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Social Text 22.2 (2004) 67-80
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"The End of Business Schools?"
More Than Meets The Eye
The recessionary malaise that now pervades the senior capitalist economies is manifest in lower rates of capital accumulation and profitability. A first-order consequence is intensified intercountry and interfirm conflict and competition (e.g., within the World Trade Organization and the North American Free Trade Agreement, and between the European Community and the United States regarding steel quotas and genetically modified foods). A second-order consequence is the end of the honeymoon between corporate gurus and the banking, finance, investor, and regulatory communities. Excessive executive compensation and corrupt management practices are now seen as integral to the accumulation crisis. Finally, blame is being laid at the doors of cultural institutions of education and research that helped reproduce the speculative ideology that inspired the high-tech bubble economy of the 1990s.
In keeping with the turbulent times, the cultural reproduction processes for MBAs and accountants are now in a state of flux. Typical of the challenge to the business school's education-for-speculation is a recent article in the Financial Times (FT).1 The author advises that "business schools do not need to do a great deal more to help prevent future Enrons, they need to stop doing a lot of what they are currently doing. ... faculty need to own up to their own role in creating Enrons" (Ghoshal 2003).
Readers are reminded that the indictment extends beyond education, to many of the research "pioneers" of the last decade who contributed to the buccaneering rapacity of the 1990s:2
- agency theory, developed by Michael C. Jensen (Harvard University) and William H. Meckling (University of Rochester), who offered "analytic" support favoring market over state regulation, to curb management (agents) when they violated their fiduciary trust to their principals (investors et al.);
- transaction cost theory, provided by Oliver Williamson (University of California, Berkeley, and Stanford University) and Alfred Chandler (Harvard), who contended that large monopolies of the twentieth century were, and are, "transaction cost" efficient governance regimes (thus rendering antimonopoly regulations superfluous); and
- strategy theory, formulated by Michael Porter (Harvard), who reasserted the identity of rapacious self-interest and the public good. [End Page 67]
Added to these criticisms is a widely cited article by Jeffrey Pfeffer and Christina T. Fong (2002) calling for a "complete re-think" of business education and its institutional approach. Here we examine the elliptical arguments of these two authors, not merely to expose their faulty logic but also to draw attention to the kind of ideological reconfigurations now under way, so that the latter can be effectively combated.
The Pfeffer and Fong Analysis
Few would dispute Pfeffer and Fong's opening proposition that "at first blush, business schools are the success story of late twentieth-century education" (2002, 1). Between 1955-56 and 1997-98, the number of MBA degrees awarded in the United States rose from 3,200 to 102,171 (Zimmerman 2001, 3). At the undergraduate level, the Association to Advance Collegiate Schools of Business International (AACSB, the leading U.S. accreditation agency for business schools) reports that between 1967-68 and 1997-98, degrees awarded increased from 79,074 to 233,119 (AACSB International 2001). As a proportion of all degrees awarded by U.S. universities in 1967-68, business degrees constituted 12.5 percent of all undergraduate degrees, 10 percent of all master's degrees, and 1.9 percent of all doctorates. By 1997-98, these proportions had risen to 19.6 percent, 23.7 percent, and 2.8 percent, respectively.
In 2002, AACSB International reported the membership profile (AACSB 2002) delineated in table 1. Of the members, 427 were accredited business schools: 403 in North America (393 in the United States, 8 in Canada, and 2 in Mexico), 14 in Europe, 4 in Asia, 2 in the Middle East, 2 in Central America, 1 in South America, and 1 in Australia.
Colleges and universities typically obtain accreditation for both graduate and undergraduate degrees; see table 2. A further breakdown of the data...