In Harvard Business School has a ‘Japan problem’ (Fortune.com, Jan 29, 2015) John A. Byrne reports that “MBA applicants to the prestigious business school from Japan have dwindled to a precious few. Harvard is beefing up its admissions presence in Tokyo to counter the trend.” Read more here.

The Harvard Dean, according to the article, blames the dwindling numbers to the insularity of Japanese students. But there may be other real reasons for the pointed avoidance of students of the American MBA program.

Henry Mintzberg’s book “Managers not MBAs: A Hard Look at the Soft Practice of Managing and Management Development” also questioned the value of MBAs from the US, calling their emphasis on globalization and their perspectives in ignoring local contexts and practices as “myopic”. Mintzberg in his book state that the Europeans and a certain segment of the UK business community also share the Japanese attitude that US MBAs are irrelevant to the business world. See his The MBA Menace where he points out the questionable performance track record of Harvard MBA managers:
“There was a book called Inside the Harvard Business School, published in 1990, that listed the great CEOs the school had produced. Harvard is very proud of its graduates who made it to “the top.” The book said little, though, about how those CEO graduates actually performed. So we tracked the 19 people on that list, from 1990 to 2003. The results were dismal. Ten failed badly, and the records of another four were questionable at best. So much for the fast track.”
Mintzberg also says that the MBA, the bread-and-butter course of many business schools and the sine qua non of fast-track management careers, “prepares people to manage nothing”. Synthesis, not analysis, he said, “is the very essence of management”, and the MBA course teaches only analysis (source: The Economist. Guru: Henry Mintzberg). Mintzberg does let us know that what he thinks is a better alternative to the MBA program, is the IMPM [International Masters of Practicing Management] program whose participating universities include McGill U., INSEAD, as well as a consortium of three Japanese universities (Hitotsubashi U., Kobe U., and the Japanese Advanced Institute of Science & Technology), see Managers & MBAs: An Interview with Henry Mintzberg.
The drastic drop in MBA aspirants is most likely, however, due to the influence of the prominent views and writings of Yoshi Tsurumi* in the Japanese Journal of Administrative Science who has published such scathing views and disdain for US MBA education. See Yoshi Tsurumi’s Hail to the Robber Baron? | Opinion | The Harvard Crimson wherein he says Harvard’s business education and MBA holders are responsible for America’s “robber baron culture” and the economic woes of the US and for the growing income gap between the rich and poor. His key charges and criticisms  are to be found in the “Dysfunctional Corporations and the Flawed Business Education of America“. His paper, you’d think reads like a diatribe against President Bush and other corrupted capitalists, identified as Harvard MBA holders, perhaps you may wonder at the man’s audacity until you realize that the ex-President Bush was once his student at Harvard!  Here’s a sample extract of his writing, and of the charges he lays at the door of holders of the Harvard MBA at http://www.jaas.jpn.org/doc/pdf/journal18_3.pdf:
“During the last thirty years, invalid economics theories of market fundamentalism have dominated business education. As a result, harmful theories of management and business-government relations have produced dysfunctional corporations and governments. President George W. Bush epitomizes the worst aspects of America’s MBA education. Students of business and economics are taught absurd theories and policy paradigms. They produce the MBA mindset that embraces the robber baron culture of market and Christian fundamentalism.
 …President Bush epitomizes the worst aspects of the MBA culture – anti-intellectualism, lack of integrity, power hungry, and lack of compassion for the unfortunate. This culture drives MBA-trainded politicians, lawyers, and business executives to willfully misrepresent facts to achieve their selfish goals.
