Five Ways Business Schools Can Cultivate Better Leaders

(Photo by iStock/fongleon356)

Since the 1980s, economic inequality in the United States has been steadily increasing. Over the past two years, the COVID-19 pandemic and our collective response to it has made these inequities highly visible. Among many examples, workers designated as “essential” in various fields have been overworked, underpaid, and often placed in dangerous situations. At the same time, knowledge workers have largely been able to operate from the safety of their homes and in many cases grow more financially secure.

As a social scientist, I’m interested in how this kind of inequality comes about, how individuals become members of the economic elite, and how they imagine and justify their social positions. One important way people build and shape their identities is through institutions such as schools and universities. And as income inequality has increased alongside wealth inequality, these institutions have taken on increasingly powerful roles in determining who is most likely—and least likely—to sit at the top of the income spectrum.

Not surprisingly, elite business schools train many of our economic elites. Many C-suite executives hold MBAs from these institutions, as do many investment bankers, financial services professionals, management consultants, tech workers, corporate managers, and marketers who have an outsized influence on how the private sector runs. The MBA experience at these schools not only gives students access to recruitment for high-pay, high-prestige jobs, but also shapes their understanding of a businessperson’s or leader’s role in specific ways.

Between 2017 and 2019, I researched the culture and curriculum of elite business schools by interviewing students and graduates; speaking with professors; attending classes; and reviewing course materials and other documents. Through this research, I came to believe that while these schools prepare graduates to lead corporations to profits and propel them into those roles, they typically don’t cultivate businesspeople who are well equipped to serve the public good through private enterprise.

The widening divide between the haves and have-nots is untenable, and a decades-long stagnation of wages means that work is no longer the way to economic stability for most Americans. Educational institutions—and business schools in particular—should help mitigate these inequalities by cultivating leaders who contribute to the public good, and they can do this in five important ways.

1. Stop Treating Students as Customers

There’s a powerful culture in elite business schools that positions students first and foremost as paying customers, rather than as students who should be taught and challenged. As writer and scholar William Deresiewicz has argued, this fundamentally alters the pedagogical relationship between student and professor—and not for the better. In the case of elite business schools, this is manifest in pervasive policies of grade nondisclosure that situate coursework as less important that social and extracurricular activities, in a shrinking of required core curriculum that allows students a high degree of customization over their course load, and in the increasingly significant role of student evaluations in faculty performance reviews.

This arrangement incentivizes professors to cater to students in the short term. It can also push professors to avoid difficult topics and undermine their ability to take students beyond their comfort zones. As former Harvard Business School (HBS) professor Michael Anteby has described, professors who get high marks from students often deliver highly prepared and precisely timed, performance-like lectures. These may incorporate elements like playing games but typically require minimal preparation on the part of students.

The popularity of this type of teaching has coincided with formal and informal university policies that value faculty research over teaching, which further motivates professors not to push or challenge students through more-rigorous work—a pedagogical approach that often requires significantly more of the faculty member’s time. The professors I spoke with were very aware of this dynamic, and some were bothered by it. Several faculty members also expressed a level of resignation when it came to the MBA students, who they perceive as less academically inclined than other graduate students and who tend to like classes less than undergraduates. One professor described doctoral students as a “luxury class of consumption” for professors and the MBAs as amortizing the value of the faculty on a teaching front (note the economics-laden language).

By reimaging students as students, these institutions could vastly improve the quality of their education, as well as the experience of professors, who typically enjoy teaching more-engaged students. To do this, elite MBA programs could disallow grade nondisclosure policies and consider more rigorous grading policies, as well as deemphasize student evaluations of teaching in tenure reviews and promotions. Cutting class sizes, while expensive, would give professors the opportunity to interact more closely with students, and guide them in deeper analysis and debate. Finally, schools could increase the number of required courses to encompass a wider variety of topics, going beyond “bread and butter” subjects like basic accounting, economics, and finance to include topics such as the history of the corporation and of capitalism, labor relations in the United States, or the social context of business.

2. Use Case Studies More Creatively

Elite MBA programs disseminate their worldview to students through liberal use of the case method, a pedagogical approach developed by HBS that uses case studies to prompt discussion around real-world scenarios businesspeople have faced. However, the way cases are typically written and taught is problematic for two reasons.

First, they’re generally vetted by the businesses and/or individuals they describe. Thus, they’re told from the perspective of a business leader who is almost always described in a positive light, if not glorified. This approach to writing cases makes critical and nuanced perspectives particularly difficult to capture, and I’m not aware of another school or discipline that presents information this way. While there are sociologists and anthropologists who ask study participants if they feel appropriately represented in their writing and analysis, for example, this is a far cry from allowing research subjects to sign off on or approve any portrayal of them.

