Business is undergoing profound change. Encouraged by regulatory reforms proposed by the European Commission, the continent’s CEOs are at the forefront of promoting purposeful, responsible and sustainable business. European business schools should be at the forefront, but run the risk of being left behind.
Many schools have been slow to recognize the extent of reform required by their curricula. They have introduced electives on topics such as environmental, social and corporate governance and sustainable business, but their core courses remain largely unchanged.
The recent final report from The British Academy Future of the Corporation program highlights the extent to which business embraces purposeful profits – making money by solving problems rather than exacerbating problems for humans and the planet. It argues that businesses need support and accountability, and sets out policies and practices.
Business school research and teaching should be the source of education for the next generation of managers and entrepreneurs. But shareholder priority remains at the heart of schools’ programs, which are focused on economic theories, financial models and management studies. Courses start with the assumption that the purpose of a business is to maximize shareholder wealth and everything – accounting, finance, marketing, operational management, organizational behavior and strategy – follows from that.
Courses should begin by asking what the purpose of business is, why it is created and why it exists. They need to identify the rich variety of answers and build programs to match. They must use interdisciplinary knowledge from across the humanities and sciences to provide the skills and values needed for business in the 21st century.
This approach is inspiring for students, enlightening for leaders and productive for researchers. It positions schools at the heart of their universities, connects their knowledge with that of other faculties, and promotes the goal of universities to contribute to human prosperity, well-being and prosperity along with education and learning.
Such an approach aligns ownership, management, measurement, performance, finance and investment with the corporate goal of solving problems profitably. It shows how companies engage in business and technological innovations in collaboration with the non-profit, public and social enterprise sectors to solve global challenges.
These are the capabilities that businesses are increasingly looking for in new recruits. Employers need graduates who can help them contribute to addressing rather than causing environmental degradation, inequality, social exclusion and mistrust. They need people with new skills in engagement, collaboration and inclusive decision-making, who can apply it not only as cost centers, but as sources of value creation for investors and the community at large.
Impressive developments are underway. One of these is the recently established Hoffmann Global Institute for Business and Society at Insead in France, which seeks to transform business education around sustainability, inclusion and well-being. It is based on the idea that business should be a source of environmental and social progress as well as profit, and it should be at the heart of research and teaching.
Harvard Business School runs a course called Reimagining Capitalism: Business and Big Problems in his MBA and has set up a program of research on impact-weighted accounts to measure companies’ benefits and burdens. Saïd Business School at Oxford University has been providing core courses on responsible business and how it can address global challenges for several years. It has research programs on corporate purpose and ownership, governance, measurement and performance, and it works with seven leading European schools to address the climate crisis.
However, none of these schools have gone far enough to place corporate purpose at the heart of core courses. One reason is that they have invested capital in existing knowledge, practices and associated research, data and reputations. Secondly, they have an eye on their position on rankings that prioritize criteria such as alumni salaries, linked to profit rather than broader measures of performance. Third, there is concern about the loss of competitive position by migrating to what some see as the “soft end” of business school culture – not competition.
The appropriate response to skeptics is factual evidence. This should come from academic research, exploring performance and competitive markets, on whether targeted business is more commercially successful, as well as more environmentally and socially sustainable, than old-fashioned business.
Companies have an important role to play encourage business schools to adapt. They can prioritize the recruitment of students with the skills associated with purposeful business practices. They can fund scale research on topics related to “profits from progress”. They can award scholarships and faculty positions to attract students and academics with the necessary attitudes and expertise.
Whether schools – backed by business – can transform themselves will determine whether business education remains relevant and survives in the years to come.
Colin Mayer is Emeritus Professor of Management Studies and a former Dean of Saïd Business School, Visiting Professor at the Blavatnik School of Government, Oxford, and Academic Head of The British Academy Future of the Corporation Program