Management

New Business Models and the Changing Contexts of Business School

By Peter Lorange, Jagdish N. Sheth and Howard Thomas

The traditional models of many business schools are being questioned given their serious financial difficulties. Below, Peter Lorange, Jagdish N. Sheth and Howard Thomas address the importance of the examination and evaluation of new models and approaches to management education.

Business studies remains one of the most sought after majors both at the undergraduate and graduate levels (e.g. the MBA) and a successful growth story in higher education. However, the context in which business schools operate has undergone significant change, which makes it timely to undertake a critical examination and evaluation of new models and innovative new approaches to management education.

Four factors are particularly relevant: • The stable, growth-oriented business environment of the past is changing. Advanced countries have fewer undergraduate and graduate students. Even the relatively stable executive education market seems to be in a recession. Although it might be argued that market conditions are improving, an alternative viewpoint might suggest that instead the situation is one of less demand, more turbulence and more marketdriven cycles.

If this is so, it is important to explore the possible consequences for academic leaders. There may need to be a greater willingness and capability to be more open-minded, flexible, and have a different approach to timing decisions, ie focus on changes that involve so-called ‘in/out’, and/or long/short moves. This relates to the timing of when to enter the market as well as when to exit (in/out), as well as when to commit to a long-term contract (long) versus when to stay current (’spot’ contract or short).

Speed and agility are increasingly essential and the old stability-based managerial approaches are less appropriate. This relates to both curriculum changes and faculty responsiveness to new topics, new research and new competencies. Business schools will need to be more proactive and even abandon some of the old approaches.

• Perhaps partly as a function of more difficult times, it seems that graduate and undergraduate students and executives are demanding a greater emphasis be given to projects, thus requiring a more eclectic curriculum. For example the development of a new product involves the areas of R&D, marketing, sales, manufacturing and finance. Similarly to enter a new market involves marketing and sales as well as communications, manufacturing, logistics, legal expertise and so on. Hence, close and quick co-operation across disciplines becomes very important.

Thus, the traditional functional and discipline-based curriculum design is becoming increasingly outdated. The need for disciplinary focused academic departments and disciplinefocused (so called A-Journal) research may be diminishing. There needs to be a quick response to these changing needs. However the move away from embedded academic traditions to a multidimensional, multidisciplinary teaching and research approach may be very difficult to implement under the current consensually-based academic governance mechanisms.

• Students are being realistic about the need to prepare themselves as well as possible for the difficult job market. Holding a generalist MBA degree may simply no longer be enough for them. The trend towards more job-specific Master of Science degrees seems clear, as set out in the European Bologna agreement. M.Sc. specialisms could include banking, finance, highend marketing, human capital management, business analytics, shipping and sports management. The demand for more general MBAs may well continue, perhaps after having taken a specialist M.Sc., provided the academic institutions design appropriate and meaningful linkages between specialist and general management degrees and maintain strong quality, academic standards and norms in their programme offerings.

• The more traditional business models of many business schools are being questioned given their serious financial difficulties as a result of high fixed costs and lower demand. Now may be an appropriate time to explore other more www.europeanbusinessreview.com 5