The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

The Failure of Economics and Management Science 177
fees than the conventional universities. It is sometimes difficult to discern the qualities
of scientific independence and striving for scientific knowledge in the business
schools. They appear to be entirely at the service of corporations. Industry often
supports the business schools precisely because it expects less criticism from them
than from the universities.
This objective is short-sighted because industry needs academia as a critical corrective
or sparring partner, and not just as a producer and supplier of instrumental
management know-how. The role of the university as a place of independent, unencumbered
scholarship, in the sense that it cannot be annexed by any institution, be
it state, church or corporation, has been weakened in recent decades. The result, in
the case of economics, is a lack of distance from the object of study and from the
actors in business, which manifests itself in a lack of capacity for criticism and early
warning. 47
So far the business schools have not succeeded in their original objective of
establishing management as a profession on the model of the medical or the legal
professions, as Harvard Business School Professor Rakesh Khurana, shows. He also
shows that this had been the original intention of the American business schools.
According to Khurana, the business schools largely capitulated in this struggle for
“managerial professionalism”, and have become suppliers of the mere product, the
MBA, which treats the students as consumers. The business schools, according to
Khurana are dominated by the idea that managers are mere agents of shareholders,
and solely obligated to the matter of increasing shareholder-value. The MBA
students, for their part, see the MBA primarily as a gateway to networks and contacts,
and are more interested in these than in a rigorous academic training. Khurana
pleads for an intellectual reinvigoration of the training of future corporate directors
and managers.
In the case of corporate finance scholars, the danger of dependency on the financial
industry is greatest because they can receive lucrative consulting assignments
from the financial institutions. Their economic and scientific interest does not incline
them to make themselves unpopular with their clients through critical thinking. 48
47 RAKESH KHURANA: From Higher Aims to Hired Hands: The Social Transformation of
American Business Schools and the Unfulfilled Promise of Management as a Profession, Princeton
(Princeton University Press) 2007. Despite its devastating criticism of the business schools, the
book won distinguished awards: “Winner of the 2008 Max Weber Award for Best Book, Section
on Organization, Occupations and Work, American Sociological Association” and “Winner of
the 2007 Best Professional/Scholarly Publishing Book in Business, Finance and Management,
Association of American Publishers.” – According to Khurana, in the USA 20% of all undergraduate
students enroll for degrees in business disciplines. However, the impacts of the financial crisis
were starting to filter through into subject choices, and student numbers in business disciplines are
declining, Khurana said in a presentation at the Annual Meeting of the Academy of Management
in a joint session with the Society of Business Ethics on 7 August 2008 in Anaheim, California.
48 POSNER (2009), p. 259. “The entwinement of finance professors with the financial industry has
a dark side. If they criticize the industry and suggest tighter regulation, they may become black
sheep and lose lucrative consultantships. [...] One does not expect economists employed by real
estate companies or banks to be talking about housing and credit bubbles.”