The winners are Wall Street money gamers and self- dealing corporate executives who were aptly called “the captains of piracy” (Nicholas Kristof, 2005: A18). Since 2002, the profits of large corporations have risen to unprecedented level while labor compensation has declined (Andrew Sum, et.al., 2004: 14). These skewed divisions of the GDP pie have been accelerated by President Bush’s generous tax cuts mainly to the wealthy and large corporations. In 2004, over 80 of America’s most profitable 200 corporations did not pay any federal and state income tax. At present, private corporations are devoting about 10 percent of their profits to compensate their top five executives, up from 6 percent in the mid-1990’s. The New York Times calls this “a hijacking of corporate wealth by top managers.”
According to the Wall Street Journal study of March 2005, the bonuses received by Chief Executive Officers (CEOs) of 100 largest U.S. corporations rose over 46 percent since 2004, to a median of $1.14 million. Both the total amount and the percentage increases were the highest in five years. To pay themselves so generously, CEOs shaved costs by laying off workers, reducing employee health benefits, and outsourcing manufacturing and service jobs abroad. Many CEOs raid their employees’ pension funds and leave them under- funded or bankrupt although they do not cut their own pay.
Under the Bush Administration, the average pay for CEOs of the S&P 500 companies has doubled, passing the $10 million mark. Meanwhile, their employees lost their jobs or saw their pay and health benefits reduced. The Wall Street Journal study also showed that CEOs’ annual compensations (bonuses and salaries and perks) had little to do with their performance. In 1980, the CEOs of Fortune 500 large corporations received, on average, 70 times larger annual compensations than their ordinary employees. Under the Bush Administration, comparable CEOs, many of whom hold Masters of Business Administration (MBA) from American graduate schools of business, have come to give themselves 600 to 1,000 times larger annual compensations than their rank- and-file employees. Meanwhile, the best paid CEOs of Japan are given 20 to 40 times more than their ordinary employees.
Furthermore, MBA-trained “captains of piracy” have produced breath-taking malfeasance in Corporate America, as seen in the examples of Enron CEO Jeff Skilling (Harvard MBA). Other MBAs are behind the corruption at Tyco, HealthSouth, Haliburton, AIG, Arthur Andersen, KPMG, Citigroup, Global Crossing, and WorldCom, to name a few. Their corruption is encouraged by President Bush’s promotion of the robber baron culture – ignoring the public accountability of business and political leaders.
Thirty years ago, Bush belonged to a minority of MBA students who were seriously disconnected from taking moral and social responsibility for their actions and abused their privileged positions. Today, he would fit in comfortably with an overwhelming majority of business students and teachers whose role models are celebrated abusers of power. Most business students and teachers refuse to believe that capitalism becomes corrupt in the absence of civic values and ethical constraints. Even against overwhelming evidence to the contrary, they continue to believe that no government can manage a service-providing system better than profit-seeking private corporations. What is wrong with America’s business and economics education that has produced dysfunctional executives and political leaders?
Harmful Management and Economics Theories of Market Fundamentalism
Under the Reagan Administration (1981-89), America’s industrial decline was visible. One manufacturing firm after another lost U.S. market shares to Japanese and European competitors. Some economists and business leaders pointed out how America’s business education was responsible for uncompetitive American firms (Yoshi Tsurumi, 1983: D2; John Young, 1985: 61; Michael Dertouzos, et.al., 1989: 344). Of late, management scholars have criticized MBA education (Jeffrey Pfeffer, 2005: 96-100). Sumantra Ghoshal noted (2005: 75-91):
“Combine agency theory with transaction costs economics, add in standard versions of game theory and negotiation analysis, and the picture of the manager that emerges is one that is now very familiar in practice: the ruthlessly hard-driving, strictly top-down, command-and- control focused, shareholder-value obsessed, win-at-any- cost business leader of which Scott Paper’s “Chainsaw” Al Dunlap and Tyco’s Dennis Kozlowski are only the most extreme examples. This is what Isaiah Berlin implied when he wrote about absurdities in theory leading to dehumanization of practice.”

