Business is undergoing profound change. Urged on by regulatory reforms proposed by the European Commission, the continent’s executives are at the forefront of promoting purposeful, responsible and sustainable business. European business schools should be at the vanguard but risk being left behind.
Many schools have been slow to recognise the extent of reform required to their curricula. They have introduced electives on topics such as environmental, social and corporate governance and sustainable business but, for the most part, their core courses remain unchanged.
The recent final report from The British Academy Future of the Corporation programme highlights the extent to which business is embracing purposeful profit — making money by solving rather than exacerbating problems for people and planet. It argues that businesses should be supported and held to account, and sets out policies and practices.
Business school research and teaching should be the source of education for the coming generation of managers and entrepreneurs. But shareholder primacy remains at the heart of schools’ programmes, which are focused on economic theories, financial models and management studies. Courses start from the presumption that the purpose of a business is to maximise shareholder wealth and everything — accounting, finance, marketing, operations management, organisational behaviour and strategy — follows from that.
Courses should begin with asking what the purpose of business is, why it is created and why it exists. They should identify the rich variety of responses and build programmes to match. They should draw on interdisciplinary knowledge from across the humanities and sciences to provide the skills and values required for business in the 21st century.
This approach is inspiring for students, enlightening for leaders and productive for researchers. It positions schools at the heart of their universities, connects their knowledge with that of other faculties, and promotes the purpose of universities to contribute to human flourishing, wellbeing and prosperity alongside education and scholarship.
Such an approach aligns ownership, governance, measurement, performance, finance and investment with the corporate purpose of solving problems profitably. It shows how companies engage in business and technological innovations in conjunction with the not-for-profit, public and social enterprise sectors to solve global challenges.
These are the capabilities businesses increasingly seek from new recruits. Employers need graduates who can help them contribute to addressing rather than causing environmental degradation, inequality, social exclusion and mistrust. They need people with new skills in engagement, collaboration and inclusive decision-making, who can apply them not just as cost centres but as sources of value creation for investors and society at large.
There are impressive developments under way. One is the recently established Hoffmann Global Institute for Business and Society at Insead in France, which seeks to transform business education around sustainability, inclusion and wellbeing. It is based on the idea that business should be a source of environmental and social progress as well as profit, and that should lie at the heart of research and teaching.
Harvard Business School runs a course called Reimagining Capitalism: Business and Big Problems in its MBA and has established a programme of research on impact-weighted accounts to measure companies’ benefits and burdens. Saïd Business School at the University of Oxford has for several years provided core courses on responsible business and how it can address global challenges. It has research programmes on corporate purpose and ownership, governance, measurement and performance, and it is partnering with seven leading European schools to address the climate crisis.
However, none of these schools has gone far enough in placing corporate purpose at the heart of core courses. One reason is that they have capital invested in existing knowledge, practices and associated research, data and reputations. Second, they have an eye on their position in rankings that prioritise such criteria as alumni salaries, linked to profit rather than wider measures of performance. Third, there is concern about losing competitive position by migrating to what some perceive as the “soft end” of business school education — culture not competition.
The appropriate response to sceptics is factual evidence. That should come from academic research, examining performance and competitive markets, on whether purposeful business is more commercially successful, as well as more environmentally and socially sustainable, than old-fashioned business.
Companies have a vital role to play in encouraging business schools to adapt. They can prioritise the recruitment of students with the skill sets associated with purposeful business practices. They can finance research at scale on topics related to “profits from progress”. They can endow scholarships and faculty positions to attract students and academics with the necessary attitudes and expertise.
Whether schools — backed by business — can transform themselves will determine whether business education remains relevant and survives in the years ahead.
Colin Mayer is emeritus professor of management studies and a former dean of Saïd Business School, visiting professor at the Blavatnik School of Government, Oxford, and academic lead of The British Academy Future of the Corporation programme