The role of business schools within universities

University business schools should not be viewed simply as ‘cash cows’ that entice international students, writes Alec Cameron 

November 6, 2017
Business men at ATM
Source: Alamy

For two decades or more, the evolving relationship between business schools and their host universities has arguably brought much greater benefits to the former than the latter. In the future, if universities and business schools want to achieve the greatest impact on the societies that they serve, now is the time for them to re-evaluate their relationship with one another and with the wider business community. 

Having spent the past 15 years in vice-chancellor, deputy vice-chancellor and business dean roles in the UK and Australian higher education sectors, I have observed first-hand the major trends in the industry and the way that these trends have changed the relationship between business school and university. Two of the most significant trends have undoubtedly been the growth in student numbers and international student mobility. 

In the UK and Australia, there has been substantial growth in the enrolment of domestic students, with participation rates in both countries climbing to more than 40 per cent. Yet this growth has been outpaced by the growth in the enrolment of international students, mainly originating from China. 

In Australian universities, more than 25 per cent of the student population now comes from overseas, while in the UK the figure is 20 per cent. A major attraction of these international students to universities is that their fees are typically one and a half times or double those of their local peers – sometimes even more. At a time when fees or government funding for local students has not been matching cost indices on a per student basis, international students have provided a vital high-margin revenue stream for universities. 

The issue is that more than 50 per cent of international student demand has been for business degrees, so universities, in spite of a desire for greater diversity in disciplinary mix and country of origin, have admitted larger numbers of international business students each year.  

Compared with other disciplines, business has seen high market growth locally and internationally; it can attract a higher student fee in a deregulated market based on expected graduate earnings; and it is perceived to be inexpensive to teach and highly scalable. 

As such, business schools have become the reliable “cash cows” for vice-chancellors, enabling them to fund ambitious growth plans in other lower-demand and lower-margin disciplines, as well as costly research that enhances reputation. Business schools have underwritten much of the investment in new facilities and initiatives.  

But it was not always so. Many leading universities have only acquired business schools within the past 25 years, subsequent to the rapid growth in enrolments. And there were many leading examples of business schools that sat outside universities, or maintained a strong “arms-length” separation. In many cases, these independent or quasi-independent schools have been acquired, merged or integrated into the mainstream of established universities. 

In Australia and the UK, a key factor has no doubt been the rise of business as an undergraduate degree or major. Demand from students to study on an established university campus, with all the benefits of the student lifestyle and facilities on offer, as well as the illustrious university brand, while pursuing a professional degree leading to a lucrative career, has been an appealing mix. 

The resulting reliable revenue streams has provided the capacity for universities to hire the leading business academics and develop prestigious programmes at postgraduate level, in research and in executive education. 

However, the academic establishment has been reticent to accept business as a prestigious academic discipline. For academic traditionalists, business “research” had too strong a focus on understanding good business practice than on theory and scientific discovery. 

The response of business academics and university-based business schools in the last generation has been to seek to overcome this lesser esteem within the academy by moving away from a focus on business as a practice-based discipline to one that is more academic in its orientation. This is evidenced by the extent to which the publications that are most highly valued in research assessment exercises are often those read exclusively by other academics rather than by business leaders or consultants.

Yet these efforts have been largely ineffective. Business schools are not able to compete with schools in the physical, life or medical sciences on the basis of research income or the volume of scholarly articles. Nor should they; society does not require the same amount of investment in research in accounting as it does in medicine. 

So, what is the direction for business schools? The opportunity is likely to be the trend towards greater recognition of research impact beyond its academic impact. Research impact is a natural strength for business schools and their engagement with business often opens the doors for engagement from other disciplines in the university.

A refocus of research on business practice rather than the academy could prove to be the saviour of both business schools and their parent universities.

Because business schools are the most commercially attractive segment of higher education, they have become the most competitive and the most internationalised. With promises of well-paid careers, their students have a greater appreciation of return on investment and universities have taken this opportunity to set fees accordingly. This higher level of student expectation coupled with competition between schools has spurred more innovation, with business schools at the forefront of the sector in terms of online education, executive education and new programme structures and modes of delivery, as well as in the engagement with external stakeholders through advisory boards. 

If vice-chancellors are seeking to understand how universities will evolve in the next decade, they may do no better than by looking at where business schools are today.

