Business schools and big business making big money – a myth or reality?

There is a perception in South Africa, and internationally, that business schools are making obscene amounts of money because they exist only to serve big corporates and don't really care about small businesses.

Professor Nicola Kleyn's comments during the Q&A session of a panel discussion at the Entrepreneurship Development in Higher Education (EDHE) Lekgotla 2020 showed that the relationship between business schools and the corporate world is complex.

The topic of the panel discussion was Rethinking the role of Business Schools in relation to Entrepreneurship.

Professor Nicola Kleyn

Professor Kleyn (left), former Dean of the University of Pretoria's Gordon Institute of Business Science (GIBS) and, since August, Dean for Executive Education and Professor of Corporate Marketing at Rotterdam School of Management at Erasmus University in the Netherlands - was responding to a question from the virtual audience. The question was about business schools seeming to be elitist and having no time for small businesses. So if their goal is to create entrepreneurs, why are business schools so expensive?

In response to the part of the question about the perception that business schools only serve big business, Professor Kleyn said their history revealed a different story. The corporate focus was not the original intention. Business schools were founded in the late 1800s, early 1900s, with the focus on professionalising management. It was only after the Second World War, as businesses grew, that they became more corporate in nature and more technocratic. There was a time when people went to business school as an engineer to learn finance in order to be able to work for a bank.

There is now a major swing away from that to include corporate but also to accommodate entrepreneurship and smaller-sized businesses.

When it comes to the cost of business education, the schools have a high cost model as the programmes are expensive to run. But she refuted the idea that business schools are cash cows, delivering their profitability back to the universities. "I was very profoundly grateful for the University of Pretoria that they were never gouging GIBS," she said.

The challenge is how to use technology to change some things. She said business schools had to become agile to think about different ways of doing things, otherwise they were going to become increasingly irrelevant.

She said business schools' relationship with business is critical. At GIBS, for example, a lot of the entrepreneurship work, particularly where it is fostering micro entrepreneurship, is only thanks to the funding of big corporates. She had thought of this when the chair of the session, Yogavelli "Yogi" Nambiar, had been introduced as having been Country Director of the Goldman Sachs 10 000 Women Initiative to empower women; GIBS had managed the training in South Africa.

Business schools need to be in partnership with business because South Africa doesn't have a history of endowments, which is an American tradition.

Another audience question dealt with cost from a different perspective: If universities are to provide wider access to higher education, and open up to those who have been marginalised, yet business schools are charging exorbitant prices for their courses, how do we bridge that gap?

Professor Kleyn said one needed to look at the mandate of business schools. Ensuring people had skills was not only the role of business schools or universities. They needed broader thinking about how people acquire the skills they need to serve and grow the economy.

"Business schools are not going to solve everything here," she said. This was where thought leadership could play a role. To have people dream up new theories that nobody can use is dangerous, she says, but business schools could not afford to lose scholarship.

A significant part of the cost of running universities, of which business schools are a part, goes towards funding the development of thought leadership.

"If we lose sight of the fact that business schools are part of the academy, and are part of universities, and we only look at aspects of the learning programmes, we're going to miss out on being able to develop solutions for tomorrow as well, because that's what the research should be generating," she said.

She said she didn't have an answer to the question of costs in the sense of cutting aspects of what business schools did. She also knew government could not afford to fund much more. So she felt the answer was for the business school sector to ''put our heads together and get smart about it", she said.

How business schools can support entrepreneurs

Another question from the audience was about what business schools could do differently to support entrepreneurs.

Professor Fulufhelo "Fulu'' Netswera (right), Executive Dean of the Faculty of Management Sciences at the Durban University of Technology, said business schools ought to document how entrepreneurship manifests, how a small business and ideas mushroom and become big ideas and big corporates.

He said the analogy of the banking system was useful to apply to business schools. Banks used to cater only for corporates but over time had learnt to cater for the needs of those who had previously been locked out of the system, to the point where new banks had even emerged for this purpose.

Professor Fulu Netswera

The annual EDHE Lekgotla is a flagship event of the EDHE Programme. It is a platform for information exchange and sharing of best practices. The thought leadership shared this year was heard by no fewer than 1221 delegates, predominantly students but also comprising academics, senior university leaders and policymakers from the higher education system.

The author, Gillian Anstey, is an independent writer commissioned by Universities South Africa

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