just as the market value of an MBA is reviving, its academic credibility is being attacked. In a forthcoming article to be published posthumously in Academy of Management Learning & Education, Sumantra Ghoshal argues that many of the "worst excesses of recent management practices have their roots in a set of ideas that have emerged from business-school academics over the last 30 years."
Mr Ghoshal was just such an academic, a professor at London Business School until he died 11 months ago at the age of 55. He believed that the desire of business schools to make the study of business a science, "a kind of physics", has led them increasingly to base their management theories on some of the more dismal assumptions and techniques developed by economists, particularly by the "Chicago School" and its intellectual leader, Milton Friedman. These include supposedly simplistic models of individual human behaviour (rational, self-interested, utility-maximising homo economicus) and of corporate behaviour (the notion that the goal of a firm should be to maximise shareholder value). These assumptions, though in Mr Ghoshal's view badly flawed, were simple enough to allow business-school academics to develop grand theories of management supported by elegant mathematical models and empirical analysis that appeared scientific, and thus earned their subject academic respectability, but were, in fact, a pretence of knowledge where there was none.
The article goes on to focus primarily on the lack of ethics in b-school, but I think the problem goes deeper. Business schools don't understand where quantitative analysis is accurate and applicable, and where it is made up bullshit. My hope is that the top programs will begin to embrace cognitive science and incorporate its findings into their programs. This really will help give management a slightly more quantitative edge, but they should still accept that some parts of the job will never be logical and analytical.