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Ghoshal vs MBAs


Though, the economist itself is clearly not in favour of the author's conclusions, this tells of a very Austrian-sounding critique of pseudo-mathematical business school methodologies:

In a forthcoming article to be published posthumously in Academy of Management Learning & Education, Sumantra Ghoshal argues that many of the "worst excesses of recent management practices have their roots in a set of ideas that have emerged from business-school academics over the last 30 years."
Mr Ghoshal was just such an academic, a professor at London Business School .... He believed that the desire of business schools to make the study of business a science, "a kind of physics", has led them increasingly to base their management theories on some of the more dismal assumptions and techniques developed by economists, particularly by the "Chicago School" and its intellectual leader, Milton Friedman. These include supposedly simplistic models of individual human behaviour (rational, self-interested, utility-maximising homo economicus) and of corporate behaviour (the notion that the goal of a firm should be to maximise shareholder value).
These assumptions, though in Mr Ghoshal's view badly flawed, were simple enough to allow business-school academics to develop grand theories of management supported by elegant mathematical models and empirical analysis that appeared scientific, and thus earned their subject academic respectability, but were, in fact, a pretence of knowledge where there was none.

Sean Corrigan is the author of 'Money, Macro & Markets' newsletter & Consultant to Hinde Capital.

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