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GFME: Global Foundation for Management Education


AACSB International


Are Business Schools to Blame for the Current Economic Crisis?

Eric Cornuel: CEO& Director General, EFMD

Image: Eric CornuelAre business schools to blame for the current economic crisis? Have they taught techniques, methods, and an approach to business that has resulted in irresponsible and dangerous behaviour? I believe they have not.

As Gerard van Schaik, Honorary President of EFMD, has pointed out, the idea that business schools inevitably produce managers doomed to create the type of mess we are now in is "nonsense".

Much of what has happened in the recent past, he states is related to dishonesty and immorality. Business schools cannot be blamed for unknowingly having trained and educated a limited number of crooks among tens of thousands of honest, incorruptible managers.

The excesses that we saw (and still see in some quarters) in management behaviour, such as large scale-fraud, environmental crime, exhibitionistic remuneration and so on are not the product of management education but are a part of the business community itself. Pride and greed are everywhere. They are part of human nature.

However, it is true that there would be little harm in business schools examining what they do and what they have done.

As Gerard van Schaik also suggests, they could assess whether or not they are sometimes inclined to too easily accept the business fads and fashions of the day. Indeed, they may even wonder if they actually help develop them further, without properly researching where it might ultimately lead. Taking the recent past, one can think of such trends as shareholder focus, reward systems, financial product development and others.

Certainly business schools must try harder to teach a responsible, ethical message. Bankers were gambling with money that was not theirs. We must spread the word of responsible business.

Despite common opinion that schools have only introduced components on ethics and values recently in response to corporate scandals, these issues have been covered in MBA programmes for decades.

But business schools can do only so much, and ethical standards must be taught earlier. Standards and respect have to be taught from kindergarten. If a four-year-old does not respect principles, there is not much a business school can do later. It is hard to change the embedded values in someone who is 25 or 35.

Business schools should question their methods for preparing participants to become innovators, leaders, creators and so on. In the context of a free economy, business schools have a crucial role to play in optimising the way institutions private as well as public- are managed, with the objective of ensuring the best possible level of growth, and thereby, we all hope, ensuring a dramatic improvement in peoples' lives.

The last two decades have seen the extension of the World Trade Organisation from 90 to 153 members and the greater integration of global markets, allowing goods, services, capital and technologies to spread across the world.
For less-developed countries this period has also led to a reduction in poverty, allowing better lifestyles, especially in Asia.

However, these dramatic improvements should not hide deep problems and injustices that remain, or the massive problems of poverty, ignorance and disease that many countries still face. Almost 40 per cent of the world's population lives on less than two dollars a day, and a child dies every 15 seconds due to lack of access to safe water and adequate sanitation. Since the beginning of the global era, we have witnessed a much stronger polarisation of wealth and economic growth, not only among countries, but nations.

Within this framework, what sort of intellectual contribution are business schools able to make to private and public decision makers – and more generally, to society as a whole?
Management education has an important role to play at least two levels.

Firstly, the techniques and methods of management that are taught, and the research underlying them, should lead to a general improvement in managerial efforts and subsequently to optimised economic growth.

Secondly, the "soft" elements increasingly integrated in curricula should raise awareness of the role of managers in society in creating more social cohesion inside and outside private, public and not-for-profit organisations.

The economic problems we are facing today have created a situation in which companies and organisations generally try to limit their expenditures. This implies restrictions on the number of managers being employed, and a more limited utilisation of outside consultants. Alongside this, tasks have become increasingly complex and individuals have to cope in increasing stressful situations, not knowing which principles (or leaders) they can turn to.

It is precisely this type of challenge that our schools should be trying to overcome, so that they have something to contribute to firms’ profitable growth, but also to society as a whole.

The business world is not a "star system". Business leaders should not succumb to this trap, one that can sometimes border on megalomania. We have recently seen the result of this type of behaviour on many occasions in the news.

Similarly, the "shareholder" dimension appears to have become increasingly unsatisfactory for today’s world. It should be replaced by a broader vision of both private and public organisations' responsibilities. Shareholders are important but people tend far too often to neglect other actors like a company's customers, suppliers or staff members – not to forget society and future generations, the environment and much more.

This is yet another area where our management schools owe it to themselves to retake a leadership role, by training managers and executives who are both humble and aware of their responsibilities, in the broadest sense of this term.

All in all, management education institutions should declare themselves willing to undergo a very in-depth change – one that without a doubt will force them to redefine the research they conduct and the educational content of the programmes they teach.