Were Business Schools to Blame for the Financial Crisis?
The financial crisis in 2008 swept the whole world and its aftermath still affect the stability of global economy, which drives economists to introspect the source of this economic storm. Recently, a debate over whether business school should be blamed for the financial crisis spreads among scholars. Opinions are divided into two camps. Many scholars believe that business school should not become the target of scold. Usually, participants in this financial crisis are the first to be blamed. However, some scholars point out that those business elites can represent the role of business schools.
According to David Crowther(2009) , professor of corporate social responsibility (CSR), people who involved in the financial crisis were students of business school 15to 20 years ago when greed was good in theory. But the advocating theory has changed in nowadays. In addition, the examples of UK business school sparing no effort to research into teaching CSR and sustainability in most recent ABS annual report(2009) indicates that business schools in UK put emphasis on ethic education in their MBA curriculum.
It seems that Business schools have taken measures through integrating CSR to avoid the evil outcome of greed beforehand. Furthermore, to some extent, business school can lead to manage the risks of financial system effectively and ethically as Andrew W. Lo(2008) pointed out. Faced with the crisis, we should figure out the source and take precautions. Ethical deficiency and illegal activities caused by the instinct of greed and the unpredictable climate of economy are the core of this crisis which can only be resolved by intellects.
Accordingly, business school are shouldering the responsibility of cultivating this kind of talents. Therefore, business schools should be praised for their efforts to prevent future crisis. On the other hand, supporters argue that time can’t be an excuse of escaping responsibility for the financial crisis. ” The financial crisis was not solely due to our graduates 15 to 20 years ago. The younger generation who designed and dealt in complex derivatives instruments came out of business schools…
Business schools were involved” says Hugh Willmott(2009), research professor in organization studies at Cardiff business school. Obviously, business school can’t abandon their share of responsibility due to the contribution of derivatives instruments in the financial crisis. Moreover, the result of the association of MBAs research (2009) indicates that CSR is not applied effectively in business school because of the neglect. It shows that nearly 80% of UK MBA courses do not require a mandatory CSR module.
Although business schools take ethic education into consideration, the attention is not enough. The mandatory set of CSR modules can not guarantee effective influence on business school students, let alone the optional ones. Personally, I believe that business school should accept some responsibility. Even though some economists has pointed out that economy works in a pattern that we can not change in terms of willingness, the participation of elites walking out of business schools can not be overlooked.
Just as Jay Lorsch and Rakesh Khurana, scholars from Harvard Business School, argues, “Ideas and tools—exotic financial instruments, poorly designed compensation plans, models of corporate leadership that value leaders’ charisma over substance, an uncritical embrace of laissez-faire models—were taught to MBA and executive-education students. But business schools fail to consider whether these idea and tools would contribute to a firm’s long-term well being or endanger the legitimacy of the U. S. capitalist system.
“(2008) The ignorance in ethic education of business elites may exert great influence on their decisions confronted with dilemma between individual profits and public welfare. Therefore, business school need to be aware of their roles in the financial crisis and start to take action to avoid similar crisis in the future in my opinion. Another question then comes in order, that is what business school should do. Clearly, the set of optional CRS model is far from the destination. It seems that we need to integrate CSR into different models of MBA education.
Turning into a part of different single model such as accounting and finance, corporation management or strategy management instead of a separated model may help to root the ethic and social responsibility into business students gradually and naturally (Harney, 2009). Meanwhile, we need to pay attention to the practice of business schools besides their ethic education. Business schools are expected to foster elites that can respond to the financial crisis through deeper and more critical content of education. In this point, Elena P.
Antonacopoulou(2010) suggests an more reflexive and critical perspective on MBA teaching. Based on the assumption that the lack of research knowledge leads to flaw in business schools’ “best practice” model, Antonacopoulou proposes “a reflexive, critical approach to management education, both conceptually and practically, analysing an innovative MBA programme based upon reflexive critique that challenges conventional wisdoms (theoretical and practical) and situates management theory and practice as a form of socially and politically driven ideology.
“(Currie G. , Knights D. and Starkey K. ,2010 ) In essence, the revolution of business education must start with questioning the existing models and then combine the practical situation and research information to modify the models. Considering the moral lapse of models in business schools now, Ferlie, McGivern and De Moraes (2010) provide an alternative ‘public interest’ model for the business school of the future.
Indeed, one of the implications of the model is that business schools might be renamed as schools of management to eschew too close an alignment with business and corporate interests(Currie G. , Knights D. and Starkey K. ,2010 ). Ferlie, McGivern and De Moraes compare business school with the medical school to support their ideas about public interest model. However, the model may lead to a lower financial surplus from the business school to protect basic research and reflective teaching.
Therefore, Hall and Soskice(2001) comment that The public interest model may fit more easily with European rather than Anglo-American schools, as they relate to distinct forms of capitalism. The ‘best model’ can never be found without practice. Still, we have a long way to the destination of the most appropriate model in business school to prepare for the financial crisis in the future.
Andrew,W. L. (2008) “Financial Crisis: Blame B-schools” Bloomberg Businessweek https://www.bloomberg.com