Business schools face criticism for perpetuating irresponsible business practices, prompting calls for fundamental change. Despite post-2008 efforts to integrate societal impact into teaching and research, critics argue they merely scratch the surface. Reflecting on the 1950s overhaul led by the Ford Foundation, today’s transformation requires challenging underlying ideologies. Business schools should learn from history’s paradigm shifts and industry leaders must identify models fostering responsible education. This entails investing in innovative knowledge aligning with societal needs. By adopting new principles and enforcing them via accreditation, business schools can lead their own transformation or risk being led by external forces.

The teaching of finance has been accused of accelerating the financialisation of the economy, with deleterious effects on global inequality. Similarly, the promotion of the marketisation of consumption has been blamed for the overproduction of waste and public health problems.

Although the global financial crisis of 2008 prompted changes in business education, when scrutinised, the changes appear to be nothing more than superficial. If we are to change business education for the better, we need to change the fundamentals of the management discipline.

The last time business schools underwent a complete transformation was in the 1950s when the Ford Foundation triggered the transformation of vocational schools into academic institutions. While we need a similar transformation now, history suggests that unless business schools lead the change, they risk being taken over by external actors.

Incremental changes in teaching and research are not enough

In response to society’s wake-up call in 2008, business schools have sought to change from within. This is something accreditation bodies have sought to push in recent times, updating the standards for business accreditation to include societal impact in business schools’ missions and strategic plans. Since doing so, we have seen the gradual transformation of their curricula by integrating the United Nations’ 17 Sustainable Development Goals into teaching.

In addition, several initiatives have been developed in business school research, such as GLRI (Globally Responsible Leadership Initiative), ABIS (Academy of Business in Society), PRME (Principles of Responsible Management Education), or RRBM (Responsible Research in Business and Management) – a network of management scholars dedicated to addressing major societal challenges and making a positive impact. While these initiatives to change teaching and research are laudable, they do not fundamentally challenge the underlying ideology of the business schools that caused the global financial crisis of 2008 and continue to perpetrate corporate scandals.

Learning from the previous metamorphosis of business schools

In the 1920s, at the dawn of the business school era, it was noted that business students were of a lower academic standard than students in other disciplines. However, despite repeated warnings, it was not until the 1950s that a change was initiated to raise their academic level. This was led by a private foundation, the Ford Foundation, created with the stated goal of advancing human welfare. As part of its Program in Economic Development and Administration, it has recently invested the equivalent of half a billion dollars to improve management practices in American corporations to preserve democracy and American power in the context of the Cold War.

The Ford Foundation built the new business school model based on the model of the Carnegie Institute of Technology’s Graduate School of Industrial Administration (GSIA), currently known as the Tepper School of Business at Carnegie Mellon University, which grounded the discipline of business in economics, psychology, and sociology and enforced the application of the ‘scientific’ model. To this end, it funded doctoral fellowships, sabbaticals, and visiting professorships at selected business schools, as well as hundreds of research seminars across the United States. The goal was to create a new profile of business school professors that would follow the GSIA knowledge model. They would research and teach management know-how from this new body of knowledge accumulated in newly created textbooks and academic journals. To ensure the promotion of this new paradigm, the Ford Foundation published a report sent to every business school dean in the US. By the late 1960s, most American business schools had adopted the Ford model, and by the 1980s, it had spread to Europe and, a decade later, to Asia. Today’s business schools are the product of this paradigm shift.

Transforming business schools to educate responsible business leaders

Then, business schools needed to change to ensure US competitiveness; today, they need to change to become responsible educators. Then, Ford Foundation was driving change; today, McKinsey, Microsoft, and Google are eager to capture a share of the higher education market, now estimated to be between $200 – $500 billion.

Business schools must do more than they are currently doing to drive their own transformation towards greater responsibility. This means fighting inertia to transform business schools. The lessons of history are clear. For example, in the 1950s, Carnegie Mellon’s business model was identified as the most innovative and the most likely to drive change in society if all schools adopted it. Now, in today’s business education market, industry leaders must identify the school whose model is most likely to drive the shift to responsible education.

Educating responsible leaders means investing in a body of knowledge that is different from that currently researched and taught in business schools – we must create new, innovative ideas, meeting business leaders’ aspirations for social good, sustainable development, and ethical leadership.

Building on the current geopolitical and climate crises for which business schools are partly responsible, business school leaders should examine those business schools around the world that have already challenged the assumptions of the current body of knowledge. Building on these lessons, it would then be possible to develop a common understanding of the business school model to follow in the coming decades. Business school leaders should then adopt new principles for educating new faculty members, which should be disseminated and enforced by accrediting bodies to ensure that this new paradigm is incorporated into the hiring and tenure processes of professors.

Without leading these changes, business school leaders risk having external actors lead them, leaving them with no choice but to follow and accept them.