(Also in the same vein, see Latitude News’ “MBA presidents not big in Japan“)

An older report suggests why MBA holders sometimes clash with Japanese corporate culture…

SPECIAL REPORT: INTERNATIONAL EDUCATION | M.B.A.’s in Japan Struggle for Respect

By MIKI TANIKAWA
Published: November 24, 2010

“TOKYO — For many businesspeople looking to re-invent themselves by getting an M.B.A., there is one well-worn question: How much more will I be worth after obtaining the actual degree?

In Japan, the answer is not simple — nor is it a given that one’s perceived value will increase at all. In fact, most companies have been known to look askance at such an accomplishment, sometimes placing recent M.B.A. recipients in unrelated fields, or trying to re-acclimate their Japanese employees who have spent years overseas earning a degree.

“They believe in business know-how gained on the job, not in the classrooms,” said T.W. Kang, a Tokyo-based businessman who holds an M.B.A. from Harvard Business School. “They’d say you can’t learn it there. You have to learn it with your feet.”

But, partly in an effort to counter those perceptions, some business schools themselves are working to make their M.B.A. degrees more relevant.

Administrators of Japanese business schools like Hitotsubashi University’s Graduate School of International Corporate Strategy and Globis Business School, both in Tokyo, say they seek to offer a business education that takes into account the local corporate culture.

Hitotsubashi’s dean, Christina Ahmadjian, said that students at her school are required to take a course in “knowledge creation.”

“Students read about the philosophy of Zen Buddhism, among many other things, and learn about how leading Japanese companies have innovated through sharing of ‘tacit knowledge’ — knowledge that is best communicated through long-term, close, personal relationships,” she said. “This is the polar opposite of the Wall Street view of things.”

This evolving approach to M.B.A.’s comes at a time when there is something of a boom for a mid-career business education in Japan.

Since the Ministry of Education began accrediting graduate schools meant to train business and management professionals seven years ago, more than 30 schools have sprung up in large cities like Tokyo and Osaka, typically run as evening and weekend programs stretched over two-year to four-year periods.

The growth in Japan has been fed by two major factors: A weak economy has pushed more professionals to seek degrees and certificates to improve their job prospects, and big Japanese companies have largely stopped sponsoring expensive overseas degrees the way they once did for their employees.

“Japanese companies have drastically reduced the number of people they send overseas,” Ms. Ahmadjian said about acquiring M.B.A.’s.

Despite the boon to the schools in Japan, the history of questioning the value of M.B.A.’s continues to present a hurdle, consultants and others say.

Mr. Kang, who has served on the boards of both Japanese and American companies, said the majority of Japanese managers at large corporations viewed business knowledge learned at school with suspicion and skepticism, bordering on disdain.

This notion runs deeper at engineering-driven, manufacturing companies, he said.

“They have so much trust for craftsmanship and believe that business school theory compromises that concept,” Mr. Kang said.

A friend of his, a chief financial officer of a leading Japanese company, recently shared an anecdote with him: During a lecture on financial management given by the chief financial officer, one engineer got up and asked, “Is it O.K. to pursue profits?”

That question — already settled in most business cultures — is characteristic of Japanese engineers, whose job it is to overcome technological hurdles rather than seek profits.

“Japanese shokunin, or craftsmen, feel satisfied if they realize and beat next-to-impossible expectations that customers demand of them,” Mr. Kang said.

Ms. Ahmadjian raised a similar point. “Many Japanese managers cling to the belief that the same ‘Japanese system’ of management that drove Japan’s economic rise decades ago is still appropriate and that everything from the U.S. is somewhat corrupt and wrong,” she said.

But she said that she perceived a growing interest in a more integrated approach, one that includes both Japanese and American principles. “A model of management is clearly emerging in the aftermath of the financial crisis — and it is going to be a combination of both.”

The phenomenon of questioning the value of business degrees took off in the 80’s and 90’s, when large Japanese companies were still sending their young employees in droves to American and European M.B.A. programs. To some skeptics back in Japan, “the M.B.A.s were considered a high-class English class,” Mr. Kang said.

When some students came back, a common practice was to place them in a most unrelated business arena, like domestic sales, furthest from what they learned at overseas schools.

The idea was to reorient the employee who may have become too westernized or become overconfident with their M.B.A. knowledge.

That issue, however, is fast disappearing, said Ms. Ahmadjian, partly because Japanese employers have found the practice counter-productive.

“I think those days are over,” she said. “Now, corporations use the returning M.B.A.s more effectively and immediately.”

In fact, Reiji Shibata, chief executive of Indigo Blue, a human resources consulting firm in Tokyo and formerly the chief executive of a number of Japanese firms, said Japanese M.B.A. holders generally do fine in the management consulting field, but not necessarily in the general business context.

“They have a tendency to overemphasize logic,” he said. “Their approach at times leads to clashes and dead ends and deals don’t go through as a result. This is especially so when you are working with different types of customers and partners.”

Mr. Shibata, who served as head of Mercer Human Resource Consulting, a leading American human resources advisory firm, in Japan, said the less-than-stellar reputation of M.B.A.’s may have resulted from the way they had been treated in the Japanese business world in the first place. “It appears to me that they feel they are constantly under-rated and under-estimated despite their degrees,” he said. “They have it backwards. They have to show performance first before they are recognized.”

