The Business School is an institution of higher learning that teaches (and often undertakes research) into the art and science of business management, and closely related fields such as finance, marketing, accounting, information, and (sometimes) economics.
The schools originated in the United States, and in recent decades have been emulated across the world. Undergraduates receive a B.S. degree, while graduate students receive, typically, the M.B.A. (Master of Business Administration). Many schools also offer an "executive program" of night and weekend classes for employed people. Full time students usually must be several years out of college before they are admitted.
The professionalization of business began at the Wharton School at the University of Pennsylvania. Its undergraduate program founded in 1881, was the first university business program. In 1901, Dartmouth College established the Tuck School of Business as a five-year undergraduate program that culminated in a master's degree. Harvard in 1906 created its strictly graduate school of business and introduced the MBA degree. Other universities joined the trend and by the 1920s the school of business became an established feature of many university campuses. The status of the business schools was problematical among the established faculties in the liberal arts, sciences, law, and medicine. The growth of big business in the U.S. in the 20th century created the new occupation of management, but managers did not attain the social authority of other professional occupations such as medicine and law. By providing university training in business on par with programs at law and medical schools, promoters of business schools intended at the outset to give managers the legitimacy of a profession.
To promote their definition of professionalism, the leading deans formed the American Association of Collegiate Schools of Business (AACSB) in 1916. It serves as both a professional association and an accrediting body to ensure that business programs had minimum standards consistent with a professional education. By the 1950s they had adopted a standardized curriculum.
By the 1980s business schools came under heavy influence from economics, especially the neoclassical microeconomics. The result was to transform business economics into a methodology of high theory that abstracted from the events of the real world and focused on how pure markets worked. The school dominated economics in the 1980s and their view that markets remained the best way to organize economic activities began to take over social discourse in the U.S. This market orientation led to the view that managers are free agents who should continually seek their highest incomes with no loyalty to their employers and no social responsibility. At the same time, in the late 1980s Business Week began a trend in ranking MBA programs using ratings from students and their employers, that is, a market standard. Business schools responded to those ranking by changing their programs to offer what the market wanted rather than what a "profession" of management should have.
Since the 1970s the leading business schools have increasinglu stressed statistics, computerized data bases, and complex mathematical models. Finance, for example, began as a specialization in banking. In recent years, however, it focuses on asset pricing techniques, widely used in corporations, banks, and stock and bond markets. Modern theories of portfolio choice and savings behavior have provided the basis for the innovation of these models.
All leading schols require research publications by their faculty. After an annual expenditure of $320 million the professors publish more than 20,000 articles each year. Most of the research is highly quantitative, hypothesis-driven and esoteric. As a result, it is almost universally unread by real-world managers. Much of it criticises other published research. The AACSB in 2007 is discussing proposals to prove that research is useful, after hearing repeated complaints that research is rarely designed with managers' needs in mind, nor is it communicated in the journals managers read For the most part research has become a self-referential closed system irrelevant to corporate performance.
- "Business schools and research: Practically irrelevant?" in Economist (Aug 28th 2007) at