Dong Uk Kim

I am an exchange student from Seoul National University, Korea. I am studying Marketing. This spring semester is my second semester at UHM, and I really love Hawaii, especially beautiful natural environment and kind people. Studying at UHM as an exchange student was one of the coolest decisions in my life. I am really satisfied with my life in Hawaii.

 

The Achievements and Mistakes
of American Business Schools

 

The Business School Boom All Over the World

From the middle of 1990’s, Business School, so called MBA(Master of Business Administration) has been popular all over the world, especially in Asian countries. After appearance in the U.S about 100 years ago, business schools flourished in the U.S and made its unique business school industry. Now it has many world-class business schools such as Harvard Business School, Wharton School. And every year lots of students knock on the door of the American business school, including many Asian students. About 60,000 Asian students entered the American business schools last year (Yu, 2002). And the number of Asian students is increasing rapidly.

By the way, why do many Asian students apply for American schools although it is much more expensive compared to their home country’s business school? There are many reasons. It might be to learn English, to have global network, and to have global mind, etc. But the quality of education looks like the most important reason. That is because they can not get high quality of business education in their home country. Of course there are also many business schools in Asian countries. But their quality is still a little inferior to American schools. Of course Asian business schools do not have long history, so it is natural. But in addition, there is one more important reason. American schools are more "practically"-oriented, but Asian schools are more "academically"-oriented, so American business schools are considered as more helpful in the real world.

Asian Business Schools’ Efforts to Imitate American Business Schools

And many Asian business schools recognized this. So they started to change by introducing American-style MBA system. For example, the SNU (Seoul National University) Business school, No.1 business school in Korea, changed lots of their education programs and policies. Just 4 years ago, most of business school students did not have work experience, but nowadays they made a fixed quota for student having work experience. And this is an important criteria American schools consider when they recruit freshmen, because this criteria is considered as helped to make the class more practical. And many schools are trying to be accredited by AASCB(the Association to Advanced Collegiate Schools of Business), which is an organization based on the U.S and emphasizing the American style of business education. But other schools are doing more than that. Many Asian business schools are just trying to import American business schools’ systems without any change.

The Tshinghua University, one of the top universities in China, also imported American MBA system. They agreed with Sloan school of Management of MIT to introduce Sloan school’s same curriculum and teaching method without any change. Sungkyunkwan University, one of the top universities in Korea, started its MBA program provided by Sloan school of Management. They will teach the same way as Sloan school does. All of them look like they think American way is the best way as a business education, because they are just trying to import American style without any adjustment.

Can American Business School Models Be the Best Way?

But from 1980s there have been ceaseless criticisms toward business schools in the U.S. In 1975, Mintzberg (as cited in Korean Economy Daily, 2002, p. 14) conducted research about the usefulness of business schools. He observed 19 companies which were run by HBS (Harvard Business School) alumni. After several years half of them were fired or their companies went bankrupt according to his observation. Recently Pfeffer and Fong (2003) also criticized business schools’ utility with empirical evidence. Their final conclusions are as follows:

The fact that there are starting salary differences that tend not to be maintained over time is completely consistent with our assertion that the MBA is a "Brand" that can provide some initial placement success and higher salary upon graduation but does not necessarily help its graduates succeed and do better on the job. (Pfeffer & Fong, 2003, p. 369)

Asian business schools don’t seem to care about these criticisms or know about them, but I think it is important for them to know about them. It is not optional but mandatory. They should consider and analyze the pros and cons of American business school systems. Just drawing attention from local student by advertising "Agreement with American business school" is not enough. Before attracting students, they should think deeply about what they are doing. So in this paper, I would like to talk about what American business schools contributed and achieved in the past and what criticisms they have faced .And I will briefly give recommendations for future directions.

The Achievements of Business Schools

Many scholars have tried to evaluate the usefulness of Business schools. But it was not easy. There can be many reasons why it is not easy, but most of all, that’s because the way of evaluation is so subjective. As Byrt(1989) said, usually the ways of evaluation are similar.