Second, students aren’t encouraged to consider outside information and in some cases are explicitly forbidden from seeking it. A syllabus I examined for a leadership course stated explicitly, “Please DO NOT conduct any additional research on the … case beyond the documents supplied in the course reader.” Most students I interviewed confirmed it was not common practice to bring up outside facts or information during case discussions. But while part of the perceived challenge is to respond to cases using only the information presented, important context is often missing. Students might have information on, say, the number of employees at a company and their profit and loss statements, but not on unemployment levels in the community where a factory is located or information about labor conditions. This teaches students to respond to only certain aspects of the case and in a narrowly defined set of ways.

Cases on Enron offer just one example and are particularly relevant because the Enron scandal is often cited as the reason ethics should be taught in business schools. In the syllabi I examined, I found three cases used to teach students about the company, which are all relatively similar in scope. (See here, here, and here.) They all explain how Enron’s executives profited by defrauding shareholders through extraordinarily deceptive accounting practices and dishonest reporting. What they don’t discuss beyond a mention is that executives also pushed employees to invest their retirement savings in Enron stock as they themselves were selling, and then prohibited them from selling in the three weeks during which share prices plummeted to near-zero. They also don’t discuss how the company provided the state of California with false information about energy supply and, as summarized by The Guardian, “shut down at least one power plant on false pretences, deliberately aggravating California’s crippling 2001 blackouts with the aim of raising prices.”

In other words, when students learn about Enron, they don’t learn that its offenses included intentionally causing summer blackouts, massively increasing energy prices ultimately paid by taxpayers, blatantly lying to the government of California, deliberately misleading employees, and depleting the retirement savings of most of its employees. Rather, they learn that Enron was scandalous for one main reason: It caused its investors to lose money and failed in its first and foremost purpose to provide returns to shareholders.

Business school professors should either use cases like these as a starting point for teaching about business problems and ethical quandaries and engage students in a critical reading of the text, or they should not use them at all.

3. Ditch Value Neutrality

Another problem with cases is that, in many instances, any well-argued response is equally acceptable in the classroom. The reasoning that was often repeated in my interviews was that MBA students are adults and the role of the professor is to cultivate a certain set of problem-solving skills, not to take sides in a debate—that essentially, they should remain value-neutral. Through this practice, professors can elicit various responses to business problems, while avoiding guiding students in thinking through significant ramifications of their decisions, such as effects on the lives and livelihoods of workers and their families or externalities that might affect the community.

Yet in reality, not all approaches to problem-solving are equally valid, nor should they be equally praised. Indeed, the custom of value neutrality and the common decision to ignore conversations about the social and environmental outcomes of business decisions, or to relegate them to elective courses, trains students to run businesses in ways that negatively impact communities and other stakeholders.

Value neutrality also presents unique challenges to African American and Latinx American students and students from low-income communities, who are often underrepresented in the halls of elite business schools. These students are often particularly attuned to the repercussions of exploitive business practice. Graduates of color I interviewed who were first-generation college students or grew up in lower-middle-class neighborhoods mentioned feeling insecure, out-of-place, and even angry at times in their MBA programs. These negative experiences occurred both outside and inside the classroom, and professor’s assertions of value-neutrality often inflamed them. For example, Jason, an African American graduate from a low-income community in the South recalled an in-class discussion about whether payday loan providers were justified in charging exorbitant interest rates:

Part of the reason why I was incredulous afterwards was because I don't think that all arguments should be treated with the same amount of respect.… And I think what was so frustrating, for me at least, was that … the arguments [in favor of] charging 400 percent or whatever astronomical number we were on … [were] treated and validated implicitly and explicitly in ways that … a steward of education, one with morals and ethics and so on and so forth, could have pushed back [on] more vociferously or could have repudiated … in a way that was respectful [and] still encouraged dialogue, but also suggested that there was something inherently wrong.

For students like Jason, conversations like these that take place in the real world, rather than in the classroom, could have significant consequences for their families and communities. As this example highlights, the pedagogical practice of value neutrality not only blunts students’ ability to contextualize business decisions and imagine them more holistically, but also can make it harder for students from marginalized backgrounds to thrive in the MBA classroom, and to contribute their unique and important perspectives to the conversation.

For these reasons, MBA programs need to re-examine value neutrality and consider their purpose in the broader context of institutions of higher education. Just imagine if Wharton aspired to the same aims as the University of Pennsylvania College of Arts & Sciences, whose goal “is to help students to become knowledgeable about the world and the complexities of today’s society, aware of the moral, ethical and social issues, prepared to exercise intellectual leadership, and enlivened by the use of their minds.”

4. Teach Students to Solve Complex Problems, Not Business Problems

While the business school curriculum excels in training students to use various frameworks to think through problems of market share, profit margins, and brand recognition, it often fails to address implications beyond a balance sheet.

