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The First MBA Presidency and the Business Academy

by JOSEPH G. DAVIS

This week marked the end of the first MBA Presidency in US history.  Not any MBA, a Harvard MBA to boot.  While it is unlikely that Harvard Business School would deem George Bush as one of its shining stars, the fact remains that he walked the corridors of the hallowed Spangler Hall and graduated with an MBA from the School in 1975.  As pointed out by Brian Dutt the Viewpoints Editor of “the Harbus” (an independent HBS student weekly), for an institution that claims to educate leaders who make a difference in the world, there is deafening silence from Bush’s alma mater when it comes to this well-known graduate whose reign has adversely affected the lives of millions of people all over the world. After all, it is difficult for HBS to hang a portrait or dedicate a building to honor arguably the most incompetent president in the history of the Union, who often struggled to piece together words and phrases to complete a sentence.  One of the HBS professors, Richard Tedlow, went to the extent of disowning Bush from the MBA club when he said that Bush administration failed to apply the MBA skill set and problem solving approach.

In an office dominated by lawyers (28 to date out of 44 counting Obama), it is fair to say that Bush has not done legions of MBAs any favors by virtue of his performance in office.  The general consensus on the Bush presidency is that it was riddled with strategic and operational blunders, not to mention moral and ethical failures.  These culminated in the deep economic crisis starting 2007-08.  While Bush cannot be exclusively held responsible for the economic crisis, thousands of fellow MBAs have contributed their share.  This may be an opportune time to look into the role, influence, attitudes, mind and skill sets, and ethics of this large and influential group of professionals and the business academy which has trained them. Business schools have clearly emerged as important pillars of modern university life in recent years and yet a sober assessment of their influence and impact on the economy and the broader society is long overdue.

The business academy was initially established in the early part 20th century in the US with the goal of shifting the focus of higher education away from educating civic leaders and ministers for an agrarian society and professionals in medicine, engineering, and law to training managers for the industrial economy. It was also meant to raise the legitimacy, prestige, and profile of the emerging managerial class. The ‘scientific management’ school inaugurated by Frederick Taylor with the goal of measuring and monitoring work using scientific principles and industrial psychology in the 1920’s gave business pedagogy greater credibility and acceptance.  By the 1960’s, postgraduate training in management through the MBA degree had firmly established itself in most of the elite US universities.  Various research-based specializations such as Accounting and Finance, Marketing, Quantitative Methods and Operational Research, Organizational Behavior and Management had been established, accompanied by peer-reviewed academic journals to publish the research. The MBA model was successfully ported to the UK, France, and India among others with the assistance of Ford and Rockefeller foundations in the 60’s and 70’s.

The growth of business degrees at both postgraduate and undergraduate levels has accelerated globally in recent decades, so much so the business schools constitute major purveyors of quasi-scientific training and ideological conditioning in business and the society at large.  In more recent times, the intellectual leadership of the business academy has been captured by the neo-liberal economists and finance researchers, in keeping with the rise of finance capital in the advanced economies.  It is well-known that some of the brightest students gravitate towards finance and join the beeline to work for investment banks and other financial institutions. The financial incentives for doing this are enormous.  The take of this sector till recent months was anywhere between 5 and 8% of the GDP!

Despite many business schools paying lip service to social and environmental responsiveness and ethics from time to time, the single-minded focus of most of the MBA hordes has been on maximizing personal and firm earnings at any cost. Many see themselves as technocrats who are exclusively focused on competition, efficiency and technology where there is no room for social concerns and community values. This is more often a simple reflection of the thrust of the substantive and symbolic learning acquired in business schools.  Several of the recent business collapses such as Enron, Global Crossing, and Lehman Brothers can be attributed to the limitations of this MBA logic. Many of the faculty are openly contemptuous of any mention of social considerations by echoing the words of the laissez faire patron saint Milton Friedman who wrote in 1970 that the social responsibility of business is to increase its profits.  Amitai Etzioni, a professor at George Washington University, has written about a debate at Harvard Business School in the late 1980’s after it was given $20 million by a former Chair of the Securities and Exchange Commission, John Shad, to introduce a formal program in ethics.  Most of the faculty were dismissive of the idea wondering whose ethics and values they were going to teach.  Some were uncomfortable with the idea knowing it would be at odds with many of the things they teach.  Some were convinced that they were teaching science in which ethics has little role if any.

It is worth noting that until the collapse of Enron in 2001, many business school professors in the US were singing hosannas to the brilliant Enron innovation model. Several case studies were written on various aspects of Enron’s business strategy and model which were energetically and approvingly discussed at length in the MBA classrooms. Even though these case studies were buried after the firm’s collapse, there is not much of an indication that the Enron ethics has been left behind. It is not much of a coincidence that many of the protagonists in the recent business collapses and the subprime crisis happen to be MBAs like dubya!

JOSEPH G. DAVIS is a lapsed MBA from the Indian Institute of Management, Ahmedabad, India.  He teaches at the School of Information Technologies, the University of Sydney in Australia.

 

 

 

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