MBA Education is bad for Society/Business/.... Students?!!!

Here is a formulae for making an explosive - and suicidal - social cocktail:

take a bunch of ambitious and intelligent young people, whose primary motivation to join the course was not really to manage business or contribute to any public good - but to make more money than their peers. To be sure, an average candidate to B-School (before s/he starts preparing for the "entrance test") has absolutely no idea of what industry, economy, business or managing is all about (and even if s/he has worked for a couple of years, contributing to make a change is not the main reason for deciding to join an MBA course); the primary criteria to apply for and select a particular B-school is monetary self-interest, i.e., the "placement" - i.e., will it land me in a "good" (read, lucrative) job or not? Will the "opportunity cost" be worth the money and time? Is the "ranking" of the B-School good enough to give me a brand-equity, etc....

for two years, give this "consumer" a concentrated intellectual input that organisations exist for the sole purpose for increasing profits/money/shareholder returns/market share - or whatever!... Even if s/he does not (have to) sit through all the classes, this "doctrine of self-interest" has an intrinsic appeal which justifies the ends.

This posting is about the 2nd point:

Are B-Schools bad for Society/ Business/... Students?

A recent item in The Economist quotes Sumantra Ghoshal from his forthcoming article (to be published posthemously) that the:

"...worst excesses of recent management practices have their roots in a set of ideas that have emerged from business-school academics over the last 30 years."... The article goes on to note:

"These include supposedly simplistic models of individual human behaviour (rational, self-interested, utility-maximising homo economicus) and of corporate behaviour (the notion that the goal of a firm should be to maximise shareholder value). These assumptions... were simple enough to allow business-school academics to develop grand theories of management supported by elegant mathematical models and empirical analysis that appeared scientific, and thus earned their subject academic respectability, but were, in fact, a pretence of knowledge where there was none."

To quote from an earlier posting on Alternative Perspective blog, Sumantra Ghoshal had noted:

"...that agency theory, created by Michael Jensen at Harvard, taught MBA students that managers could not be trusted to maximize shareholder value and therefore managers' and shareholders' interests had to be aligned through incentives such as stock options.

At Berkeley and Stanford, students were taught transaction cost economics, developed by Oliver Williamson, which argues that the only reason companies exist is because managers can exercise authority to ensure all employees do what they are told. As a result, managers must ensure that staff are tightly monitored and controlled while creating individual performance incentives.

Michael Porter has argued that to be profitable, a company must actively compete not only with its competitors but also with its suppliers, customers, regulators and employees, striving to restrict or distort competition, "bad though this may be for society."

Ghoshal concludes that "by incorporating negative and highly pessimistic assumptions about people and institutions, pseudo-scientific theories of management have done much to reinforce, if not create, pathological behavior on the part of managers and companies. It is time the academics who propose these theories and the business school and universities that employ them acknowledged the consequences."

On a similar theme, a couple of years back, Robert Simons, Henry Mintzberg, and Kunal Basu had published this Note to CEOs about the 5 Half-Truths of Business. To quote excerpts about two of these five half-truths:
"...As business leaders and academics, we need to challenge what we do and what we teach. For some years now, we've been captured by a questionable set of beliefs -- assumptions about business that are, at best, half-truths.

We're only in it for ourselves.
Think of this as the first law of business: In our finance classes, we are teaching a view of the world that says that each of us is obsessively self-interested and intent on maximizing personal gain. Economic Man, we tell our students, has one goal: more. And to get more, each of us is willing to do anything.

It is, of course, a half-truth. To some extent, we are all self-interested. And today, perhaps more than ever, there are plenty of people - business leaders, financiers, consultants, athletes, professors - who are willing to sell their integrity for a price. There are people who just want more and who are willing to do whatever it takes -- and take whatever they can get.... But here's the problem: The half-truth of Economic Man drives a wedge of distrust into society. If we truly believe that each of us is nothing more than a calculator, then we become a society of calculations. Business simply won't work if each of us is only in it for ourselves. While we need to have individual initiative, we survive in a context of social engagement.

Corporations exist to maximize shareholder value.
If there is a mantra that CEOs today have learned to repeat almost mindlessly, this is it. Analysts, the media, and institutional stock traders rate, reprimand, and reward companies and their CEOs based on this single standard of performance.... What's remarkable about the current worship at the altar of shareholder value is that it's a reversal of our prior beliefs and behaviors. We used to say that corporations exist to serve society. After all, that was why they were originally granted charters - and why those charters could be revoked. We used to recognize corporations as both economic and social institutions - as organizations that were designed to serve a balanced set of stakeholders, not just the narrow economic interests of the shareholders.... Of course... shareholders need a fair return on their investment. But there is a larger truth to this half-truth: Maximizing shareholder value at the expense of all of the other stakeholders is bad for business and bad for capitalism. It drives a wedge between those who create the economic value -- the employees -- and those who harvest its benefits..."

...So, given the profile of aspirants/students (consumerist/ self-interested/ insular) which the MBA progams attracts (point 1)- who are driven by personal selfish goals, a utilitarian attitude , a self-focued ambition and superior intelligence... but ignorant/insensitive etc....

do B-Schools promote and reinforce these tendencies?...

...or as Mintzberg noted: do the B-Schools help developing:

"...dangerous people, especially in this hyped-up society, are... those whose confidence exceeds their competence. These are the people who drive everyone else crazy. MBA programmes not only attract significant numbers of such people but encourage their tendencies."
???

[postscript: A couple of months back, I had posted a note about the "Socialist" countries (alive and thriving) on this blog - which led to a personal mail exchange (not very pleasant, to be honest) with a IIT/IIMB student, who vehementaly and emotionally differed with that viewpoint. I admired him for his intelligence - he was, in fact, selected for the exchange program to Texas A&M - was extremely well-read and intellectually sharp... what stuck me was his parting comment in his mail:

"I don't give a shit about this country or any other country in the world, I am just a simple good old greedy person who wants to become the richest person in the world and create and exploit discontinuities so please don't ascribe your motives to me (and if my actions indirectly result in wealth creation and benefit to society well that is a side effect I can live with :)."]

...Is this the archetypal MBA we - me included - produce in B-Schools??!!!