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The Multipolar MBA

To Rakesh Khurana, a Harvard Business School professor known for his histories of management knowledge, business schools are facing a crisis of global irrelevance.

According to Harvard Business School professor Rakesh Khurana, U.S. business schools are fighting to be meaningful on multiple fronts. Khurana is known for his ongoing efforts to chronicle the changes in management education, most recently with his book From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession (Princeton University Press, 2007). But in 2013, his warnings about the decline of business schools have particular urgency. Most management schools are reporting a decline in the number of applicants for their two-year MBA programs; some students are flocking to one-year specialized degrees, and others are choosing to take courses online or on a part-time basis.

The reason has to do with diminishing relevance, argues Khurana. It is driven in part by the impact of globalization on business success. Aside from the sheer cost of earning a two-year MBA (tuition at Harvard Business School is US$53,500 per year), management school graduates are finding that their skills and training are not ideally matched to the needs of global corporations that have undergone rapid changes. Many of these companies are looking for business leaders who can help them expand in developing markets where the rules of engagement are quite different from what they might be at headquarters. They need leaders who can build coalitions with governments, nongovernmental organizations, and social activists.

S+B: Why are U.S. business schools facing such difficulty?
There is a dramatic shift in three core pillars of management education. First is a shift in what is taught. There has been an incredible race to the bottom among business schools. They have become everything and nothing to everyone at once. This is partly a result of the huge growth in the number of business schools in the United States—to about 900. In contrast, there are only 140 to 180 law schools and 130 or so medical schools. At the same time, there is no longer consensus on what constitutes a core curriculum. Historically, business schools used to require courses such as marketing, organizational behavior, accounting, finance, and similar subjects. Today, it’s not even clear what an MBA consists of anymore. The fastest-growing degrees are one-year and part-time degrees. Online MBA degrees are emerging, and executive education continues to evolve into new forms. This sends very complicated and confusing messages to potential students.

Another force is the lack of quality and consistency in the development of general management knowledge. In an attempt to obtain academic legitimacy, especially at the research-based business schools, the faculty began to ape the arts and sciences faculty. The social scientists hired into business schools established their careers by applying their specialty, but not by producing general management knowledge; instead, they just reiterated their previous perspective. The economists hired into business schools acted even more like economists once they were here. The same goes for sociologists and psychologists.

That was the strategy for getting promoted and getting tenure, and it worked, because the incentives were based on research and developing academic credibility, but not oriented toward producing management knowledge. Thus, very little general management knowledge has been produced. If you’re a healthcare company or in the pharmaceutical industry and you want to find basic research, you turn to medical schools at universities. But we business schools have lost the place where we could be turned to as a source of basic research and basic knowledge. Very few businesses turn to us. They turn to other sources of knowledge, such as consulting firms, instead.

Finally, there’s a shift in who is being taught. The orientation of most students has changed quite dramatically. Increasingly, students see an elite MBA as more desirable for its selection effect than its educational impact. If you get in, you’ll get a highly valued credential, but you’re not going to learn much along the way. It’s more a way to signal to employers that you’re a smart, hardworking, and competent person. If you don’t get into the top programs, there’s really no point in going to a business school. You can always do a part-time program or go through a company’s training program.

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