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Business and B-Schools Key to U.S. Economic Growth, Says Dean Glenn Hubbard

In a world where even China has turned capitalist, globalization seems unstoppable, and the United States has its first M.B.A. president, the value of business schools -- and the role of business itself -- ironically continues to come under fire.

Whereas business schools were once seen as old boys' clubs, they now stand accused of having gone too far in the other direction, spending too much time on abstract research lacking any real-world, practical application.

Though he takes such criticism seriously, R. Glenn Hubbard -- dean of the Business School and former chair of the U.S. Council of Economic Advisers under President George W. Bush -- begs to differ. He is a passionate defender of what he terms the transformative role of business in world affairs and the value of business schools within the university.

"I am here to plant the flag, to defend business as a social agent, the academic study of business as a way to help it better perform that role, and the M.B.A. as the best vehicle to do that on a large-scale basis," he said. Hubbard made these remarks to an audience gathered in Low Memorial Library for a May 9 University Lecture (transcript and video available).

Glenn Hubbard
Dean Hubbard is also the Russell L. Carson Professor of Finance and Economics at the B-School.

Hubbard admits that business schools will always face a challenge in figuring out how to straddle the world of ideas and the world of affairs. But he remains adamant that America's leading business schools have been meeting this challenge. It is no coincidence, he told the packed audience, that the resurgence of entrepreneurial capitalism in the U.S. -- reflected in the extended one-percentage-point addition to U.S. GDP growth -- comes at a time when graduate schools of business are integrating social science research and business more effectively.

Productivity growth, he explained, comes not just from making technological improvements -- technology is better in many other countries -- but by "having managers and entrepreneurs who know how to integrate the best technology with new business models to raise productivity."

The breeding grounds for this kind of innovation are the nation's top business schools. They actively foster "cross-disciplinary intellectual conversations," he said, which have already led to innovations in the areas of inventory control, financial instruments, behavioral economics and designs for new accounting systems.

"The abilities to think strategically and to value opportunity are teachable," he claimed, with students benefiting from the connection the classroom makes between research and industry.

Addressing the value of the M.B.A. program, Hubbard said it offers students an education for a lifetime career, not just a tool kit for their first job. Business school graduates, he continued, can serve as agents of change by sharpening America's understanding of the threats to its prosperity, by applying technology toward continued growth and exporting knowledge to developing countries.

He also finds it encouraging that so many M.B.A.s are contributing their skills to the nonprofit world. Describing another indicator of the power of the M.B.A. to transform the world for the better, he noted, "Some of our graduates manage theaters and are as concerned with Shakespeare as with cash flow."

Published: May 26, 2006
Last modified: May 26, 2006