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Noticeable by their absence

Themes: Economics and policy

Dr Kamal MunirBusiness schools missed a trick in failing to grasp an unprecedented opportunity to create a new behavioural understanding of financial markets

Business schools failed to grasp opportunities created by the global economic firestorm of 2008-9 to benchmark their theories and create a new behavioural understanding of the way financial markets work.

Dr Kamal Munir, Reader in Strategy & Policy at Cambridge Judge Business School, says that in social sciences the belief is that disruptions are the best time to study social life and its constituent parts.

“This was a huge disruption. People like Alan Greenspan and others including famous Nobel Prize-winning economists were openly admitting they had suddenly discovered they did not really understand how the markets worked.”

There was much to be learned as economies and countries went under and a realisation that sentiment and expectation drives the markets rather than national decision-making.

Dr Munir says the crisis was a great opportunity for business schools, through their empirical and behavioural work, to develop a new theoretical understanding of how the markets work.

He feels the opportunity has not been lost entirely.

“The world was crying out for a new theory around how the markets work and business schools just did not step up to the plate. We need to step back and look at the bigger picture. Continuing to help businesses to make even more money is missing the point right now.”

Dr Munir says the traditional path created through conventional economic theory is no longer appropriate.

“The onus is now really on business schools. We cannot remain cheerleaders for big business. We must go back to duelling with economists and tell the world this is where we stand; this is what we agree with in conventional theory and this is what we disagree with. We are in danger of losing the forest for the trees. We must go back to the big picture.”

Dr Munir feel that business schools should be encouraged to take up the challenge having failed so far because as the media moves on and stories change, then the lessons of the crisis will be forgotten.

“This was a goldmine of events and of behaviour which would easily have informed or led to the generation of new theory. I’m trying to highlight the fact that business schools should be engaging more with contemporary events like this, an event that affected a large majority of the population of this planet.”