Click here for the debate. started November 21, 2008
Financial Crisis: Blame B-schools
Business schools are largely responsible for the U.S. financial crisis. Pro or con?
Pro: Failure to Promote a Higher Cause
We are facing the most severe economic crisis since the Great Depression. There is plenty of blame to go around. But as suppliers of ideas and talent to the business community, business schools need to accept some responsibility.
Ideas and tools—exotic financial instruments, poorly designed compensation plans, models of corporate leadership that value leaders’ charisma over substance, an uncritical embrace of laissez-faire models—were taught to MBA and executive-education students without considering whether these idea and tools would contribute to a firm’s long-term well being or endanger the legitimacy of the U.S. capitalist system. etc. etc.
Con: Business Education—We Need More, Not Less
A natural response to crisis is to try to make sense of it—how did we get here, could we have prevented it, and how do we fix it? But sense-making can easily turn into a less productive and more vindictive blame game. While ethical lapses and illegal activities should be exposed and prosecuted, the more urgent question is why financial crises seem unavoidable. Is it really because business schools do not have the right mission statement?
As unprecedented as current events may seem, researchers have documented at least 18 bank-centered crises globally since 1974, and the majority were preceded by runups in housing and stock markets, large capital inflows, rising public debt, and financial liberalization. etc. etc.
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