Issue link: https://www.e-digitaleditions.com/i/58915
Your Turn B-School Critics Miss the Mark Management education, a decidedly American innovation, is secure in its success. We need only consider the number of businesses and nonprof- its run by graduates of premier busi- ness schools to know that business schools offer a valuable product. But if this is true, why has there been such an outpouring of self- criticism from business educators? Warren Bennis and James O'Toole, Jeffrey Pfeffer and Chris- tina Fong, Harry DeAngelo and Linda DeAngelo, Jerry Zimmer- man—all have decried the state of business schools today. At the heart of their criticism lies the implication that business schools are completely to blame for the problems they face, that declining enrollments and other trends are the direct result of business schools' failure to meet the needs of their market. Although their criticisms are not altogether groundless, I could not disagree more. Business schools are well-advised to look for ways to improve their programs; but the inferences these critics make, I believe, are unfounded. Yes, business schools are facing difficult market realities. Applica- tions to full-time and executive MBA programs have declined since September 11, 2001. Even top-tier schools are reporting that the num- ber of applications to their full-time programs is down 30 percent to 50 percent. Class sizes, ratios of sell- ing-to-sticker price, and standard measures of student quality are fall- ing as individual schools adapt to shrinking demand. Business schools also must cope with a decline in 56 BizEd JULY/AUGUST 2006 by Stuart Greenbaum the number of business doctorates, which has been steadily decreasing since 1992. Faculty compensation has been arrested, and budgets are tight. Clearly, the industry has hit a soft spot, and no one seems com- fortable in predicting its duration. Criticism from the professoriate has come in the wake of the wan- ing fortunes of business schools. One faction, voiced by Bennis and O'Toole, has pronounced the industry irrelevant because profes- sors' proximity to "real world" practice has been sacrificed for scholarship. Pfeffer and Fong represent the view that manage- ment educators have lost their souls and that altruistic values have been supplanted by a "show-me- the-money" mindset among our students. This criticism resonates especially well with those who believe the moral turpitude of the Fastows, Kozlowskis, Rigas, and Scrushys of the world somehow tie back to the curricular shortcomings of business schools. Finally, the DeAngelos and Zim- merman offer yet another perspec- tive. They attribute the current funk in management education to a communal loss of scholarly focus. Schools' fixation upon MBA program rankings, they argue, has prompted the diversion of scarce resources away from scholarly research. Implicit in much of this criticism is the idea that the current pre- dicament of many business schools stems from their own refusal to adhere to academic ideals and adapt to changing times. However, link- ing this criticism of business schools to the decline in demand for full- time and executive MBA programs seems strained. What these critics fail to consider is that many exog- enous factors have been at least partially to blame for the decline in enrollment: Increased competition. American MBA programs are challenged with the plethora of options avail- able to prospective students. MBA programs are proliferating in other parts of the world, part-time pro- grams are increasing in popularity, and online programs have proven remarkably alluring. The job market. The demand for management education—and for MBA education in particular—is tightly bound to the conditions of the job market. Generally speak- ing, the more employers are hiring MBAs, the more applications there are to MBA programs. The tougher the job market for MBAs, the fewer applications business schools are likely to see in their admissions offices. Dot-com disasters. The growth of entrepreneurship among U.S. busi- ness schools is a beneficial develop- ment that survived the dot-com bust of 2001. However, during the boom, the movement diverted talent away from business schools' traditional employers. This redirec- tion applied upward pressure on MBA compensation packages and fueled the flow of students to MBA programs of every stripe. With the pricking of the dot- com bubble, equity prices collapsed among the dot-coms and essentially closed the IPO and "deal" markets. The result was a surfeit of invest- ment bankers, devalued equity, and a lack of cash and capital. The demand for consultants evaporated and, not surprisingly, so did the demand for business degrees. In 2000 and 2001, many MBA pro-