Business schools need to be critics of the corporate world

Over the past two decades the emirate of Dubai emerged as a hotspot for the establishment of international business school campuses, only to then see many of these campuses subsequently close their doors or operate with largely empty classrooms as the world financial crisis took hold.

What happened in Dubai was something business faculty spend considerable time writing and teaching about but which they had little success in avoiding – the making and breaking of a bubble. The Dubai business school bubble exposed a disturbing eagerness of schools to emulate the corporate sector in a way that is at odds with their traditions and puts their reputations and finances at risk.

The lesson of the Dubai bubble is that business schools need to get back to being students and critics of the corporate world, not participants in it. If not, Dubai could turn out to be a portent of a sector-wide depression, an early warning sign of a wider problem in higher education in general and business education in particular.

Most at risk is the US, where a number of developments suggest a late-stage bubble, among them the rapidly rising total sum of student loans, a growing propensity of state governments to shift cost burdens from taxpayers to students and their families, rising unemployment among graduates and growing resistance from parents and students to prices increasing at several times the rate of inflation.

The gloom pervading the business school sector is compounded by perennial problems such as overemphasis on research at the expense of teaching and the questionable practical value of much of that research.

At its peak before the world economic crisis, Dubai hosted the opening of more international branch campuses than anywhere else in the world – 25 business schools from 11 countries, almost two a year, opened their doors in the region between 1995 and 2008.

If it had not been for the world financial crisis, more would have followed, as 54 universities were on the waiting list to open international branch campuses when the economy went into free fall. Some business schools in Dubai went bankrupt and many others were forced to exit or downsize their operations, leaving even those schools that had benefited from the boom with half-empty teaching facilities.

How could the world’s top business schools, supposedly founts of business wisdom, have collectively invested in activities that were driven less by economic rationality than by euphoria, mania and panic?

A similar bubble in the 1980s saw US universities flocking to Japan, eager to take advantage of the most dynamic economy in the world. Of the approximately 30 international branch campuses that opened there, one remains today.

Yet, little more than a decade later, institutionalised modes of thought accepted without question that an emirate with a population of 1.7m could absorb branch campuses of 50 universities, including 25 business schools.

In the past, decision-making in business schools was in the hands of the teaching faculty, evolving slowly and incrementally in a pattern that might be described as active inertia.

More recently, an administrative professionalisation process has left the faculty without a significant voice in matters such as investment decisions. Traditional bottom-up organisations have become top-down hierarchies similar to their corporate counterparts and schools commonly harbour globalisation-related ambitions and economic aspirations that mirror those of corporations and carry much the same risk. Global operations are usually undertaken by separate, for-profit, semi-autonomous units called “global centres”, administered by “deans of internationalisation”, captains of a multibillion-dollar global industry which is a significant source of cash for their universities.

It is apparent that the power of the academic elite is waning and a new era in corporate thinking in higher education is on the rise.

While this trend is university-wide, business schools have been in the forefront, even as their vaunted expertise in corporate folly should be leading them to pump the brakes. In short, it is time for business school academics to focus their formidable critical intelligence on the dangerous bubble that higher education is confronting and to exert their traditional powers to prevent a real depression.

Kimmo Alajoutsijärvi is a professor of marketing at the Jyväskylä University School of Business and Economics in Finland. Katariina Juusola is a doctoral candidate at Jyväskylä University, based in Dubai since 2010 researching UAE’s higher education field. Juha-Antti Lamberg is a professor of strategy and economic history at Jyväskylä University.

This article is adapted from a longer piece in the March issue of Academy of Management Learning and Education.