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Three prevailing winds in business education may be converging to create a perfect storm—one that threatens the financial security of many U.S. business schools. by D. Michael Fields StPerfectorm I n the real-life story that inspired the film "The Perfect Storm," a com- mercial fishing vessel is placed in catastrophic danger when three signifi- cant, yet unrelated, meteorological events converge at sea. This scenario is eerily reminiscent of what we see happening in management educa- tion. U.S. business schools are facing some troublesome trends on three different fronts: the doctoral shortage, endowment inflation, and state funding decreases. Each presents its own substantial administrative challenges, but together they are forming management education's own "perfect storm." The consequences of the storm may be positive or negative, depending on how school administrators choose to react. But the result of its onslaught may have many colleges re-examining, or completely revising, their primary missions. Front No. 1: The Doctoral Shortage AAC SB International has been warning of the impending shortage of doctoral business faculty for several years. In 2002, its Management Education Task Force issued an ominous report, "Management Education at Risk," and in 2003, its Doctoral Faculty Commission (DFC) issued its findings in "Sustaining Scholarship in Business Schools." The DFC found that the number of business doctoral degrees conferred in the U.S. during the second half of the 1990s declined considerably in compari- son to those conferred in the first half. It projected that the shortage would only worsen. In coming years, demand for management education will increase just as supply will be decreasing due to shifting demographics, curricular changes, and financial cutbacks at business schools throughout the country. Although the total number of U.S. doctorates conferred in all subjects has decreased 5 percent since 1998, most areas—such as the humanities and life sci- ences—have experienced a recovery in recent years, according to the National Opinion Research Center. Since the early 1990s, however, the number of doc- torates conferred in business decreased more than 19 percent. It has fallen to 1,035 business doctoral degrees conferred in 2003 from 1,281 in 1993. If the trend continues, and most believe it will, management education will be faced with even greater shortages of doctorally qualified faculty. The DFC predicts that the supply of business Ph.D.s will trail demand by 1,142 in 2007 and 2,419 in 2012. If more things go right than wrong, the DFC notes that the shortage could be as few as 21 in 2007 and 334 in 2012. But in a worst- 34 BizEd JANUARY/FEBRUARY 2006