Business schools are finding themselves faced with the challenge of how to measure the societal impact of their courses.
Business is overwhelmingly responsible for pollution and environmental damage – with over half of all plastic pollution and about a third of the world’s carbon emissions linked to two groups of 20 firms, according to research by the Minderoo Foundation and the Climate Accountability Institute.
Investors, board directors, entrepreneurs, employees, and young people building their careers are all searching for new ways of doing business, to avoid shouldering responsibility for the worsening climate crisis and the growing inequality in economic opportunities.
Agents of change
With debates emerging about whether business can fulfil its purpose in society, the ramifications for business schools are becoming clearer.
Why is this significant? This shift will affect a large proportion of the HE sector. Approximately one in six undergraduates and one in five postgraduates in the UK is currently enrolled in a Management and Business Studies (MBS) course, and over a third of the UK’s entire international student population, making it the subject group with the largest number of students in the UK.
Lecturers and administrators are already starting to think about how they respond. In a recent report, the British Academy found that MBS schools and departments in the UK are increasingly emphasising the role of businesses as agents of societal change.
Building on the diversity within the subject student body, many have created internal, student-led taskforces to promote Equality, Diversity, and Inclusion (EDI).
Increasingly, schools are embedding themes related to Environmental, Social and Governance (ESG) standards in the curriculum. Leading schools ensure these changes have the greatest effect by introducing them to the core curriculum, as Oxford Saïd Business School has done with its Capitalism in Debate course.
Many business schools also deliver programmes not just for their own students but for students in other parts of the university, especially for entrepreneurship, and this can be another way to introduce students to debates around purposeful business.
Positive contribution
Whether it is the role that business can play in improving social mobility, how new management practices can close the gender pay gap, or how enterprise can improve opportunities for people from minority ethnic backgrounds, MBS schools are introducing these questions to more students, encouraging them to consider the social purpose of business.
Faculty deans and programme directors point out that these trends are partly a response to the changing views of students. But these trends are not just confined to the UK; the Association to Advance Collegiate Schools of Business, a global organisation setting accreditation standards for business schools, changed its accreditation standards to encourage more than 900 accredited schools to be more creative with their curriculum and to make a positive contribution to society.
From the US to Japan, business schools are teaching students to understand how business can have a positive impact on society and the environment, and how they can prioritise this understanding in executive decision-making. When students become the next generation of entrepreneurs, managers, directors, and investors, they can put these lessons into practice.
The rankings systems for business schools are also playing a factor in these global trends. For example, the Financial Times is reviewing the methodology behind its business school rankings to better account for the societal impact of schools and graduates around the world. The FT recognises that “pay is not a proxy for quality” when it comes to measuring graduate outcomes, so it is asking critical questions about how to define the purpose of business education and the success of its graduates.
It has also found ways to recognise responsible business education around the world with awards for teachers, researchers, and alumni. At the heart of this is the idea that business schools’ teaching and research has a purpose, and that purpose is to improve the world in some way the sector is still trying to define.
A new purpose
The need for more responsible business education also comes from new research within the subjects MBS encompasses, highlighting the evolution of business’ relationship with society.
The British Academy has played an active role in creating a body of research with which to examine the role of business in society over the past four years, through its Future of the Corporation programme.
At the top of a business, its board of directors’ performance is typically determined by profits and shareholder value maximisation. This is the purpose of business, as enshrined in law and regulation – and, arguably, in business education, too. However, changes to the UK Corporate Governance Code in 2018 placed greater emphasis on considering the interests of stakeholders and society, not just shareholders.
Change is taking place; some would say it is overdue; and critics of business – focusing on its role in the climate crisis and wealth inequality – would be right to say that these changes are very limited without a proper accountability framework to deter businesses from insincere statements about their social commitments.
The Future of the Corporation programme has investigated the possible forms of purposeful business – and accompanying policy frameworks – that might emerge in a future where shareholder maximisation is no longer the norm, publishing its most recent report last year.
The appeal of purposeful business is strong: a new YouGov poll for the British Academy shows that more than 40 per cent of business leaders agree with an alternative definition of the purpose of business put forward by the British Academy: to “profitably solve problems of people and planet, and not profit from causing problems”. That is just as large a proportion as those who believe business’ purpose is maximising profits and share value.
Importantly, the shift in business reflects changes across society as well; MBS is one of the nimblest subject groups in adapting to societal change, but others may follow. Young people such as Arshiya Sawhney, an Economics undergraduate at the University of Cambridge who spoke at the British Academy’s recent Purpose Summit, prefer to align themselves, both as customers and employees, with businesses that “see the bigger picture”. But Arshiya found that internships and work placements provided her with a clearer understanding of what purposeful business looked like than her university course did.
If we treat MBS as a bellwether for courses across the humanities and social sciences – and perhaps the entire sector – higher education policy is likely to encounter the challenge of considering the many ways in which we can systematically understand HE’s own impact on society and the types of success it directs graduates towards.
In recent years, the conversation about the “purpose” of higher education has revolved mainly around increasing graduate salaries. As we have argued elsewhere, graduate salaries are not a helpful way of measuring higher education’s impact on society but that objection takes us no closer to defining the purpose of higher education.
Perhaps the purpose, to borrow the government’s own vernacular, is simply to make it possible for individuals and communities to “level up”, though until the government’s white paper on this is released, HE providers’ role in the levelling-up agenda remains open for discussion.
The post-pandemic recovery also will depend on the effectiveness of every part of the education system, including higher education. Here again, we need to avoid defining the value of education, higher education, further education or otherwise, in purely economic terms.
The question of how to define and articulate higher education’s value and purpose is one that stakeholders increasingly need to grapple with, just as the wider business sector is doing. In business and society more generally, these concepts are taking root fast and, as shown by the Future of the Corporation programme and the growing popularity of MBS schools, organisations that react to and reflect on their times are ultimately the ones that succeed.