Assessment of the results of management education activities is usually made by tracing the careers of those who have undertaken courses, particularly the MBA, by making judgments about the standard of management in organizations and by asking those who have completed courses. (Byrt ,1989, p. 221)

But with the same results, peoples show different reactions. Usually business educators seem to be satisfied and positive. But the students and other critics are not satisfied with and complain about the results, so still many scholars are arguing about the business schools’ utility. Nevertheless most of people agree about some achievements business school made.

Recognition of the "Business" Aspect of Many Activities

The first achievement is that business school have helped society to recognize the "business" aspect of many activities (Byrt, 1989, p. 222). The employees working for government department, hospitals, schools, and non-profit organizations just considered their organizations as a system that was naturally not supposed to be efficient and profitable. But after finishing business schools, many of them could rethink their organizations as a system to which management skills could be applied. Their working places were no longer for traditional administration but for the business management. They started to manage their organizations more efficiently and more strategically. And as some people pointed out, organizations such as government departments and hospitals could be transferred from internal-oriented to external (customer) - oriented because of business educations such as MBA. Indeed, some business schools such as the Sloan School of Management of MIT are providing unique MBA program for organizations considered not for management such as hospitals.

Giving Opportunity to Change a Career

The second achievement is that business schools have enabled people who made a dissatisfying first-choice of career to make a change (Byrt, 1989, p. 222). It’s not easy for a college senior to choose a job which is appropriate to his or her aptitude and capability. Most of all, many college students don’t know exactly about themselves. Although they are trying to realize what are their talent and capabilities and what they really want to do for 4 years, it is not easy. In addition to that, they don’t know about the working fields. So they usually decide their jobs with any specific and detailed knowledge or experience. Most of their choices are based on vague ideas they could get from people around them. But after starting to work, it is not easy for them to change their jobs, because they need to improve other skills which are needed to work in other areas. Now MBA promotions are helping and satisfying these people who want to change on their career. And most of MBA graduates are satisfied with MBA as a way of change of occupation.

Developing Managerial Skills in Classroom

The last achievement is that business schools let people think "one’s managerial management skills may be developed by means of training and education" (Byrt, 1989, p. 222). Before now many people thought that they could only learn to manage by managing in the real business world. They could not agree with the idea that studying management in classroom could be helpful to improve managerial skills. However it is not easy to learn to manage by managing in the real world. Most of all, it is dangerous in a real field, because everything is related to money, but there is no rehearsal. And there is a limit to what you can learn through real practice. Although people can learn more detailed and practical things, people can not get more general ideas and broader insight. But in business school people can learn without any risk and get broader sight. At first people were negative about the effect of this kind of business schools’ education. But nowadays many people agree people can develop business abilities "just as one’s ability at a sport may be developed by means of coaching" (Byrt, 1989, p222).

The Criticisms toward Business Schools

Although a business school has contributed in above ways, many people have criticized business school in lots of aspects continuously. They started from 1980s and still many scholars are trying to show the uselessness and faults of business school’s education although it is so popular all over the world. And their complaints range over "the entire spectrum of possibilities, including dissatisfaction with the curriculum, and with the attitudes displayed by graduating students" (Daniel, 1998, p. 235). So I concluded thinking about criticisms business schools confronted and problems they are trying to solve would be needed to understand American business schools. In the next section, I will explain the major complaints critics made.

Not Practical, But Abstract

The first complaint is that business education is not practical. As Daniel (1998) said "an unresponsive curriculum", many critics complain it is not helpful in reality. They claim it is "not practical enough, too theoretical, abstract, and removed from anything that could be put into practical use on the job" (Daniel, 1998, P235). Of course, most of faculties are trying to teach more practically, but it doesn’t seem to be enough. In 1980, Former Admiral Rickover (1981) of the U.S. Navy said in an address to Columbia University,

Many who teach ‘management’ in our universities do their students and society a disservice...they promote the idea that by mastering a few simple principles…one can become a universal manager, capable …A good manager has to know specific details of the work being done for completion of job. (Rickover, 1981, p. 23)

