A STAKEHOLDER APPROACH TO BUSINESS SCHOOLS

Transcription

1 International Business: Research, Teaching and Practice (2) A STAKEHOLDER APPROACH TO BUSINESS SCHOOLS Vladimir Boguslavskiy Alexej Arkhipov Southern Federal University , Rostov-on-Don, Bolshaya Sadovaya st, 105/42 Alexa A. Perryman University of Washington Tacoma Milgard School of Business 1900 Commerce Street Tacoma, WA This paper seeks to examine business schools via a stakeholder approach. Three primary stakeholders are suggested: students, educators, and employers, and are examined in context. This baseline view of schools operating in a manner similar to firms allows for future discussions on school efficiency and optimization. omvladimir@yahoo.com 59

2 International Business: Research, Teaching and Practice (2) INTRODUCTION Although a business major is a popular choice for many college students, many business workers do not have a formal business education background. Prior research has found that 45% of workers report their job to be only partially related (or not related at all) to the field in which they studied, with graduates from majors with general skills (e.g., liberal arts) having the greatest likelihood of mismatch (Robst, 2007). Yet arguably almost all graduates work in a business environment in one form or another. Logically, potential employees with relevant business education have a greater chance at appropriate job placement and subsequent income gains. Many business schools use hiring levels as both a recruitment tool and a platform for donations. Given current economic conditions, students, schools, and employers are placing additional emphasis on finding a balance between each group s needs. As such, this paper seeks to view business schools from a firm perspective in the context of its three main stakeholder groups. THREE STAKEHOLDER GROUPS At its core, stakeholder theory can be broadly used to include any and all parties who influence firm activity or are influenced by a firm s actions (Freeman, 1984). Narrowing this view, for stakeholders to contribute to firm success they must add value to ongoing operations; have processes and governance systems that acknowledge their contributions; and have their interests aggregated and conflicts managed (Kochan & Rubenstein, 2000). Further, stakeholders can be assessed by their power to exert influence, the moral legitimacy of their claims, and the priority of the claim relative to other stakeholders (Trevino & Weaver, 1999). For business schools, three prominent stakeholder groups are examined. The first group is comprised of both students and applicants. This cross-section of individuals is suggested to be the most important group. Although students and applicants have the same functional role as firm clients, subtle differences do exist. Specifically, students have the possibility to influence internal performance whereas applicants speak more to external legitimacy. One of the primary concerns for both parties is the overall price of tuition. Education typically is viewed as a normal good, with higher price linking to lower demand, despite the adage that students often prefer to get less than what they have paid for (Becker, 1990; Mason, Steagall, & Fabritius, 2003). Additionally, there are qualitative factors to consider: such as reputation, geographic preferences, and perceived quality of teaching (Anchor, Fišerová, Maršiková, & Urbánek, 2011; Kwok & Elliott, 2001). During the industrial revolutions of 17th-18th century in Great Britain, there was a demand on personnel with basic business competencies. Although nobles and clergy possessed such knowledge, the trading class and commercial class generally lacked these skills. As a result, business schools emerged. These 60

3 Boguslavskiy et al. Schools Stakeholder Approach to Business schools taught three key subjects: writing, arithmetic and double entry accounting (Edwards, 2009). At that time, graduation from a business school did not mean that a student had become highly skilled in all spheres of commerce; instead the diploma listed the skills actually acquired. Today, a business school diploma is the result of a set number of academic hours and corresponding grades. Time in a classroom, unfortunately, does not automatically equate to subject mastery. Although the burden of proof does not solely rest on those teaching the course, teaching efficiency and mastery do influence student success. In turn, professors must balance quality educational delivery with the reality of student evaluations. This is particularly crucial for untenured faculty to achieve appropriate marks from students. This system of appraisal runs the risk of lowering quality standards and grade inflation. This leads to the second stakeholder group: educators. Here it is defined broadly as all those in a full- or part-time teaching capacity. Educators, as a whole, are the main engine of the knowledge factory of the university. Yet they can be divided into internal and external stakeholders based on full-time or parttime status, respectively. Similar to students and applicants, full-time faculty have a greater ability to bring about change, whereas part-time faculty contribute more to legitimacy and local reputation. The utility function of a business school, with reference to educators, includes variables such as: salaries and grants, competition for positions, teaching quality, and faculty loyalty. Business schools, like all businesses, seek to have the lowest cash expenditures with the highest possible outcomes (i.e., competition, quality, etc.). This goal is a perpetual balancing act as many businesses schools spend a significant majority of their budgets on faculty salaries. In many ways, business schools seek to become mini-monopolies based on specific programs for teaching or research. Although teaching is a primary means of reaching audiences, research drives value propositions as well. Research success requires individual effort, yet business schools bear the majority of financial expenditures to facilitate research productivity. As such, some schools have begun to see teaching and research as somewhat separate spheres. This can be seen in the trend of distinguishing and having separate funding lines for teaching (or clinical) and research faculty in order to better direct resources to desired outcomes, such as student interest, student satisfaction, and increased citation counts. Schools that seek to differentiate between faculty skills of research and teaching typically offer separate expendable budgets for teaching workshops and personal growth in new teaching techniques to clinical faculty in a manner similar to conference travel for research faculty. The third and final stakeholder examined is that of business employers. Acito, McDougall, and Smith (2008) take a very direct stance on this group by acknowledging that in some business school cultures it is openly acknowledged that employers, rather than students, are the true clients of business schools. Regardless of individual feelings on this topic, the reality is that employers are the direct consumers of the product of the knowledge factory of the business school. 61

