Cash cows amid bulls and bears

April 23, 1999

Business schools can earn millions - but is what they do proper research and should academics be allowed to reap huge profits from private work? Phil Baty reports.

Just when the field of business studies thought it was beginning to peel off its label as a "phoney academic subject", its academics have found themselves at the heart of controversy again.

Business academics may well have had smug smiles when the recent Department of Trade and Industry's competitiveness white paper called on universities to smash down their ivory towers and become "engines of economic growth". The then cabinet minister Peter Mandelson said that too many ideas were "locked up" in universities, "just waiting to be liberated".

Business schools have led the way, unleashing their ideas into the boardrooms of any company ready to pay and generating large quantities of cash for their universities - and in some cases, their professors - in the process.

But as the government steps up its role as match-maker in the arranged marriages between higher education and the commercial world, the reputation of business schools as the shameful "cash cows" of higher education and that of their staff as glorified consultants is coming under increasing scrutiny.

There are questions, too, over how much consultancy cash finds its way into the pockets of business academics rather than into university coffers (see box right).

"The issue is more relevant than ever," says Jonathan Slack, chief executive of the Association of Business Schools. "We call it the 'double hurdle' - how to secure academic respect and real-world relevance."

Debate over the dilemma is expected to come to a head today when business school leaders meet at the Association of Business Schools annual conference. There, Department for Education and Employment permanent secretary Michael Bichard is due to tell them they should become "world class" by further increasing their relevance to the business world.

Tony Cockerill, director of Durham University's school and chair of the ABS research steering committee, believes the argument over whether business and management studies is a subject that should be taught in universities has already been won. Just last year, even lofty Oxford dons accepted a controversial benefaction to establish the Said Business School, though not before critics such as English professor Valentine Cunningham condemned business studies as "a shallow contemporary shibboleth promoting a noxious cant", a "phoney academic subject".

Yet acceptance in some academic quarters still relies on the maintenance of an uncompromising culture of pure and unadulterated blue-skies research, well removed from the sullying influence of commercial cash. In opposition to this rather old-fashioned view, business academics are determined to keep moving the goal posts and to challenge what they see as old, elitist preconceptions.

Despite persistent unease about the intimacy between companies and business academics, the ABS wants to see more and closer links. "Business schools are seeking to collaborate with corporations in many ways," Slack says, "not just through providing teaching programmes but through research and consultancy. Such collaboration is government policy."

Cockerill agrees. "There should be substantially more symbiotic links between business and business schools," he says. "Generally we don't do enough."

Indeed, some of the most prestigious business academics made their names at the cutting end of the business world. John Kay, head of the new Oxford school, is former chair of the consultancy London Economics. A recruitment drive by City University business school last year saw three of four new visiting professorial posts go to businesswomen.

But Cockerill acknowledges that getting the balance right between blue-skies research and lucrative privately funded consultancy-based research can be problematic. "The best business schools do both. And the best institutions enable a conversion process, whereby the consultancy work can be translated into good research. But it is very difficult."

Financial pressures on universities can encourage business academics to concentrate on winning research funding from private sources, but this work is often unoriginal and too narrowly focused to be widely relevant. "There is not a great deal of good, original research commissioned by a single private source," Cockerill says.

For commercial cash commonly comes with strings attached. Geoff Walsham, a former consultant and now professor of management studies at the University of Cambridge's Judge Institute of Management Studies, believes only the naive think they can undertake independent research with a private sponsor's money.

"If you do sponsored research you do not have as much freedom as with a research council grant," he says. "The sponsor is looking for more direct value for money. That is perfectly reasonable. You would have to be very naive if you were not aware that you are constraining yourself to an extent with a commercial sponsor. You enter the arrangement with your eyes open."

For Walsham, it is essential to work with the real world. "Consultancy makes you aware of what people are talking about at the sharp end, and collaboration is seen as positive."

But the balance can get skewed. "There is a lot of pressure," he concedes. "The research assessment exercise demands publications in the top refereed journals, but they are not what business practitioners read. Doing work with Sainsbury's might carry more clout with businesses than (research paid for by) a grant from the Economic and Social Research Council. But the RAE panel will be more impressed by money from the ESRC than it would by money from Sainsbury's. They are different stakeholders. We want to keep all stakeholders happy.

"This is sometimes a conflict. There is pressure to be good at everything. And a lot of this is not complementary."

Walsham believes that in a properly managed school, a natural balance, albeit a delicate one, can emerge. In 1996, the RAE panel would not assess the quality of research that had not already been published. As much company-sponsored work is commercially sensitive, this rules out a lot of consultancy work. When, rarely, consultancy reports do contain original research, they can be submitted to the RAE if the sponsor agrees.

But departments with poor research records may move too quickly into bed with commercial partners, Walsham says.

Cockerill concedes that there is a worrying lack of guidelines about how many constraints academics should accept from high-paying commercial research sponsors. "I can see that there could be a dilemma for some institutions," he says. "There is no general protocol on how a business school should approach setting up research grants and contracts. There are Committee of Vice-Chancellors' guidelines on managing such contracts generally. But the ABS hasn't worked towards any guidance. Maybe we should."

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