A call for more quality; Harvard dean sees oversupply of business schools

To John H. McArthur, dean of the Harvard Business School, the most prestigious in the United States, too many business schools have sprung up in this country in the last decade or so. He's concerned about their quality.

''We're not like the pharmaceutical industry, let's say, where you can have machines and patented new products, and to expand them you can add factories,'' he noted. ''We're a service business. The quality depends on the capacity of our society as a whole to generate great scholars, great teachers. Even in a country the size of ours, we can't generate enough faculty that are going to be high quality and effective in dealing with these remarkable kids that keep coming along.''

Between 1950 and 1980, the number of business degrees granted at all levels (including master's) grew from about 75,000 to 220,000. The number of master's degrees alone went from 4,300 in 1950 to 26,000 in 1970 to almost 60,000 in 1980 . The number of master's in business administration (MBA) programs grew from fewer than 50 in 1950 to almost 500 in 1980. Over 1,000 schools now offer a bachelor's degree in one or more fields of business.

Several hundred of these institutions are ''unable to deliver,'' Dean McArthur says. ''We've expanded out of control and far too rapidly for there possibly to be high quality.''

So, he maintains, business education is ''vulnerable'' on two grounds:

* Parents, youths, legislators, and donors are all taking another look at education. ''There is a kind of widespread feeling that the system isn't working as well as it should, that the quality of education isn't acceptable.''

Moreover, with the nation's economy not growing much over the past decade, there could be proportionately fewer resources for education.

* Because of demographic trends, fewer students are entering the nation's colleges and universities. In addition, business education will likely lose some of the popularity which won it - ''I think temporarily'' - a larger share of the education market in recent years.

''I don't think the world is going to support this whole business education establishment at the present level,'' the dean warned in this first interview with a US-based publication since his appointment at the start of 1980. Some business schools ''will be eliminated and some will just not prosper . . . the glory days are over, I think and hope. It would be very good for us to slow down and to consolidate and to try to focus on the quality of what we're doing. . . .''

Mr. McArthur doesn't believe the more than a dozen research-based business schools - Harvard, Columbia, Stanford, etc. - will be hurt. These institutions generate ''intellectual capital'' (books, studies, cases, surveys, etc.), train young faculty, and develop tenured professors.

Nor, he goes on, does it mean that all the other institutions are condemned, or are not performing an important service.

''The ones that will be in difficulty are the ones that try to be a little bit of everything, that don't have a clear sense of who it is they're trying to serve and are not trying their (best) to understand how to serve that part of the community effectively. Some schools are just out of control . . . and live off other people's ideas.''

Dean McArthur has a further complaint about business education. In too many schools, he says, there is too much ''orthodoxy'' in the curriculum. ''There's a lot of pressure, peer pressure mainly, on institutions to look like each other. It seems to be clear to people what ought to appear in a respectable curriculum for developing different kinds of people for careers in business, whether it's developlng managers, as we do, or helping people develop in specialized fields like retailing or accounting or whatever, which we don't do. They use the same (teaching) materials.''

He went on: ''That's got to be backwards in a world where everything is up for grabs, when (the future) is not clear to people running small businesses or large businesses, or to government officials that are trying to make something out of the difficulties we've been going through.

''This ought to be a period of great experimentation in our field of education.''

The Harvard Business School, which concentrates on turning out general managers, uses the case method of education. An actual corporate or industry business problem is researched in detail by a professor. The students and teachers together review the case, devise their own solutions to the problem, and compare these with the resolution of the problem by the company or industry.

Conducting case studies is ''extremely expensive,'' Mr. McArthur noted, and HBS is one of the few institutions with the resources to do such research.

Although this will continue, the ''B School,'' as it's often called here, has itself changed enormously, the dean noted. Over the last five years, for instance, some 50 courses in the MBA program have been added and dropped, with the total offered at one time usually running about 60. ''Almost every one of these was homemade,'' he says. In the current year the school will spend some $ 16-17 million on research and course development. Case studies and other research was sold last year to some 6,000 other institutions in the world, mostly schools and companies.

Dean McArthur, a commerce graduate of the University of British Columbia, pointed to several areas of research and course development:

1. The school has invested some $9 million over the past decade on a course in business and government in the international economy. It aims at greater understanding of the business and government relationship, with the legal, regulatory, and political constraints involved.

2. HBS has doubled the number of people studying business ethics and social responsibility. This is intended to help future managers better balance economic , political, ethical, and moral considerations.

''What we're trying to do is to help more people on the faculty see how they could effectively deal with the ethical and moral dilemmas that are raised by the things they're teaching, so that we don't have a special Sunday school class to talk about ethics, but that we learn eventually to make it a part of the fabric of what we're doing.''

3. An ''important venture'' in its early stages aims at creating programs and teaching courses in ''entrepreneurial management.'' Here faculty interest has been low, but student interest high. It may take 10 or 15 years to do the research and develop programs.

As for business schools themselves, they are ''undermanaged,'' the dean said. ''Who's running them? Well, it's people like McArthur, who were never selected at any point . . . because (they) could run something. We were all scholars. . . . That's going to have to change. (Business schools) were pretty simple places to run two decades or three decades ago. . . . They have become complex places.''