Taipei Times: How has the state of the global economy affected top-tier MBA programs?
Judy Olian: There are a number of ways in which the global economic crisis has had an impact on MBA programs. It has brought students into MBA programs who have lost their jobs, especially early on, so immediately there was a spike in the number of applications.
The global economic crisis has impacted new angles to what we teach, around global economic risk, the interdependencies of markets, ethics and integrity and crisis management, which has become a managerial imperative. When you think about what’s been going on at British Petroleum in dealing with the Gulf of Mexico oil spill, in addition to the pragmatics of operations, a lot of what they have been doing is crisis management, which is a challenge.
There have also been challenging conditions in terms of employment. Not only was there an employment downturn, it also meant that people had a much broader perspective in the jobs they were looking at, both functionally and geographically. Many students who might have previously only looked for jobs in the US have looked globally, and I think that’s a very good development, because we are in a global economy.
TT: Did you see a spike in the number of MBA applicants who lost their jobs during the financial crisis?
Olian: Initially, yes, but then it leveled off again. The other thing that we’re a part of is the narrow financial issues associated with getting financial aid and loans.
TT: Some people have pointed to business schools and MBA graduates as being at least in part responsible for the global financial crisis. Would you concur?
Olian: I think that singling out one set of people is way too simplistic an analysis of what happened in the market. Nobody in MBA programs for the last 30 years taught people to take unbridled or uncalculated risks. Nobody taught them to be unethical. To simplistically say that it’s one set of people or one type of behavior is really misunderstanding the huge complexity of what happened in the marketplace. There were some triggers around sub-prime mortgages and uninformed lending that then blew up into huge financial risk that then spread like a tsunami or avian flu throughout global markets. There were some of the wrong incentives associated with the way people were rewarded, and in a few instances there was unethical behavior.
That said, nobody in MBA programs has ever said, take uninformed risks. On the contrary, we try to teach people what the underlying risks are and how to behave in an ethical manner. What sometimes happens is, they leave and spend 10 or 15 years in organizations and their behavior is molded around the incentives offered. Having said that, we’d be living like an ostrich with our head in the sand unless we accepted that we have to do things differently.
TT: Some critics argue that ethics cannot be taught in the classroom. Do you agree or disagree?
Olian: Especially when you’re talking about the MBA, students come in at the age of 27 or 28. Something has happened during those 28 years. They’ve been molded by their families and experiences. But we can refine that. We can teach people ethics through case studies. Not that people who have emerged from MBA programs have questionable ethics, but what happens when incentives mold behavior? When you see somebody earning ridiculous amounts and doing things that raise some questions in your mind, do you raise those questions or do you do what he or she is doing?
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