Growth in demand will change business supply

May 5, 2000

Business and management course suppliers will have to adapt to the growing shortage of top educators, predicts Paul Danos

The booming global economy demands well-trained and confident business leaders at ever- increasing rates, and, judging from the extraordinary salary offers for the top MBA graduates, the demand for quality business education will continue to grow as the prosperity of the world increases.

But the highly qualified faculty - those with PhDs who have developed a deep expertise through research - may not be there to meet the demand. The signs are already pointing in that direction in the US and the situation is worse in other parts of the world.

The number of faculty posts in business schools seems to be increasing faster than the number of PhDs being produced, which, in the US at least, seems to have slowed. More than 1,300 PhDs were reportedly produced in 1995 compared with 1,221 in 1997, and the American Assembly of Collegiate Schools of Business reported just 1,006 in 1998.

In contrast, the number of reported faculty vacancies ranges from 14 per cent and 10 per cent respectively for information technology and international business to between 5 and 10 per cent in finance, organisational behaviour, operations, marketing and accounting.

While there are no comparable hard numbers on the non-US demand and supply, I predict that the projected shortfalls will be far more severe in Europe, Latin America and Asia, where the percentage growth in business programmes is greater and the relative number of PhDs being produced is lower.

Faculty's rigorous research informs teaching and corporate interactions. This is crucial to high-quality business education and that is why top schools such as Amos Tuck and many others support research at such high levels.

Most academic programmes that aspire to quality and accreditation have attempted to put broadly similar faculty models in place: faculty are promoted and rewarded according to their acknowledged expertise in researching specific topics and teaching students based on their expertise. The employment contracts, tenure regimes and research support have been remarkably similar.

It follows that if the supply of PhDs will not even meet US, much less global demand, the basic model of academic faculties will inevitably change.

Outside the very top schools worldwide - perhaps the top 30 or so - the model of research-oriented faculties who carry out most of the teaching in business schools will not be as widespread in the future. While the expertise of research-oriented faculty will remain very important in most academic environments, many business educators in the future will perforce not be PhDs, and many will not be on a traditional tenure track.

One development may affect these trends: the new information technologies may allow a relatively small group of renowned researcher/experts to meet a considerable portion of the burgeoning global market demand for management education. Such a development would further concentrate the expertise in a relatively small number of top schools.

In addition to business programmes in academe, there will be non-academic entities offering electronic degrees and other types of online business instruction. I believe that most of those entities will "outsource" much of their teaching, with little concern for faculty research or status within a traditional faculty.

However, the recognised business schools will participate in the online and distance-education space. Their research-oriented faculty will be much in demand and they will deliver the highest quality business instruction.

In summary, I predict the following trends:

The shortage of top-quality PhD-qualified graduates will grow because the best PhD programmes show no signs of meeting the worldwide demand for business faculty

The rewards for the most renowned faculty experts will grow as their outreach to larger audiences will be aided by

technology

Increasing rewards for the best will attract high-quality entrants to the best PhD programmes, but the numbers will not be great

The top business schools may keep their current faculty structures, but other providers of business education - academic and non-academic - will outsource much of their teaching to staff with no research function.

These developments point to a far more complex market for top management educators and business schools that aim for excellence will have to find ways to compete for their services.

Paul Danos is dean of the Amos Tuck School of Business Administration at Dartmouth University, United States.

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