Looking east from the tower of Healy Hall, the hilltop landmark of Georgetown University, the white dome of the US Capitol building dominates the Washington landscape. Now the home of federal legislature is attracting attention from a different quarter.
Leading US business schools are recognising how the financial crisis has prompted government to play a more active role in the economy and in response are re-evaluating their approach to public policy and its impact upon business.
The subject has never been considered a traditional strength of schools, but as legislation such as the Dodd-Frank Act – a reform that increases US government oversight of financial institutions’ trading activities – has had consequences for entire sectors, schools are taking a fresh look at the topic.
“Business education has long been focused on core disciplines to the exclusion of the policy environment in which businesses operate,” says John Mayo, executive director of the Center for Business and Public Policy at Georgetown’s McDonough School of Business.
Mark Duggan, a professor of business economics and public policy at the University of Pennsylvania’s Wharton School and recent member of the White House Council of Economic Advisors, agrees. “Historically, it is fair to say that the policy-making world has not been foremost in the minds of business schools.”
The reason for this is that business schools are not equipped to engage successfully with matters beyond their field, says Bhaskar Chakravorti, executive director of the Institute for Business in the Global Context at Tufts University’s Fletcher School of Law and Diplomacy. “Business schools have very little intellectual foundation to tackle questions of political context,” he says.
Dartmouth College’s Tuck School of Business partners with the Fletcher School to offer dual masters degrees in international affairs and business, for students wishing to address issues at the intersection of business and policy. Other business schools, including Harvard and Columbia, have teamed up with their university’s respective public affairs schools – Harvard Kennedy School of Government and Columbia’s School of International and Public Affairs – to offer joint degrees.
Bringing the significance of public policy to the attention of MBA students is a growing concern for many business schools, which are enhancing public policy elements in their curricula.
“For most MBA [students] this is the last formal education they will receive,” says Matthew Slaughter, associate dean of the Tuck School. “To be internationally capable, today’s MBA graduates must understand the goals and mechanisms of government decision makers.”
This summer Tuck launched the Center for Global Business and Government, headed by Prof Slaughter, to prepare future business leaders with an understanding of the complex interactions between companies and governments.
Marianne Bertrand, professor of economics at the University of Chicago’s Booth School of Business, believes it is essential that MBA students have a greater awareness of debates concerning market failure, regulation and lobbying.
“Students arrive in my class with black-and-white views,” she says. While she accepts that these issues may not be directly applied in graduates’ careers, she says that a sophisticated understanding of government’s relevance is critical for students to engage successfully with government policies that affect their companies.
Prof Mayo believes business schools will have underachieved if they do not expose students to perspectives from outside the insular world of business. Georgetown’s Center for Business and Public Policy, established in 2002, comprises 20 senior academics from Georgetown and beyond. It engages McDonough students through a series of seminars involving the business and policy communities, on economic policy issues that affect business.
Part of the centre’s “evolution of regulation” series involves senior federal regulators coming to the school to discuss their work and its impact. With the university’s law and public policy schools, a certificate is planned for those McDonough students who take part in these seminars.
Some students, such as Richard Caperton, an MBA alumnus of 2009, join the centre in a research capacity during their MBA programme. Mr Caperton, who today works for the Center for American Progress, an influential Washington-based think-tank, is one of a small number of Georgetown MBA students who were looking to continue in the public policy realm after graduation.
“While there is an element of self-selection among Georgetown students – who tend to be more policy-oriented than most business students – they are still coming for a business education”, says Prof Mayo.
Prof Slaughter cites the lack of structured relationships between business schools and government agencies as a limitation on MBA students gaining public policy experience during their degree. “The reality is that key US agencies have no experience with hosting MBAs [for internships].”
These challenges contrast with the well-trodden path to Capitol Hill taken by several leading business-school academics. Laura Tyson, professor and former dean of the University of California, Berkeley’s Haas School and Glenn Hubbard, dean of Columbia Business School, both served as chairman of the Council of Economic Advisors under Presidents Bill Clinton and George W. Bush respectively. Prof Hubbard has this year served as economic adviser to Mitt Romney’s presidential campaign.