Entrepreneurship and Business Education
| Peter Klein |
Kauffman Foundation president Carl Schramm joins a rising chorus of protest against contemporary business education with an op-ed, "The Broken MBA," in the Chronicle of Higher Education. US business schools, says Schramm, have missed the transition from "bureaucratic capitalism" to "entrepreneurial capitalism."
Although most major schools now have formal programs in entrepreneurship, the programs typically exist in isolation. Their precepts have had little impact on the core curriculum. It is hard to find serious research on entrepreneurial processes, and not much attention is paid to the importance of technology in entrepreneurial growth — even in large companies.
Instead, business schools have chosen to emphasize ethics and social responsibility, a move Schramm blasts as "ineffective, irrelevant, or even counterproductive." On ethics: "Presumably the goal is to prevent future Enron-like scandals, but how likely is it that human behavior can be changed for the better by tacking on a course on ethics?" On social responsibility, which he calls a "nebulous area": "The implicit message of those courses is often that business goals should be subordinate to political goals. Business serves society by creating wealth — that is its true social responsibility. Business schools do their students and society a disservice by teaching that corporations should pledge primary allegiance to political ends, which could harm their ability to create the wealth upon which civil society depends."
Schramm's suggestions for improvement: (1) Pay more attention to business theory. (2) Emphasize the role of technology. (3) Teach risk taking more effectively. (3) Make professors do empirical research with practical implications. (4) Emphasize general principles rather than cases. (5) Cut out the fluff and focus on the core. Not an unreasonable set of suggestions, on the whole.
Addendum: Another article in the same issue of the Chronicle asks — as we've discussed here, here, and here — if economics (agency theory, in particular) is responsible for Enron. Rakesh Khurana, Herbert Gintis, and Lynn Stout, while not exactly saying Yes, seem sympathetic to the idea. Michael Jensen, not surprisingly, demurs.