Are MBAs Bad for Business? The Economist

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http://www.economist.com/opinion/displayStory.cfm?story_id=3667863
School for scandal

Feb 17th 2005
From The Economist print edition


Is the MBA responsible for moral turpitude at the top?

SEVERAL of the corporate scandals that took place in the early years of this decade are currently being replayed in courtrooms from New York to Alabama. The trials of top executives at HealthSouth, Tyco International and WorldCom are reminding the public how unethical was the behaviour of some of the nation's top managers only a few short years ago.

The finger of blame for this behaviour is sometimes pointed at the MBA, the degree offered by business schools from Harvard to Hawaii. Perhaps this is not as odd as it sounds. After all, MBAs lay as thick on the ground at Enron as managerial hubris, and disinterested outsiders are not alone in asking whether there might have been some connection.


In an extraordinary mea culpa, Sumantra Ghoshal, a respected business academic who died last year, argued in a paper to be published shortly that the way MBA students are taught has freed them “from any sense of moral responsibility” for what they subsequently do in their business lives. This, he believed (and other respected academics, such as Jeffrey Pfeffer of Stanford, are carrying his argument forward), is because management studies have been hi-jacked intellectually by the dismal science of economics.

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AND

Business schools

Bad for business?

Business schools stand accused of being responsible for much that is wrong with corporate management today


http://www.economist.com/opinion/displayStory.cfm?Story_id=3672752

THIS is the time of year when MBA students run not from classroom to classroom but from interview to interview as they try to get the high-paying job that they expect their qualification to deliver. It seems that the demand for MBAs is now strong again, after four decidedly weak years. “The big eaters of MBA talent have regained their hiring appetite,” says Ken Keeley, director of career opportunities at Carnegie Mellon's Tepper School of Business in Pittsburgh. At New York's Stern School, close to Wall Street, the number of jobs offered to this year's MBA class by the beginning of this month was double that at the same stage in 2004. Better still, average starting salaries in investment banking for Stern graduates were—at $95,000—up by $10,000 from a year ago.

But just as the market value of an MBA is reviving, its academic credibility is being attacked. In a forthcoming article to be published posthumously in Academy of Management Learning & Education, Sumantra Ghoshal argues that many of the “worst excesses of recent management practices have their roots in a set of ideas that have emerged from business-school academics over the last 30 years.”

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Mr Ghoshal was just such an academic, a professor at London Business School until he died 11 months ago at the age of 55. He believed that the desire of business schools to make the study of business a science, “a kind of physics”, has led them increasingly to base their management theories on some of the more dismal assumptions and techniques developed by economists, particularly by the “Chicago School” and its intellectual leader, Milton Friedman. These include supposedly simplistic models of individual human behaviour (rational, self-interested, utility-maximising homo economicus) and of corporate behaviour (the notion that the goal of a firm should be to maximise shareholder value). These assumptions, though in Mr Ghoshal's view badly flawed, were simple enough to allow business-school academics to develop grand theories of management supported by elegant mathematical models and empirical analysis that appeared scientific, and thus earned their subject academic respectability, but were, in fact, a pretence of knowledge where there was none.


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At least they admit that they are taught to "compete" with regulators. Now we know where the rock is to look under!!

[stopbush]

1. You skipped the part where The Economist says "No, they're not bad

for business."

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2. Huh? Did I cut and paste wrong?

[stopbush]

3. Yes. Read the rest of the article. They pretty much set up the

question and then answer it.

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4. I read this stuff for the information inside. I don't drink to Kool Aid at

the bottom. Now I am glad I have the words: "taught to compete with regulators". Them is fighting words!!