Since the start of the global financial crisis, business schools from Barcelona to Buenos Aires have heard the steady drumbeat of footsteps as college graduates and executives facing a tight job market returned to the classroom to further their employment prospects.
Soaring business school enrollment, in some cases posting annual increases as high as 20 percent, has been one of the immediate consequences of the financial crisis.
But the woes that have dogged the global economy have started to shake up the world of business education, prompting educators in universities in Latin America, the United States and Europe to rethink what they are teaching business managers of the present and future. And the reassessment over how questions of risks and ethics must be incorporated into the curriculum for business education is certain to be one of the lasting consequences of the Great Recession for business schools and MBA education across the globe, a number of academics and school administrators said in interviews.
For Angel Cabrera, president of Thunderbird School of Global Management in Glendale, Arizona, the crisis finally forced the long overdue debate among educators about how business administration students need courses that cover the entire business landscape, from the bottom line to incorporating ethics and weighing risks in business decisions.
“It has been a window of opportunity for critical voices that were not always listened to,” said Cabrera, adding that those favoring revamping programs were calling for curriculum to better address ethics, corporate responsibility and sustainability.
Cabrera recently chaired a global task force, “Principles for Responsible Management Education,” which called for incorporating ethical principles into business courses. Some 286 educational organizations have now joined the initiative.
“For decades, the dominant narrative and framework was a very economic view, an oversimplified view that all the manager has to do is maximize profit, with minimum concern for the human, social implications,” Cabrera said.
Many dissenting educators saw this view as divorcing business management from the many other aspects of daily life, when everything from food safety standards to labor practices can affect the company and community.
“You go to medical school and you’re not just taught the science of medicine — you’re taught the idea of a sense of higher purpose. The same goes for law school,” Cabrera said. “We need to do the same thing, and the students demand it.”
The shake-up in courses has not been limited to U.S.-based universities.
Armando Dal Colletto, dean of the Business School São Paulo, said a number of business schools have been taking a close look at the reasons and roots of this crisis.
“It became clear that top executives were responsible for a number of wrong decisions or attitudes, such as a short-term optimistic view, lack of transparency, partial analyses, lack of modeling and respect for economic theories and over-simplified [economic] growth mentality,” Dal Colletto said.
“The most up-to-date MBAs had been offering a broader and more complex view of business management that could have avoided the crisis,” he said.
Dal Colletto said that corporate social responsibility, ethics and sustainability have been taught at business schools for years. But at the Business School São Paulo the emphasis on these subjects had been strengthened, amid the belief “that all this will make a difference for our students in avoiding or better managing the next crisis.”
There are numerous examples across the globe.
Ethics and corporate responsibility have surfaced in new required courses at INSEAD, one of the world’s largest graduate business schools. These subjects have been re-emphasized in course offerings at schools like the HHL-Leipzig Graduate School of Management in Leipzig, Germany, and UADE Business School, which offers graduate and executive programs at the Universidad Argentina de la Empresa in Buenos Aires.
“The impact of the crisis has made us reflect on the requirements of subjects related to ethics,” said Juan Cruz Lozada, UADE’s director. “We think that ethics shouldn’t be addressed in specific courses that are isolated from the rest, but should be interlaced within other subjects that make up the programs.”
The challenge of globalization and the role of emerging market countries have become a major focus at the Adolfo Ibáñez School of Management in Miami. “We didn’t change our MBA, we reinvented it,” said Dr. Alejandro Ruelas-Gossi, dean of the U.S. affiliate of the Chilean school.
“The problem is that, when [the MBA program] was first created at Harvard, it was a very American program,” Ruelas-Gossi said. “Now, the world is not American. The world has changed a lot. It’s really the emerging economies that are more dynamic, and developed countries are moving slower.”
As a result, Adolfo Ibáñez and other business schools in the hemisphere increasingly partner with institutions in emerging market countries, studying practices in places like India, China and Brazil. “Those are the three most important emerging economies,” Ruelas-Gossi added.
The economic crisis has meant higher enrollment in many business schools.
“We’ve had significant increases [in MBA enrollment] over these last two years, about 20 percent per year,” says Eric Weber, associate dean of Barcelona-based IESE Business School, part of the University of Navarra. The growing enrollment has sparked expansion at the school’s Barcelona and Madrid campuses, and the school was slated to open a new education and research center in New York City in March 2010.
Business schools contacted by Latin Trade reported similar increases and said the reason, to a large extent, is the crisis itself.
“Applications to MBA programs are typically counter-cyclical, and tend to increase at the start of an economic downturn,” said Jake Cohen, dean of the MBA program at INSEAD, which now has campuses in France, Singapore, Abu Dhabi, and an Israeli Research Center.
“This was the case following the recent economic crisis,” Cohen said. “INSEAD saw double-digit growth around the time the crisis hit. Now we still have growth but it is back to single digits.”
“Enrollment increases when unemployment increases,” agreed Francisco López Gallego, dean of the business school at Universidad EAFIT in Medellin. López also thinks that in the case of EAFIT, Colombia’s rising profile on the world stage has helped his school attract more foreign students.
At the same time, the global financial crisis reduced demand for executive programs and cut into corporate funding for business schools. Even the schools that have experienced higher enrollment numbers have faced drops in other enrollment as corporations slashed spending for training programs.
“The most notable effect of the crisis last year was the decrease in the demand for executive seminars, and the level of donations we received from businesses and donors,” said Guillermo D. Selva, dean of masters programs at the Francisco de Sola Campus of INCAE Business School in Managua, Nicaragua.
Selva said that while enrollment in the full-time master’s programs surged 10 percent, the school was forced to make changes in its seminar program to counter the decrease in other revenue.
“We developed a series of new seminars with subjects that were important for the situation businesses were facing,” Selva said, adding that the school eliminated some courses that dealt with traditional topics, such as financial management and strategic planning.
Another cost-saving tactic was to reduce travel and substitute face-to-face meetings with communications technology.
Selva said the experience proved useful, showing “the benefits that a flexible organization can achieve when it takes rapid action to mitigate the effects of a crisis that affected every organization in the world, one way or another.”
The Business School São Paulo’s Dal Colletto said his school also took a fresh look at financing options. In one innovation, the school began offering MBA consortium programs, through which a company partners with the business school. The company’s human resource department coordinates but participating employees pay their own education costs. Such programs turned out to be very attractive for students, Dal Colletto said, adding that 400 new students were thereby able to join MBA programs in 2009.
In Alicante, Spain, FUNDESEM offered to cover half of the costs of its MBA programs for unemployed former FUNDESEM students who wanted to “refresh” their studies or return to study a new specialization, according to Ramón Mañas García, the school’s director.
The current climate and student demands prompted school educators to overhaul the line-up of courses and specializations to match future needs.
“We thoroughly evaluated and revised our curriculum,” said Barbara Kahn, dean of the University of Miami School of Business. The school introduced new classes in real estate, mergers and acquisitions, and health sector management and policy, among others.
Kahn said enrollment rose significantly in the school’s Executive MBA in Health Sector Management and Policy program over the last two years. “We also restructured programs to enable students in our Executive MBA classes to choose electives, and expanded our programs in the school’s strategic areas of strength such as health sector management and policy,” she said.
The economic crisis did not entirely crimp business school interest in expanding in the Latin America education market.
Kahn said that the University of Miami launched a new Executive MBA program in Puerto Rico and partnered with leading business schools in Latin America to address executive education needs.
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