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Better Managed Firms Mean More Social Value Add

Posted By Guy Pfeffermann, Thursday, October 25, 2012

Guy PfeffermannI participated this month in a conference on "Profits and Social Values – Closing the Gap” organized by Fundaçao dom Cabral, a Brazilian member of the Global Business School Network. Pedro Passos, the Founding Partner of Natura (a major cosmetic producer committed to protecting the environment) and I sat on a panel moderated by Gilberto Dimenstein, a Brazilian journalist. Dimenstein commented that there has been a lot of criticism of business schools for destroying social values; could I defend them?

My response focused on the fact that better-managed firms are more likely to generate social value. This is clear when one thinks of a poorly-run company – when they are limping along they are unlikely to generate lots of jobs or be willing or able to protect the environment.

Not only is the quality of management correlated to economic and social progress, but it is also a driver of change. This is what recent economic research conducted in more than twenty countries shows. Unsurprisingly, more managers with college degrees are found in the better-managed companies, supporting the idea that management education contributes to economic and social progress.

Incidentally, government policies, for example foreign trade or labor policies, have a huge impact on the quality of management. Policies that discourage competition among firms also reduce incentives to improve the quality of their management.

When I consider the immense social value of well-managed companies, from the smallest start-up to multinational corporations, I am energized to continue the important work that GBSN is doing to build management education capacity through our network and programs. Just think of the wasted potential in human productivity that comes not from lack of ideas or passion, but simply a failure to implement good business practices. It is absolutely essential that quality, locally relevant management education be accessible in developing nations if their businesses are to thrive.


Guy Pfeffermann is the CEO and founder of the Global Business School Network.

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Page Schindler Buchanan says...
Posted Thursday, November 15, 2012
Comment Courtesy of Jose Ruisanchez: On whether a better business education results in social value, it should in theory but, in practice, it depends. If we use the product of education for the welfare of society, then I fully concur with you; if not, then I disagree. Just look at Wall Street in the years up to the crisis of 2008. Never was Wall Street as educated as in those years, nor was the destruction of social value as high when the collapse came. The culture of "ever more growth, maximum profit and let the suckers take the hit" has roots in the typical MBA program. One of the keys to sound leadership is not to be a hog, and in this human nature often fails and the MBA education can increase the cost of failure. I encourage you and your colleagues to continue analyzing and debating this all important topic. It is a worthy and viable cause and, as a minimum, it can lower the cost of the next crisis.
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