The Problem With Academic Business Research

classroomBusiness schools have released research papers about business trends since they opened their doors. Once upon time, when business classes were taught by business people, they may have been useful and relevant. Unfortunately those days are long gone. Why? It comes down to an old saying, “In theory, theory and practice are the same. In practice, they aren’t.”

As an example, Facebook COO Sheryl Sandberg wrote a book called, “Lean In.” In it, she states that to overcome the wage gap between genders women need to negotiate their salaries the same way men do. Sandberg is a respected businesswomen who based her findings on the actions of herself and other successful businesswomen. Harvard University published a study disagreeing with there. They stated that in their experiments, negotiations did not work well for women. The problem with the experiment? The jobseekers and the hiring companies were both played by undergraduates. Students who had never had any business experience, and in many cases had never had a job were supposed to be representative of what goes on in the real world.

In the book “Good To Great” academics studied businesses whose stock prices showed a particular pattern that the researchers determined were indicative of great companies. Among those “great” companies were Circuit City and A&P (both out of business), Gillette and Warner-Lambert (both no longer operate as standalone companies), Fannie Mae (who had to get bailed out by the government) and Wells Fargo (who was found to be opening fraudulent accounts without people’s knowledge). Not exactly a great bunch.

In academia, business is generally taught by professors who learned business from professors, who learned from professors. Studying business is not the same as being in business.