But kind of negative view doesn’t seem to disappear not and be solved perfectly, because "too, theoretical, not practical" is one of the characteristics business school has by its nature. As Pfeffer(2002) pointed out,

Business schools are relatively unique among professional schools such as law,…and engineering in the degree of separation from the profession that they supposedly serve...what is unique is the degree of separation that differentiate business from other professional schools—differences in terms of the proportion of faculty who move in and out of the profession or who practice it regularly. (Pfeffer, 2002, p. 89)

The business school is different from other professional schools in its characteristics. It can not provide what students can use directly in their working places, except accounting majors. So many critics attack this point as "not practical." But nowadays they are considered as people without understanding the nature of business school. Because many people have realized business schools can have limit in terms of practicality, they have started to argue more specific topics such as unbalance among subjects, etc.

Absence of What is Important for Succeeding in Business

The second complaint is that "the curriculum taught in business schools has only a small relationship to what is important for succeeding in business" (Pfeffer, 2002, p. 85). And in this area they usually attack 2 topics. The first one is that business schools pay too much attention to the "quantitatively based analytical techniques" (Pfeffer, 2002, p. 85). And the second one is that it doesn’t teach how to integrate various functional areas as Porter and McKibbin(1988) pointed out.

It can be useful for business majors to learn sophisticated analytical skills with quantitative techniques, but the problem is they are spending too much time on improving that kind of skills. According to the study by Porter and Mckibbin(1989), employers gave MBA graduates high scores on skill areas such as "high motivation to work", "Analytical skills". But they didn’t give positive evaluation on areas such as "leadership/interpersonal skills", "communication skills." They wanted to hire the employees who had a balance of many skill areas such as communication skill and leadership, which are usually considered as an important attribute to success in business. Especially employees having good communication skills were preferred. But according to the study by Porter and Mckibbin(1989), most of MBA graduates thought they could not learn communication skills in business schools.

And now departments of a business school are usually divided on the basis of functions. There is a finance department, marketing department, and so on. Each department teaches its own area, but there is no department or class teaching how to combine all the functions they learned. But it is necessary in the real world. So it caused critics complain again, "Does the typical business school curriculum provide sufficient attention to both the need to and the means to use specialized functional knowledge in an integrated approach to the increasingly complex, fast-changing…..of contemporary business?"(Porter & Mckibbin, 1989, p65) and the answer is still "No." So many scholars including Porter(1989) said this is one of the problems the business schools have to solve in the future. They suggest business schools to make more emphasis on "integration across functional areas" to train more realistic and effective managers (Porter & Mckibbin, 1989, p. 65)

Unbalance among Subjects

The third complaint is the unbalance among subjects. Critics say business schools overemphasize finance but underemphasize human relations and human resources, because human resources management is also very important in doing business and working as a manager. We can easily notice this trend by checking the number of faculty of each department of some business schools. For example, at the Harvard Business School there are 36 finance professors but 20 human resources management professors. But it is better than other schools. The Columbia Business School has 51 finance professors but it has only 3 professors studying human resources management.

As a result business schools are thought to make many managers based on financial background. So many critics started to describe business schools as a school teaching "management by calculator", "management by remote control", etc(Daniel, 1998, p237), because MBA graduates heavily depended on quantitative analysis. And very crucial and acute criticism was made by two Harvard Business School professors. In the Harvard Business Review, Hayes and Abernethy said, "Business schools had taught the principle of maximizing short-term financial returns at the expense of long-term competitiveness." They also showed fewer marketing and technical people were selected as company presidents. Through this study they could draw attention and persuade others, because they could prove how finance people are biased in their decision but how well they are served in the job market.

About underemphasizing human resources management, Business Week compared American managers with Japanese managers by saying, "Whereas American managers base their decisions on statistics, Japanese managers base theirs on human considerations and personal relationships" (As cite in Daniel, 1998, p. 237). Their conclusion was that in the long run Japanese managers would be stronger than American managers, because they considered more things, especially human being with a wider sight. (Daniel, 1998, p. 237). Stolzenberg(1986), a professor of university of Chicago, insisted that business schools are not a proper place to learn and improve human relations by saying, "For those who see business schools as academies of leadership skills, they will be disappointed" (Stolzenberg, 1986, p. 13). So critics started to urge business schools to pay more attention to areas of human resources management.