Alec Cameron is vice-chancellor and chief executive of Aston University. This article is an excerpt from Rethinking Business Education, a collection of thought pieces produced to celebrate 25 years of the Chartered Association of Business Schools.

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Reader's comments (4)

While I agree with the overall thrust of the article that the role of B Schools need to be viewed through a wider lens than as mere cash cows for universities, I disagree with a key point being made. i.e. that B-schools should focus extensively on practice and industry relevant research as a marker of future strategy. Even assuming such simplistic quantification is possible, statements such as 'society does not require the same amount of investment in research in accounting as it does in medicine' are particularly worthy of critique and reflection. Extending the same rationale, one could argue that social science research is in itself of less importance than research in natural sciences. The problem with statements such as these are that they fail to adequately reflect on the powerful role that business schools can and acutely need to play in critiquing, problematizing and offering an alternate conception of the role of business and professions in society, state regulation in industry and the path that public policies relating to industry, economics and business need to play if we are to conceive of a sustainable future. Profiteering, lack of ethics, lip service to governance, weak accounting and tax frameworks, poor enforcement and lax compliance have repeatedly combined to unmask the dark underbelly of contemporary corporate practices in many regions of the world. All this suggests strongly that rather than become a hand-maiden to industry or restrict itself to practice relevant research, B-schools must look to partner closely with social institutions, regulatory and policy bodies and with responsible corporations and professional leaders to research and develop a critical body of knowledge that helps re-regulation of business practices in the service of society. If this involves the conduct of high quality scholarship that speaks to other academics in philosophizing alternatives, so be it. The alternative runs the risk of B-Schools being reduced to mere research and recruitment back offices of business, a trend visible in large parts of Asia. In such a view, society, it turns out, does need extensive accounting research, but one that points a way out of the current morass in which the accounting profession finds itself - in which, it has been reduced from a noble gate-keeping institution for credible public financial information to a mere for-profit business. In an age where the relevance of the MBA is being questioned, such enlightened and critical scholarship should constitute the path to future relevance for B-Schools, rather than merely instrumental conceptions of commercial viability or impactful practice-oriented research.
We agree that business schools are much more than ‘cash cows.’ Their legitimacy can be enhanced by acknowledging their applied research contributions to organisational practice. We suggest that interdisciplinary research impact can be facilitated by collaborations with subjects such as STEM where higher research income and journal articles are the norm, and also by business schools lowering their walls: Currie, G., Davies, J. and Ferlie, E. 2016. A call for university-based business schools to “lower their walls”: Collaborating with other academic departments in pursuit of social value, Academy of Management Learning & Education, 15: 742-755.
Business Schools are essential, but should be no more 'for' business than politics departments are for politicians or political parties. A particular scandal yet to be publicly addressed is business and management faculty comprise about 20% of all social scientists. Yet the ESRC gives around 2% of its grants - if that - to Business Schools. It quite suits other social sciences skimming off the top like this to frame business and management research in this simplistic 'service to business' way. Instead, we should consider how much of the country's problems are due to bad business institutions and practices, and recognize that the 'winners' in this elite rake off are, institutionally, complicit in the problems caused by untramelled and unexamined business practices.
Great to hear Alec Cameron expand on this theme at the Chartered Association of Business Schools conference in Birmingham last week. Three themes which are intertwined here might benefit from being teased apart. First, business schools can and should cross subsidise to some extent within individual universities. This may seem like heresy from within the business school community but at some stage in the distant future, business schools may be in need of such cross subsidy. Fads and fashions change over time ... there should however be a collegiate conversation about the extent of the cross subsidy. Second, business and management research funding appears to be being squeezed out by other disciplines. The research council funding pattern should perhaps more accurately reflect the composition of the academic community it funds and the data that Bill Cooke cites suggests that this is not the case in the UK. Third, the nature of the research conducted within business schools merits a debate. What proportion of the funding should be directed toward studies that aim to "improve" the practice of running organizations successfully ... and what proportion should be directed toward more abstract studies of the process of organizing. As Alec Cameron notes this is "evidenced by the extent to which the publications that are most highly valued in research assessment exercises are often those read exclusively by other academics" ... this point has been made for decades in the so-called relevance debate in management research. That what Cameron says isn't new doesn't mean that he isn't right. Perhaps only by addressing all three strands concurrently will our business schools and our universities prosper in the medium term. The alternative, in a rapidly changing HE landscape, is frankly unthinkable.

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