The end of the business school?

University business schools are sometimes even better known than their parent universities. Of course everyone knows about Harvard University, but Harvard Business School is probably mentioned even more in conversation and discourse. In relative terms business schools are a recent development in higher education. Many people assume it was an American invention, but actually the United States came late to the party. The first business schools, dedicated specifically to teaching business or commerce courses, emerged in France from the early 19th century, and then spread to other European countries. It was not until 1881 that the first American Business School – the Wharton School of Pennsylvania University – opened its doors. Though Wharton declares on its website that it was the first globally, in reality it wasn’t. Britain had its first business school in 1902.

But the real surge of business schools occurred somewhat later, from the 1960s onwards, and even in the past decade new schools were still being established. Some of these were stand-alone institutions not affiliated to any bigger university; some have had a semi-autonomous status in association with a university; some are integrated Faculty units.

The rise of the business school was accompanied by the rise of its flagship educational programme, the Master of Business Administration (MBA). This was an American invention, with the first one set up by Harvard Business School in 1908. The MBA did not appear anywhere outside the United States until after the Second World War. But by the 1980s it was ubiquitous, the most common taught postgraduate degree in the world, and also a uniquely profitable programme offered at a relatively low cost. Whole universities began to rely on the revenues from business schools and their MBAs.

But from about 2000 voices began to be heard predicting the decline of the MBA, and with it the decline of business schools. By the time the downturn and recession came later in the decade, such voices became more urgent. In 2009 the New York Times ran an article by Kelley Holland suggesting that MBA programmes may actually have contributed to the economic crisis as business schools had ‘become too detached from real world issues’. And now more recently others have come forward suggesting that a significant number of business schools may actually fail. The Dean of the Haas Business School at Berkeley has predicted the ‘demise’ of half of the world’s 10,000 business schools.

There is little doubt that a number of things are potentially conspiring to make the future of business schools more uncertain: technology, demographics, economics, and changes in how companies see the career development of their managers. It is also clear that the MBA is not the gold standard of business education that it once was. However, predictions of its complete disappearance have not come true, and to some extent it is a more resilient product than some have expected.

What can be seen however is that there is no longer a single model for a business school; but maybe there never was. Some focus on postgraduate or indeed executive education, some are integrated and include all levels of formation and training. But one trend that may be emerging is the disappearance of stand-alone business schools, not associated with any larger university.

Business schools need to be part of the strategic model of a parent university, and need to share that parent’s educational, scholarly and pedagogical perspective. Business schools will always be expected to make money, but they need to have a vision that goes beyond a financial model. With that vision, business schools, in all their variety, may be with us for some time yet.

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