How Business Schools Have Failed Business

By - Apr 24, 12:13 PM Comments [0]

Business school deans and educational thought leaders are doing a lot of soul-searching concerning the role and culpability of graduate business schools in the economic downturn.

Additionally, there are a slew of articles in the Harvard Business Review about the responsibility of MBA programs for the financial crisis.

I would like to highlight today’s excellent piece on The Wall St. Journal editorial page by Dr. Michael Jacobs of UNC’s Kenan Flagler School of Business entitled “How Business Schools Have Failed Business.”

His main points:

  1. Misaligned and dysfunctional incentive programs rewarded short-term gain instead of long-term value creation. Most business schools do not systematically address compensation systems.
  2. Corporate boards were “AWOL.” Schools don’t require courses in board structure, composition, and processes. Courses in “ethics”are not enough and are not the same as governance.
  3. The investment community failed to accurately evaluate risks. Jacobs argues that “as the gulf between the provider and the user of capital widens, the risks involved with selecting and monitoring the participants in the portfolio increase.” 

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