Business schools’ guilt for our financial mess

Could it be that “the way business students are taught may have contributed to the most serious economic crisis in decades?”

That question is now on the minds of analysts, “and even educators themselves,” reports Kelley Holland in the March 15 business section of the New York Times.

For one educator, Rakesh Khurana , a professor at Harvard Business School, business schools are at fault for failing to teach students that they are professionals, stewards with long-term economic goals, not agents of shareholders responsible for maximizing shareholder wealth.

“A kind of market fundamentalism took hold in business education,” Khurana said. “The new logic of shareholder primacy absolved management of any responsibility for anything but financial results.”

Holland’s quick survey did not uncover a consensus on whether business schools contributed to the current disorder in the global market. One professor of finance does plan to incorporate the changed world into his class this fall. Among other things, he will add a discussion of whether the market is always right when it values things. “You would not have had that discussion three years ago,” he said, inadvertently revealing that business school educators are part of A.I.G.’s backstory.

The Times article fell short of the clarity of a 2002 Washington Post article titled “When It Comes to Ethics, B-Schools Get an F” by Amitai Etzioni of George Washington University. Etzioni based his criticism on his own experience and on an Aspen Institute study of 2,000 graduates of the top business schools.

“B-school education not only fails to improve the moral character of the students; it actually weakens it,” he wrote. For more, see my Website article, “How Business Schools Teach Enron Ethics.”

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