These omissions occur for a few reasons. First, as discussed above, the list of required courses at most elite MBA programs typically doesn’t include classes that contextualize the American corporation, explore trends in and theories of capitalism, or address the history of labor in the United States (including unions, slavery, and women in the labor force)—topics that would complement, expand, and nuance students’ thinking around core subjects like finance, economics, and marketing. Instead, the focus on profitability and marketability means that issues affecting workers, customers, and communities rarely surface in MBA classrooms and aren’t typically seen as central to solving business problems.

Second, term lengths are often too short to allow for deeper exploration. Many MBA programs operate on the quarter system, which gives students just a few weeks to delve into any given topic. Some of the professors I spoke with expressed concerns that, particularly in core courses, there isn’t a lot of time or flexibility to challenge assumptions or get into why things are done a certain way due to tight course timelines.

Third, what schools define as a “business problem” is far too narrow in scope. The reliance on business problems as a narrowly defined set of considerations signals to students that their job as businesspeople is only to address these issues. In reality, the leaders of private businesses determine a great deal about how we live, how we work, and what we value, and have a great responsibility to consider the ramifications of their decisions on workers and communities. The assertion that they are beholden only to the companies they work for or the shareholders that benefit from them absolves them of this obligation. Without a broader understanding of what constitutes a business problem—and consequently of what the responsibilities of a businessperson are—students will struggle to develop decision-making practices that effectively address the kinds of complex problems business leaders ought to address.

Business schools need to revisit the selection of courses that constitute the MBA core and the time devoted to each course. In addition, professors should broaden the scope of problems or dilemmas that they address in their courses. Discussions must go beyond the implications for profitability, and faculty should guide students in systematically considering implications of decisions for all stakeholders. Finally, and perhaps most significantly, both professors and business practitioners should consider fundamentally redefining what constitutes a “business problem” or abandon the idea in favor of a focus on complex problems.

5. Teach Economic Theory as Theory and Offer Alternatives

A final barrier to cultivating more thoughtful and socially minded business leaders is the extraordinary reliance of the business school on economic theory. Economics is the business school’s lingua franca and enables easy communication between its different departments, but economic frameworks also lead people to view the world in ways that typically privilege efficiency and cost-effectiveness over other values.

What I found most interesting about economic theory in the MBA curriculum was not its pervasiveness, but the way it was mobilized. As scholar Mariana Mazzucato and journalist Duff McDonald have noted, business schools teach only a very small slice of what we know about economics. Additionally, rather than teach economics as theory, business schools often teach it as fact, and students are subsequently required to use economic frameworks in their reasoned responses to issues that come up throughout the curriculum—not just in finance, but also in ethics and leadership.

This practice is particularly odd because generally, in the academy, and particularly at the graduate level, professors are careful to distinguish theory from empirical evidence. Students in sociology or anthropology or political science are typically exposed to many theories; have a chance to explore their benefits and shortcomings; and learn how, why, and when to employ them effectively. In contrast, neoclassical economic theory is often the only theory offered to MBA students, and with the possible exception of a foray into behavioral economics (which doesn’t fundamentally contradict neoclassical economics), professors don’t often offer substantial critiques.

Economics is a part of the business school culture, and one of the reasons it’s so frequently employed and so highly regarded is that it is seen as a “hard,” quantitative science. One graduate who had an MBA and a PhD in engineering explained to me, “If you don’t talk about economics, people say it’s too squishy or not rigorous.” Yet this affinity for “hard” sciences deprives students of other lines of thought that might better explain phenomena they encounter in their studies.

Business schools could improve their teaching of theory by exposing students to a wider variety of economic thought, as well as to relevant theories from the social and behavioral sciences. This could help students better understand and analyze issues like employee or customer behavior and preferences, as well as the role of business in society and the effects of its actions. Within the field of economics, scholars like Marianne Ferber and Julie Nelson have offered economic theories that reconceptualize entities like the family and the firm, while Italian economist Mazzucato’s theories of value offer a different way to think about various economic activities. Sociologists and other scholars also study business and organizations from different perspectives—perspectives that could expand and nuance students’ understanding of the business world and their role within it.

Elite business schools in the United States play an important role in the cultivation of the economic elite and help shape corporate culture. Consequently, they influence the ways society thinks and talks about inequality, how we understand and reward various types of labor, and what actions we allow businesses to take or avoid. Today, these institutions excel at placing their graduates on paths to the upper echelons of corporate ladders, but they are less successful at producing thoughtful business leaders who contribute robustly to the public good. By rethinking certain curricular and pedagogical approaches to education, and by pushing to shift institutional culture, these schools may have to opportunity to improve, rather than exacerbate, economic inequality in the United States and beyond.

Read more stories by Rebecca Shamash.