The role of business schools and business education in a complex society

The EFMD Conference for Deans and Directors General hosted by the SDA Bocconi School of Management on February 13-14 was a momentous occasion for open and creative discussion on the foundations of business education. Framed by the overarching theme of Managing Impact, the conference offered an opportunity to exchange ideas and insights on the impact that business schools have - or should have - on individuals, organizations and societies. Within this framework, some of the salient themes addressed during the conference related to the role of academic research and education, university faculty and alumni, and external collaboration and geographical expansion. All these aspects, taken together, contribute to drawing the horizon on which to redesign the role of business schools and their influence over an array of different stakeholders.

But why should we be talking about the impact of education and research in the field of management? And why now? One way to begin to answer these questions is to take a look at the trajectory of transformation that business schools have followed through the years. There are a number of different – albeit complementary - interpretations pertaining to the founding of these institutions, dating back to the 19th and 20th centuries. For example, the American historian Steven Conn asserts that business schools flourished at the turn of the 20th century thanks to a desire for “cultural prestige.” In his opinion, at that time businessmen sought to earn social status comparable to doctors, lawyers, and engineers; they eventually realized that the only way to do so was through ad hoc business education. Essentially by establishing prestigious educational institutions in economics and management, these fields of study would rise to the level of dominant disciplines.

According to a second perspective, the birth of business schools represents an attempt to create and transfer knowledge that serves to enhance the general wellbeing of societies. Here the spread of economic and business culture is seen as a public good. In fact, by the mid-1800s many universities, responding rapidly to the development needs of industry, began training civil engineers to support the expansion of the railroads. In addition, MIT launched degree programs for mechanical engineers, electrical engineers, and chemical engineers. And since the early 20th century, the university-business connection has become even closer and more direct. In the United States, frenetic economic growth and the need for rationalization and efficiency in major industries sparked a surge in demand for new managers specialized in accounting, finance, marketing and general management, educated in the leading business schools of the day: the Wharton School of Commerce and Finance and Harvard’s Graduate School of Business Administration.

With the development of institutions modeled on universities and specialized in the education of business leaders in industry and finance, the transformation of the study of business accelerated, moving from the purely practical to a profession in its own right, defined by rigorous techniques on par with engineering and medicine. This second perspective aligned with the influential work written by Frederick Taylor in the early 1900s, the aim of which was to come up with “scientific management” based on clearly-defined laws, rules and principles. From that moment on, in the decades to follow, business schools advanced at the same pace as the rise of a new, powerful social class, halfway between business owners and employees: managers and business executives.

The growth of major companies offered additional breeding ground for business education that leveraged new techniques and competencies to support what Alfred Chandler called the “triple investment,” which he considered the driver of the advent of the large modern firm: the augmented scale of production, streamlined distribution, and innovation of the business organization. In addition, the burgeoning size and complexity of managerial hierarchy boosted the demand for managers with specialized training.

The economic boom that followed in the ‘60s was a contributing factor in both the proliferation of new business schools on a global level, and their ever-more prominent role in training management teams for companies and institutions. This trend received additional impetus from the advent of neo-liberalism in the ‘80s. However, with the advance of a market ideology anchored on the principles of free trade, economic individualism, and personal interest, business schools came under attack on various fronts for their modus operandi. According to a number of scholars, these institutions gradually marginalized the question of ideals, values, alternative representations of reality and critical thinking, ultimately modeling the forma mentis of business leaders in a rigid and ineffectual way within the context of an increasingly complex world.

Only a few years ago, the renowned expert on organizations James March observed: “Business schools have lost a part of their essential ‘philosophical connection’ to the questions of humanity and human identity.” Basically, according to this view, business schools have failed in their primary goal: to educate leaders capable of adopting a long-term, future-forward perspective, in keeping with the principles of ethics and responsibility.

The final decade of the last century was marked by escalating complexity from a social, economic, political, and environmental standpoint. Colossal financial and corporate scandals (Enron, Libor, and many more) have fired the debate on managerial ethics and the excessive power of the business leaders who run major corporations with broad shareholder bases. Adding fuel to the fire are the massive off-shoring processes that have characterized globalization, and tragedies such as the collapse of Rana Plaza (a textile factory in Dhaka, Bangladesh which manufactured products for major Western brands), leaving over one thousand dead and thousands injured. All this has turned modern slavery and the social responsibility of big transnational companies into hot-button issues.

The 2008 financial crisis also hit hard, while the environmental and climate emergency has prompted new generations to urge organizations and institutions, both public and private, to adopt effective measures for damage control. And if the international socio-political scene shows signs of de-globalization (Brexit and new trade wars being the most emblematic examples), the technological revolution has brought with it a radical transformation in the technical and managerial competencies that business practitioners need. All this calls for a major overhaul of the training paths and educational models adopted by business schools. Complicating matters further are questions that still need to be answered regarding diversity, inclusion, and wellbeing in the workplace. Consequently, the new demand for business education not only centers on the traditional hard and soft skills, but encompasses ethical and cultural issues as well.

Traditional training models structured vertically by discipline now seem obsolete, also in light of new need for interdisciplinarity. This term does not refer simply to the sum of different disciplines or fields of research, but rather something that crosses the confines of disciplines, merging together all the progress made in various knowledge areas. If studies in an individual discipline tend to accentuate scientific rigor, the focus of an interdisciplinary approach, in contrast, is to attain greater practical relevance by applying a vision that goes beyond simply dealing with organizational and managerial issues.

To contend with all these challenges, business schools should be able to offer solid integration between functional skills and a broader, interdisciplinary vision. This would enable managers to gain a deep understanding of the impact not only of major technological innovations, but also the social, philosophical and ethical aspects of modernity. Ours is an era of growing complexity, where technological transformations play a part in redesigning the way we think and live and learn, an era of substantial social and environmental challenges. Therefore, the impact that business schools seek to have on people, organizations, and societies cannot happen without first making a radical change: in values and objectives, in content developed and shared through pioneering new didactic processes, in the way in which scientific research is created, transferred, and disseminated. All these elements taken together contribute to a more complex and multi-faceted definition of the human, organizational, and value-creation equation that business schools apply, in a future that has already begun.