In my early days as a financial journalist, I worked for the Anglo-French publisher Sir James Goldsmith. Although I can’t say I knew him well, he was a presence around the building, and he went on to provide a fulsome commendation for a book I published in 1995.
One of his memorable characteristics was his scorn for MBAs, whom he viewed as at best overeducated windbags. Hardly an ivory tower theoretician, he had never been to university but nonetheless ranked as one of Europe’s wealthiest self-made tycoons. He had thus earned his right to an opinion.
Nothing I have learned in the interim (in a career spent mainly in the United States and Japan) has undermined my confidence in his skepticism. Quite the contrary.
Perhaps the most telling evidence against the value of a business school education is in the various attempts to rank business schools around the world. There seems to be an inverse law at work: those nations with the most lackluster economies seem to score highest in the business school rankings. Meanwhile nations with outstandingly successful economies are nowhere in the rankings.
Take the latest Financial Times list. No fewer than fifty schools in the top 100 are in the United States alone. Meanwhile the United Kingdom boasts thirteen, Canada five, Australia three, and Ireland one. Thus the total for the Anglophone bloc is 72. Not bad for nations boasting less than 7 percent of the world’s population.
All this seems hard to reconcile with reality, however, given that, measured by their share of global output, the main Anglophone nations have been losing position in the economic league table for decades. Take America: its share of global output has plummeted from nearly 50 percent in 1950 to less than 20 percent today.
As for East Asia, the story is entirely different: somehow East Asia has achieved spectacular economic growth — boosting its share of global output nearly five-fold since 1950 — while never developing any serious business education.
Even China, with four times America’s population and a long-term growth rate unprecedented in human history, boasts just three schools on the FTlist. Tellingly not one of these is based in a university considered prestigious by Chinese standards. (If you want to be taken seriously in China, you wouldn’t be see dead in a B-school. Rather you study engineering at Tsinghua or law at Peking.) As for the rest of East Asia, Korea boasts a measly one school on the FT list and neither Taiwan nor Japan has any.
Nor is this dichotomy unique. It is reflected in Europe. On the one hand the United Kingdom scores far higher than any other European nations in highly ranked business schools; on the other the United Kingdom economy has been by far Europe’s most disappointing major economy in the post World War II era.
By contrast, the story in Germany is the opposite. Germany boasts only one business school on the FTlist yet – have you noticed? – it has long since passed the United Kingdom to become Europe’s largest and most powerful economy.
As for rich Austria, it is a no-show in the FTrankings. So are the Scandinavian nations. Yet anyone who bothers to check discovers that Scandinavia is probably the world’s richest and best-run region (measured at market exchange rates, per-capita income in Norway is nearly twice America’s).
What is going on here? It is an anomaly that might provide a suitable research topic for some capable business school professor – provided, of course, he or she were prepared to run the gauntlet of the group-think and defensiveness of his or her colleagues.
A book could be written on why what MBAs are taught may not be good for a nation. Sadly Sir James Goldsmith is no longer with us but if he were to explain himself he would surely point out that the case studies at the heart of much business school education are cartoonishly simple and provide no grounds for scientifically respectable generalizations. Certain aspects of a business education can be taught, most notably balance sheet analysis and statistics. But in many parts of the world these subjects are taught very effectively in a quite different environment that does not require a big deal business school culture.