4 International Business: Research, Teaching and Practice (2) Despite this direct consumption, employers have few tools to influence the content and quality of the product aside from refusing to hire students from certain schools. Based on local labor markets and firm resources, this may not be possible. In line with this stakeholder, business schools must grapple with the larger umbrella issue of what students should be taught in the limited hours allotted to each major. More specifically, how should a general business education be balanced with practical knowledge and skills given the mission of the university and the needs of firms? For example, most of today s undergraduate business students have only a cursory knowledge, at best, of business history. Yet, on the other hand, business schools are not technical programs focused solely on set skill proficiency. Adding to the complication is that a significant part of the primary material taught is most applicable to higher-level managers. As a result, lectures and seminars must be balanced with interpersonal skills, professional development, team work, and other skills to help employees better incorporate themselves into business networks and culture. This is of particular importance for students hoping to start their own businesses, as competitiveness is only one factor that leads towards success, and paramount for foreign students. For foreign students hoping to return to their home country for employment, it is difficult to imagine effective managers not having personal contacts and close relationships as developing countries often function not in a purely competitive environment where the best professional survives, but rather a hierarchical system where survivors are those who have obtained the patrons and partners. CONCLUSION The above has sought to perform a baseline view of business schools based from a stakeholder approach. Each stakeholder suggested above takes risks interacting with the school, and vice versa. Students can invest significant time, effort, and money into education and may not be able to find a job that will cover the expense or employment at all. Faculty must balance student needs, research expectations, university goals, and potential conflicts between the three. Lastly, employers must attempt to work with schools to better articulate current job market needs while balancing the need to train employees for optimal fit within their companies. 62

5 Boguslavskiy et al. Schools Stakeholder Approach to Business REFERENCES Acito, F., McDougall, P., & Smith. S. (2008). One hundred years of excellence in business education: What have we learned? Business Horizons, 51, Anchor, J., Fišerová, J., Maršiková, K., & Urbánek, V. (2011). Student expectations of the financial returns to higher education in the Czech Republic and England: Evidence from business schools. Economics of Education Review, 30(4), Becker, W. E. (1990). The demand for higher education. In S.A. Hoenack & E.L. Collins (Eds.), The economics of American universities: Management, operations, and fiscal environment (pp ). Albany, NY: State University of New York Press. Edwards, J. (2009). A business education for the middling sort of people in mercantilist Britain. The British Accounting Review, 41, Freeman, R.E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman/Ballinger. Kochan, T., & Rubinstein, S. (2000). Toward a stakeholder theory of the firm: The Saturn partnership. Organizational Science, 11(4), Kwok, T., & Elliot, C. (2010). Does price matter? Overseas students in UK higher education. Economics of Education Review, 29(4), Mason, P. M., Steagall, J. W., & Fabritius, M. M. (2003). The changing quality of business education. Economics of Education Review, 22, Robst, J. (2007). Education and job match: The relatedness of college major and work. Economics of Education Review, 26, Trevino, L. K., & Weaver, G. R. (1999). Response: The stakeholder research tradition: Converging theorists not convergent theory. Academy of Management Review, 24(2),