Researchers, Teachers, and Incentives

Roger Martin, former Dean of the Rotman School at the University of Toronto, worries about the future of business schools. “I absolutely believe that if business schools don’t take action in the next five years, we are looking at a GM scenario. Some 90% of current tenure-stream faculty positions will not exist” (Martin quoted in Byrne 2015). I agree, there is a tendency towards two classes of professor — the more numerous un-tenured teachers and the star researchers making the big bucks.

Business schools will have “specialist researchers and the really rich business schools will have 35 to 50 of them and Iowa State will have one. Students will mainly be taught by teachers who have a focus on teaching.” (Martin quoted in Byrne 2015, I’m not sure what he has against Iowa State). This has a certain logic, specialization between researchers and teachers seems to be comparative advantage, i.e., economics 101. (Many excellent researchers aren’t good interacting with normal human beings so why make them do something they aren’t good at.)

Where I lost Martin is when he said that “We have to have [researchers] understand where the money comes from.” (Martin quoted in Byrne 2015).  He is wrong because the researchers are bright people who already know where their personal money — as opposed to the school’s money — comes from. Their pay is awarded by the choices of other professors it does not come directly from the students. The faculty member who alarmed Martin by not wanting to be bothered by students is sensibly responding to incentives which drive her to prioritize impressing her peers rather than her students. She wants to ensure that she is in the well-paid tenured star researcher category not the teacher category. While it may have been beyond Martin’s job as Dean to change her incentives he shouldn’t haven been surprised when she responded “correctly” to the incentives.

Read: John A. Byrne (2015) Are American business schools headed For a GM-like catastrophe?, Fortune, August 17, 2015, 12:05 PM EDT