This is a very pertinent question. I have been interviewing MBA’s from West Bengal (not-IIM) and so far I had poor experience wrt. their understanding of basic management & marketing principles and basic exposure to real business problems.

While I wouldn’t go as far as to solely blame them for the crisis, I think MBA’s they have to bear the responsibility as a group for not doing justice to their hefty price-tag and MBA institutes for churning out incompetents.

Education has become a big business in private sector with scant respect for quality.

Ethics and Values have nothing to do with MBA education.

Shouldn’t study of ethics be a part of MBA education?

I am not a business expert but I think ethical principles and values are a must for any business professional.
The current Satyam fiasco has shown how important it is to follow ethics and principles. Even in US many business leaders were criticised for taking hefty bonuses from one hand and at the same time taking bail out money from the other.

Why do people do MBA? Each individual has his own reason but here are a few common ones:

1. Fat salary package (top rated reason). Because companies have really offered huge packages in recent past (in one case it was 1 crore per annum for a girl whose name I forgot). So others started believing that doing MBA will fetch them more money. Afterall, why do we do job — to earn money. So MBA becomes just another way of earning more money. This was/is a common thought in young professionals.

2. Not getting a job after graduation (engineering/MCA/Commerce). Let’s not waste time in searching job. Prepare for MBA, atleast that will fetch a job and with huge salary.

3. Some people really want to manage a business.

4. Fed up with engineering job. Fed up with workshop job. Fed up with writing codes and a bad boss. Fed up with low salary (no great increment). MBA will make life more easy, and if one can do it just be studying Maths, English and Logic, why not do it?

5. Peer pressure: My friend who was earning less money one year ago suddenly got selected in to IIM? Now he will earn double or triple than me?? Thats a sad news. I will also do it. If he can why not I? i am no less than him. (Peer pressure, competition, jealousy).

There are actually more reasons, but these are the true life cases that I have seen. And they are 100% true. (Please add more to this list).

AFTER EFFECTS:
——————————-
This created a huge croud of MBAs. This means huge amounts of salary were getting filled in their pockets. But the amount of money available in the entire world is limited (The total cost of gold reserves in all the reserve banks of all countries). => Economic crisis.

[Above may need citation, its my own view]

MBAs were generally fired out so that companies could save money during economic crisis.

[I heared this... might be true to some extent]

Economic crisis is not due to the low quality of MBAs produced by 2nd/3rd tier colleges. Ironically the crisis is result of world class minds graduated from harvard/strandford working with best Investment Banks like Lehman Brothers, Bear Sterns etc. These guys created some funny products which led to the downfall of the financial system of the world. So the agruements made so far is not valid.

While B School cirricula can certainly not be blamed for the current economic crisis, the excessive reliance of corporations on MBAs for managing their growth strategy has certainly contributed to the situation.

Over a period of time, we have developed a class of people in the finance industry who hold sway over large monetary and investment decisions, but have very little understanding of how “value” is really created in the economy. The emphasis on invest, divest, acquire, infuse cash blah blah blah is so high as compared to the ability to “build” products that add real value and will fetch a price in the market. This inability of managers to understand what it is that they are investing in, what is its real value, and why this value will grow (or diminish)…. led to the tech bubble, and then the mortgage bubble.
It is really important that investment managers are able to think about “what is the underlying trend that causes a technology or a real estate product to be valued very high, and whether this is growth is sustainable at least in the medium term”. In order to have this understanding, investment managers need to have some real life experience in building and selling products based on the value they provide to consumers.