What's happening in business schools?

Public Interest, Fall, 1999 by Marianne M. Jennings

Over the past two years, stories of questionable - at times criminal - business activity have dominated the business press: Cendant's creative earnings, Archer Daniels Midland's price-fixing, Bankers Trust's leveraged derivatives and use of customer funds, and Long-Term Capital's high-risk bets with others' funds, to name a few. Rite-Aid and Wal-Mart have been profiled for their peculiar charge-back policies that leave their suppliers confused and temporarily or permanently underpaid. Sears Roebuck's disregard for bankruptcy laws, debtors' rights, and creditor priorities led to a $63 million fine - the largest in the history of U.S. bankruptcy law.

The sheer magnitude of the dollars and number of missteps would seem to prompt the question: What's going on in business? And while business misconduct gallops along at a Triple Crown pace, business academicians stand on the sidelines, wringing their hands and clicking their tongues in exasperation at the inherent wickedness of business. Instead of helping to train ethical businessmen, business faculty attack the very foundations of business and the capitalist system. Many business students abandon business altogether, changing their majors to liberal arts.

Business in the academy has never quite overcome its poor reputation. That liberal-arts schools regarded business with disdain was not surprising. But business schools at the undergraduate level were able to chug along, turning out successful majors, bringing in private dollars, and even attracting attention with scholarly research in economics and finance. For a long time, they were tolerated as tacky but harmless. Yet it was unlikely they would remain untainted by the rise of multiculturalism, political correctness, radical feminism, and postmodernism on the nation's college campuses. Indeed, these anticapitalist notions have penetrated the hearts and minds of business students and the fields of debit, credit, risk, and macroeconomics. The result has been an ongoing transformation of the business curriculum with the full participation and blessing of business students.

The consequence of this reformation in the curriculum has been a disconnect between what business students should know and what business students are actually taught. The fundamental principles of capitalism are derided, and students emerge from business schools with odd notions about everything from business ethics to the role of business in society. These trends in the curriculum may have, in part, contributed to the business malpractice noted in my opening paragraphs. Business students are offered little of intellectual or moral substance under the current curriculum - no texts or programs that help them understand the role of business in society or their personal role in its success as managers with integrity.

Business with a new face

The American Assembly of Collegiate Schools of Business (AACSB) is the national accrediting body for college and university business schools. Trying to escape their embarrassing reputation of being the least scholarly units on campus, business schools created this body to be sure that business-school degrees carried sufficient depth and rigor.

The AACSB then regulated business schools with a series of incomprehensible self-study guides on everything from faculty recruitment and retention to student diversity to mission statements to muddled curricula. When one thinks of business-school subject areas, the topics of accounting, finance, management, marketing, and business law come to mind. But the Preamble to the AACSB guidelines sets a different tone. Businesses, it says, face four significant challenges: globalization, conflicting values, changing technology in products and processes, and demographic diversity among the employees and customers.

The Preamble goes on to add, "In this environment, management education must prepare students to contribute to their organizations and the larger society and to grow personally and professionally throughout their careers." The AACSB guidelines then require all business schools to have a holy grail quest with a "clear and published mission that is subjected to periodic review and revised as needed." The guidelines offer advice on this pilgrimage only to the extent of adding that the mission statement must be derived after "the viewpoints of various constituencies have been considered," and must emphasize "the achievement of high quality as one of its educational objectives." High quality is achieved, according to the AACSB, through specific requirements in the areas of faculty, curriculum, instructional methods, students, and intellectual contributions.

Diversity not excellence

The AACSB standard for the recruitment of faculty members includes the following: "The school should demonstrate continuous efforts to achieve demographic diversity in its faculty." The words "merit" or "scholarship" are omitted in the faculty-selection criteria in favor of "diversity."

Both undergraduate and MBA programs in AACSB schools of business must emphasize the influence and ethical aspects of political, social, legal, regulatory, environmental, and technological issues, and the impact of demographic diversity on organizations. Only as a subset of these areas do the guidelines mention accounting, behavioral science, economics, mathematics, and statistics. Only at the MBA level are the topics of financial reporting, market analysis, and human behavior in organizations mentioned. The MBA curriculum is allowed to cover the production and distribution of goods and services in the real world. But the undergraduate business degree looks like a de facto liberal-arts degree with math and statistics slipped in for window dressing.