Business schools become irrelevant

It is fifty years since London and Manchester Business Schools opened their doors to their first students. The ambitions that led to their creation resonate well with many current concerns. British businesses in the 1960s lagged behind many of their overseas rivals, productivity was poor and international competitiveness declining. As a result, a series of government reports, culminating in the 1963 Franks report, saw an injection of new blood from talented graduates from business schools as a key part of the answer to Britain’s economic challenges.

Those celebrating the milestone of LBS and Manchester can point to many successes. There are more business and management students in UK universities than any other subject group, they use smarter technologies, and some schools appear near the top of league tables.

But is this a job well done or a loss of purpose when, in his 2015 Budget, the Chancellor says “Britain’s weak productivity” is our “great economic challenge”, the balance of trade is even worse than in the 1960s and the UK struggles to stay in the World Economic Forum’s global top 10 for competitiveness?

Perhaps even more worrying for business schools, there is no sign that business sees them as part of the solution any more. When the UK and global banking system went into a tailspin, few called to deans and professors for help. Did anyone expect the UK government’s plan for productivity to give a leading role to business schools?

It is a cause for concern when a thoughtful academic such as Richard Thorpe — professor of management and development at Leeds University Business School — acknowledges that “in recent years there has been little evidence of British businesses taking a close interest in business schools.” This lack of interest is reflected in a lack of support and active engagement. Support for business school research by UK business shrunk by over 50 per cent in real terms between 1999/2000 and 2009/2010. It is not surprising when business faculty interests as illustrated in journals and conferences give issues like heterarchy and harmonic oscillation theory a bigger role than most in business would expect.

Reports on graduate aspirations might indicate that they want learning that is applied and connected to the ‘real’ world, but the evidence suggests that business academics are engaging less and becoming more inward-looking.

This reflects the “capture” of business schools priorities by their host universities. Where they can, universities are increasing their control over their favourite cash cows. Faculty naturally respond by seeking academic legitimacy rather than economic contribution. The chair of the Chartered Association of Business Schools Angus Laing might see its members as central to solving the economic challenges faced by the UK but this can pall into insignificance against a good research assessment.

Businesses, governments and communities call for faculty with a range of experiences; people just as likely to be drawn from business as academia. But virtually every recruitment advertisement demands “a doctorate”. In truth, like most apprenticeships, the doctorate seems largely to act as a barrier to entry to those from business and others with different skills and complementary capabilities.

Business schools around the world are losing market share to private sector providers that build teams that wed academics with practitioners. This mirrors the early hope that schools would evolve in the same way as medical schools where tackling ailments is deeply embedded.

Senior associate dean for executive MBA and global Programmes at Yale School of Management David Bach has flagged the shrinking demand from home students in the US, which is pushing schools to seek new markets. In Britain, the solution to declining home postgraduate student numbers seems to lie in criticising the borders agency. Neither ask why home students aren’t coming.

Until now, the failure to have an impact where needed has been disguised behind soaring student numbers. As cash cows, schools have succeeded for their host universities. Some faculty have found this very comfortable. Business, in turn, has found it easy to abdicate its responsibility to place demands on institutions to deliver value where it matters — in the workplace. Change these and, perhaps, schools can assert their distinctive identity and be a key part of the answer to Britain’s and others’ economic challenges over the next 50 years.

Tom Cannon is professor of management at the University of Liverpool