This book caused quite a stir when it was first published and perhaps not surprisingly since it is an “insider’s account” of why business schools have never gained the respectabilty they have searched for over the past century. Rakesh Khurana is a Harvard Business School professor whose book came at an end of a decade of a great deal of criticism of business schools that came mostly from within. That was just before the current financial crisis. Since the beginning of this crisis those criticisms have continued to grow.
The book describes how management became to be seen as a profession from the 1870s onward and that once they were organized how business schools organized themselves that they might cater to this profession. The book highlights the suspicion that has existed of business schools since their creation. This is in part due to their self-sufficient nature, and also to the status inferiority that the business schools have themselves. Indeed, one of the strong themes that comes out from the book is the need for business schools to be recognized as a profession in their own right.
The very first business school, in the true sense of the word, was created in 1819 in Paris with a school called ESCP. Harvard, which has existed as a college since the 1600s, refused for a long time to actually create its own school. Indeed, Charles Eliot, who assumed the presidency of Harvard in 1869, refused for thirty years to establish a business school, arguing that it would not be in line with the university’s educational purpose of teaching students to live worthy lives! Eventually Harvard relented in 1908, but one wonders if many faculty members across the world today still harbor the same suspicions about business schools.
The twentieth century then saw the growth of business schools throughout the world. Khurana, who concentrates mainly on the US higher educational industry, says that in fact the universities in the United States were set up persue the advancement of secular knowledge in line with America’s Puritan founder principles under the Protestant work ethic. To some extent, business schools were not always in line with this, hence the difficulty to become recognised.
Indeed, one of the many criticisms of them was that for the earlier years of the twentieth century was that they concentrated basically on telling war stories to their students and had no real scientific value. Despite this, the number of MBAs awarded grew steeply from the period after the First World War, even though it is often said that both faculty and student levels were very poor at this time. This problem came to a head in 1958 when Robert Gordon published a report highly critical of schools. In it, he says “I should be surprised if five percent of faculty members in graduate business school programs could provide a reasonably coherent account of basic research methodology.”
This report led to a radical change in the strategy of business schools and led to what many have deemed a quest for scientific respectability. As the AACSB began to get itself organized, some other organizations such as GMAT sprang up to give some form of harmonization in processes and procedures. This change was so radical and so quick that by 1978, the New York Times could describe a Harvard MBA as a golden passport to financial well-being. This passport lasted right up to the current financial crisis.
Khurana sets out neatly the difficulties and questions that business schools have asked themselves for the past hundred years or so. None of them seemed to have been answered, and perhaps this is normal given the schizophrenic nature of the institutions. Being a business requires a certain set of skills; being a school requires completely another. However, as the author shows, the schools need to look closely at their past in order to understand how they might progress in the coming century. As he says, as long as the “ghost of professionalism” continues with American business schools, the future of institution cannot be extricated from the past.
Of course, money is still a driving factor within business schools, both for their survival and for the students that go to them. However, Khurana’s conclusion is quite sobering. If institutions lose their legitimacy, or find them called into question, they become ripe for intervention or change. He ends by saying that this time has come to business schools, and they need to start thinking about how they might develop in the coming years.
Interesting quotes from the book:
It was not until the late 1870s that the equivalent of today’s modern, salaried manager emerged as a significant, if still vaguely defined entity. By the early 1920s, managers constituted a sizable and universally recognized occupational group—the 1920 united stated occupational census estimated that there were 2,612,525 executive and manager positions in business.
William G. Roy has found no statistical support for chandler’s primary hypothesis that firms in technologically advanced industries with the fastest-growing markets were able to significantly reduce costs through economies of scale. His research suggests, in fact, that the major link between scale and firm profitability was via market power, which reduced overall competition in particular, industries.
To the extent that managers were identified with owners in the public’s mind, they inherited a system of authority wildly held to be of questionable legitimacy, a suspicion deriving from the actions of the previous era’s so-called robber barons.
For managers, the task of defining and standardizing their work so as to present themselves as candidates for leadership in a new social order was rendered all the more formidable by their having, even in their own eyes, no common identity.
The champions of business schools attempted to present management as a “science”, both to furnish solutions to problems of efficiency and control, and to provide management with an aura of objectivity that removed the discussion of managerial claims from the turbulent and subjective realms of politics and markets.
As Mark Granovetter has pointed out, networks of trust are most often embedded in interpersonal relations, which are the channels through which emotion, common understanding and reciprocities flow.
New American research university had quickly transformed the pursuit of secular knowledge into something very much like what America’s Puritan founders would have termed a calling (a concept that would also become central to Weber’s characterization of the Protestant ethic). For the individual following his or her calling, work was not simply a means to end but represented, rather, a devotional act.
So I think that scientific management can be justly and truthfully characterized as management in which harmony is the rule instead of discord.
For business schools, the years immediately following World War II were, to borrow from Dickens, the best of times and the worst of times.
For business schools, the new accrediting mechanism has transformed a process that had been rooted in values of voluntarism and self-improvement—the grounding philosophy of the AACSB—into a quasi-government function through which business schools, along with other institutions of higher education, established their eligibility for federal funding.
I should be surprised if five percent of the faculty members in graduate business school programs could provide a reasonably coherent account of basic research methodology.
In 1966, an AACSB publication would describe business schools as “still unable to speak with a united voice”.
In 1978, the New York Times described a Harvard MBA as a “golden passport” to financial well-being.
In 2005, significant tension between students and administrators erupted at both Harvard Business School and Wharton when administrators proposed allowing students—whose grades, as a matter of policy, had hitherto been withheld from recruiter—the option of disclosing them. Administrators hoped that such a policy would improve student performance.
By the beginning of the twenty-first century, as I have also argued, business schools had largely set aside the demanding, relatively constraining notion of professionalism for the looser more protean idea of leadership.
Business schools have not severed themselves so completely from their historical roots and inherited identity as recent developments might seem to indicate.
As long as the ghost of professionalism continues to prowl about in the life of the American business school, the future of the institution cannot be fully extricated from its past.
Harry Lewis, formerly dean of Harvard college, in the absence of any credible educational principles, money is increasingly the driving force of decisions in universities.
History in the meantime, tells us that when institutions lose their legitimacy or find it called into question, the times are ripe for their reinvention. It is more than possible that we live in such times now.
Other Book Reviews
Businessweek: “Khurana’s From Higher Aims to Hired Hands is an important and surprisingly disparaging look at business-school education in the U.S. from the late 19th century to the present.”
From Higher Aims to Hired Hands: The Social Transformation of Business Schools and the Unfulfilled Promise of Management as a Profession
Economic History Association: “Is management a profession? Are collegiate schools of business legitimate professional schools? The answers Rakesh Khurana’s book provides to both questions are “not yet” and “maybe never.” In reaching these answers, Khurana, associate professor of organizational behavior at Harvard Business School, provides a wealth of information about the history of collegiate business schools.”
Concurring Opinions: “The book is a profound contribution to sociology and institutional analysis. It is also a persuasive critique of some of the most disturbing trends in the American economy.”
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