Mr. Shibata added that this condition could lead them to flaunt and accentuate their business knowledge even more, turning off their Japanese co-workers and customers. “It is a vicious cycle,” he said.

Yoshihiko Takubo, deputy dean of Globis Business School in Tokyo, said that the fact that many young Japanese company-sponsored M.B.A. recipients quit their companies may have left a bad feeling with their employers and the Japanese business community. “But many people stayed on and became successful,” he said, adding that others who left went on to become successful entrepreneurs, including Hiroshi Mikitani of Rakuten, the leading on-line shopping mall in Japan, and Tomoko Namba of DeNA, a leader in on-line auctions. Both went to Harvard Business School.

Mr. Takubo said M.B.A. degrees are useful, but for Japanese business people, some adjustments need to be made. He said, for example, that instructors at Globis do not teach that corporate managers are a class of people divorced from the realities of business. “Japanese managers have to know, understand and identify closely with the front-line,” he said.

He also teaches that brandishing one’s M.B.A. knowledge is not a good idea.

“We tell students never to use technical terms like the ‘five forces’ of sales, when they go back to work,” he said. “That is going to turn people off.”

Ms. Ahmadjian said that while Japanese employers may not yet instantly recognize the value of the business degree, they have come to value the overall experiences that come with it.

On the other hand, a study from the Thai Chukalongkorn U. in analyzing the “best-practiced” MBA programs from USA, Europe, and Asia Pacific; and based on a survey business peoples’ opinion about general business practices and MBA programs in Japan; indicated the gap between “best-practiced” MBA programs and Japanese MBA programs indicated:

– that “best-practiced” MBA were preferred / scored higher than Japanese MBAs;

–  that there were positive significant relations between “their business organization has very internationalized governance” and “they agree that MBA programs have good potential to develop new business leaders”;

– that there were significant negative relationship between “their company’s training courses are unique” and “they feel that  present Japanese MBA programs are irrelevant to the business practice

The questions used in the survey of administrators, faculty members, students and students’ parents opinions derived from the analysis of the “best-practiced” and Japanese MBA programs related to (1) school contest, governance and strategy (2) quality of MBA program (3) quality of students (4) quality of faculty) (5) research and development (6) contribution to the community (7) resource and administration (8) internationalization) (9) corporate connection.  The second set of questions used in the survey of business peoples’ opinion regarding the business practices and MBA program.  In addition, interviews used with the students from Japanese MBA program to get their opinion about their program and their needs, and also used with business executives from top listed 24 different industries to get their deeper opinions about their business practice and MBA program in general.

A 2010 study, “The Future of the Planet in the Hands of MBAs: An Examination of CEO MBA Education and Corporate Environmental Performance” (SLATER, DANIEL J.; DIXON-FOWLER, HEATHER R)  finds a positive correlation between MBAs and CEO careers.

However, we could explain this correlation as possibly due to what is called the “swimmer’s body illusion” (see Rolf Dobelli’s chapter “Does Harvard make you smarter” from his book “The art of thinking clearly“), since many of the applicants for Harvard MBAs are already entrepreneurs or people in the corporate world who have already achieved some measure of success in building up and running or managing companies, businesses, and are naturally CEO material, the correlation is what Dobelli calls a false correlation and their success may not due to the excellence to the school program per se.

Related resource:

Watch a Globis panel discussion on youtube: “Does an MBA help or hinder entrepreneurs and managers?” “What are the secrets of Successful Entrepreneurs?” (3 parts) Dr. Mark Lee Ford, GLOBIS faculty, President and Board Director of The Moneo Company, and his entrepreneur fellows discuss the issue.

* His cited distinctions include: Professor of International Business and Recipient of Baruch Presidential Award of Distinguished Lifetime Scholarship (2002). He holds B.A. and M.A. (Economics) from Keio University, Tokyo and MBA and DBA from Harvard University. He has published in leading journals includingJournal of Econometrics,Journal of International Business Studies, andHarvard Business Review. His book,Sogoshosha: Japanese General Trading Firms(1979) aided the enactment of the U.S. Export Trading Company Act of 1982. His recent book,Amerika no Yukue, Nihon no Yukue(Wither America, Wither Japan) (2002) was made into NHK’s award winning t.v. documentary of U.S.-Japan relations (2003.