Were business schools to blame for the financial crisis? What should business schools do to help prevent similar crisis in the future?
Were business schools to blame for the financial crisis? What should business schools do to help prevent similar crisis in the future?
In the recent decades, there has been a mass of graduates into the banking world from top MBA business courses. These graduates, often from reputable universities and business programmes, have the opportunity to step straight into powerful, prestigious, and high-risk taking positions within the financial world (James, 2009). Such individuals potentially focused their success on profit making and quick money; a debatable strategy with regards to a companies health and success. Such methods of management and regulation have been disputed (Lorsch & Khurana, 2008). However, can business schools really be to blame for the actions of their graduates, or is it simply that “greed is hardwired into human behaviour” (Lo, 2008), and that business schools played a minimal role in the cause of the economic crisis. Is the link between the business schools and the financial crisis instead due to the nature of individuals that business schools attract rather than the business schools teaching?
The cause of the financial crisis cannot easily be pinpointed on any one reason, but instead a number of causes that have been critically debated in the search to find an explanation in order to prevent future occurrences. Corruption and ignorance has been put forward as an explanation for the crash, with lack of knowledge and skills from MBA graduates to deal with high-risk situations and decisions under pressure. The lack of ability of business schools to use more critical techniques and to teach efficient and effective response to economic events (Currie et al., 2010) lead The Economist (2009) to turn on business schools, highlighting their weaknesses. According to Lorsch & Khurana (2008), “exotic financial instruments, poorly designed compensation plans, models of corporate leadership that value leaders’ charisma over substance, an uncritical embrace of laissez-faire models” were taught to business students without consideration as to whether these tools and concepts would actually help a company or firm’s long-term health and well being. Lorsh & Khurana also pointed out that many business executives were self-absorbed and interested in making their own money in the run up to the crisis and as a result failed to consider themselves as important leaders and protectors of their own firms.