Like the corporate world, big international business schools are trying ever harder to cut costs as the downturn drags on. Even the mighty Wharton School moved to eliminate $10 million in expenses in recent months. But one part of that operation emerged almost completely unscathed–academic research.
“We’re not only in the business of educating those on campus. We’re also in the business of creating knowledge, of participating in the public debate and contributing to public policy,” says Mauro Guillen, the director of Wharton’s Lauder Institute. “To do those things we have to invest heavily in original research. If you add up the cost of faculty time, of research assistants and administrative staff, of producing and purchasing data and of surveys and the expenses involved in publication, you’ll find that somewhere between a third and a half of our total budget is directly related to research activity.”
Of course, any potential MBA student trying to work out how he or she will pay for a top-flight program might ask what direct benefit that huge investment in research can have for him or her. According to Jenny George, acting dean at Melbourne Business School in Australia, one obvious benefit is the fact that active researchers make better teachers: “They tend to be more up-to-date, more engaged in their subject matter and continually inquiring about whether there are better ways to do things. All that makes for a more exciting and engaging classroom.”
Howard Thomas, the dean of Warwick Business School in Britain, offers a similar line: “There will always be backroom people who may not be so effective in the classroom but who do great work behind the scenes to move a discipline forward. On the whole, however, I believe there is a direct link between high-quality research and high-quality teaching, as long as the research is informed by the practical needs of managers in the workplace and the marketplace. To produce the best research, you have to be completely immersed in your subject, and that, in turn, makes for a stimulating experience for students.”
It seems there are no shortcuts for business schools when it comes to research. “If you want to train the best people in the most effective way, you can’t do it by simply recycling existing material or waiting for new material to come along,” says Patrice Houdayer, dean of EM Lyon Business School in France. “Academics need to produce original material of their own, they need to be continually developing and passing on new knowledge, and they need to have an opinion. You can’t achieve those things just by reading someone else’s work.”
Or, as Warwick’s Howard Thomas puts it, “If you aren’t engaged in cutting-edge research, then you may as well just tell your students where they can buy the standard textbook.”
Another popular argument for the continuing emphasis on original research at top schools is that it moves the teaching away from anecdote and opinion and onto a far more solid foundation.
“Managerial practice should be based on evidence,” says Jenny George, “and research gathers evidence that leads to solidly based decisions about management practice.” In the past year her school has invested in two Centers of Excellence, one focusing on leadership for social impact, the other on ideas and the economy. The centers provide the faculty with access to resources in business, nonprofits and government for research that deals with important policy issues and business practices. “Without research we’re into the territory of try it and hope it works, which is not what our students want or expect from us,” George says. “The kind of research business schools should be doing is bold, potentially long-term and detailed. It is most certainly complex and rigorous.”
Patrice Houdayer, at EM Lyon, takes a similar view. “Good management is not just about a set of soft skills,” he says. “It should be a rigorous discipline. That’s why we don’t just need to produce good research, we also need to educate our students in how to read it, understand it and employ it in their day-to-day working lives. The people who pass through business school campuses will always have to be looking for new ideas and new ways of securing competitive advantage. Original research can help them deliver on that.”
Granting, then, that research is so important to business schools, how effective is it really? How many b-school academics came close to spotting the economic storm that has engulfed the world? When pressed, schools can name researchers among their faculty who were concerned about the financial services industry’s cavalier attitude toward risk in the lead-up to the credit crunch, but very few can name anyone who countered the relentless optimism of the pre-downturn years. But was that the fault of their research or just the mood of the time?
“We were producing a lot of written research on the impact of sustained low interest rates, the reasons for past crises and identifying early signs of a bubble,” says Mauro Guillen, “and we’ve used our research as a basis for advising policymakers on how to counter the downturn. But all business schools got too excited about how things were evolving, and perhaps weren’t concerned enough about the way the financial sector was taking over the economy. Our graduates were benefiting from the strong market, and consequently we didn’t allocate enough resources to foreseeing the crisis. What was needed was more informed research and policymaking.”
It seems that business schools, or at least the deans and directors who run them, are human and subject to hubris just like the rest of us. At least their insistence on keeping up on research and disseminating it to students and the wider world suggests that they’re determined not to fall into such a trap again–and that is surely good both for future MBAs and for the business world as a whole.