Criticisms about Other Factors

Compared to the topics above, less often, but business schools are criticized for other factors. According to the study by Porter and Mckibbin(1989), MBA graduates are evaluated as being weak at skill areas of "understanding of legal/social/political environment". That area was evaluated as the weakest aspect of MBA graduates. And critics didn’t miss this point. They blamed business schools for this result by saying "business schools have been overly concentrated on the internal operations and management of business…and have generally tended (except in the area of marketing) to neglect the necessity for coping effectively with the external environment."(Porter and Mckibbin, 1989, p. 66). In the real world, any manager can not work only in an office. They have to interact with outside world. And they should be sensitive to the change of external environments such as legal, social, political environments. In the fast changing world that is the way they can be effective and profitable.

Business schools are sometimes criticized for paying insufficient attention to "business ethics" (Porter and McKibbin, 1988, p. 66). Although corporations’ goal is to make a profit, simultaneously they have an obligation as a component of society. Especially managers of major companies should have ethical mind about their business because they can affect the whole society more than other small companies. But recently examples of inappropriate conduct in business have been on the rise, especially major companies. For example, Enron, a major energy company, went into bankruptcy because of accounting-scandal. It is considered as a typical example of misconduct in business. Many companies are becoming a 2nd, 3rd Enron because of mischief in business. Business schools are given some of the blame for this kind of situation. They are charged with "traditional business curriculum ethics is seldom given direct, explicit attention in either separate courses or as designated parts of other courses" (Porter and McKibbin, 1988, p. 66). But still they are arguing with critics because they believe that kind of misconduct can not be prevented by education. Dispute about this topic seems to continue.

Changing Business Environment, "New Economy"

Until now I talked about the some achievements business schools made and criticisms they have faced. Criticisms started from 1980s and their major issues have not changed. In response to those critics, business schools seem to have tried to improve their curriculum. Although they have faced many crucial criticisms, they have done their role well as professional managers-improving the school. The fact that still they have many applicants proves that still they are working and are recognized as effective. The continuing tasks business schools have to adress might be efforts to alter their weak points mentioned above. They should try to provide students with what is really needed for success of business instead of overemphasis on quantitative analysis skills, more balanced curriculum instead of overemphasis on finance as well as underemphasis on human relations, business mind with wider insight, and firm business ethics. They are major topics critics addressed. But in the 21st century, there seem to be more than that, because the society is changing so fast.

Nowadays many people can hear the term "New economy" indicating recent economy and society. According to Baalen and Moratis (2001), new economy can be defined as "The economy is… where the keys to job creation and higher standards of living are innovative ideas and technology embedded in services and manufactures products."(Baalen and Moratis, 2001, p 12). Among some key words used in definition, technology is the most important concept, which indicates "Information and communications technologies." It is becoming one of the important success factors; as Baalen and Moratis said, "There has been a tendency to relate much of contemporary economic successes to the contribution of information and communication technologies" (Baalen & Moratis, 2001, p 9).

In order to react to these kinds of changes properly, business schools should be able to notice these kinds of changes and adapt themselves to a new environment. But they don’t seem to try to change. "Course materials have been upgraded and some class offerings have changed, but 1960s product is still quite recognizable…in the 1990s" (Davis & Botkin, 1994, p. 90). Most of all, they have to make efforts to try to change. They have to ask themselves "What is the core knowledge in key management areas (finance, accounting, marketing, MIS, organizational behavior, etc) that students will need in the 21st century?(Green,1994, p. 97) and they have to keep in mind "How will that core knowledge change in 5 or 10 years?"(Green,1994, p. 97).

 

Dong Uk [Danny] Kim
ELI 100, 4/20/2004


References

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