employers are questioning the value of an M.B.A degree. A research project by two Harvard professors published in 2008 found that employers valued business graduates’ ability to think through complex business problems. And so, a growing number of business schools are now finding valuable lessons from the economic crisis. As a matter of fact, big schools like Harvard Business School and The Wharton Business School are now considering to make their courses more global and put more emphasis on leadership skills. More so, Harvard is even assembling cases based on the events of the last decade, including issues involving accounting practices, for instance, the JPMorgan Chase’s acquisition of Bear Stearns.
In the year 2006, Yale School of Management introduced cases based on the financial crisis on their curriculum to offer interdisciplinary perspectives on complex problems.
The Aspen Institute, meanwhile, has developed a curriculum in conjunction with the Yale School of Management that is aimed at teaching students how to act upon their values at work. About 55 business schools, including Stanford, Northwestern and MIT are using a part of it in pilot programs. Moving along, the Aspen Institute also produces an annual report ranking business school on how well they integrate social and environmental issues into curriculums.
At the Stern School of Business of New York University, professors recently wrote papers analyzing the economic crisis and offering policy recommendations that have been now combined in a book.
Management is a profession much like law or medicine. Accountants, doctors and lawyers are not immune to wrongdoing or poor judgement, and they have long been taking certification exams and promising to act ethically.
It requires a code of conduct as well as continuing education. Some of the best known Business schools worldwide has now promote standards for sustainable business practices, with a renewed focus on the social value of management.