Challenges to business education: the gap between practices and expectations

Challenges to business education: the gap between practices and expectations Carlos F. Gomes University of Coimbra School of Economics ISR-Institute of Systems and Robotics Av. Dias da Silva 165 3004-512 Coimbra - Portugal Email: cfgomes@fe.uc.pt Mahmoud M. Yasin East Tennessee State University Department of Business & Marketing P.O. Box 70625 Johnson City, TN 37614 Email: mmyasin@etsu.edu Citation: Gomes, Carlos F. e Yasin, Mahmoud M. Challenges to business education: the gap between practices and expectations, International Journal of Business Research, Vol. 11, No. 6, pp. 169-177, 2011. Acknowledgments The authors would like to acknowledge the cooperation, support and encouragement of Prof. José Reis, Director of the School of Economics at the University of Coimbra. 1

Challenges to business education: the gap between practices and expectations Abstract With the changing realties of the business environment, the gap between business education and expectations of business organizations tends to limit the market availability of business graduates. This study empirically investigates this gap. Data gathered from executives evaluation of performance of undergraduate and graduate students during their internships is analyzed using factor analysis and regression analysis. Implications to business education are presented. Keyword: Business education, internships, business expectations, educational requirements. 1. Background Economic and technological challenges are pushing business organizations to the edge were leadership can make the difference between mere survival and first-class performance. As these organizations push the boundaries of efficiency, innovation and reaching out for their customers, they are guided by visionary managers who blend their technical expertise with a renewed entrepreneurship spirit to lead their employees toward business excellence. In this context, achieving performance excellence requires the adoption of an open system business model. Such business model stresses proactive business and responsiveness to the competitive environment. Therefore, today s business organizations are in need of true leaders rather than mere managers. As a result, higher business education is being call upon to meet new challenges steaming from the realities of the innovative open system business model (Frølich& Stensaker, 2010). In response to the open system performance demands of business organizations, institutions of higher business learning are finding it necessary to re-orient their own educational systems, programs of study and approaches to become more open in nature. As such, business education must equip its graduates with the tools, skills and attitudes needed and demanded by the business community. As a response, most of these institutions are reengineering their graduate and undergraduate programs to make them 2

more in tone with the requirements of the new job market (Winkel, 2010). These programs are being modified to stress cross disciplinary knowledge, which is based on innovative problem solving, entrepreneurship initiatives, and creative systematic thinking (Czuchry, Yasin, & Gonzales, 2004). In the process, they are focusing on a performance-oriented education, which emphasizes both the technical and the human aspects of organizational performance (Dodridge& Kassinopoulos, 2003). Deregulation and increased competition within public sector institutions of a higher learning, and among these institutions and their private counterparts are forcing public sector higher learning institutions to adopt more market-like approaches. Such new approaches are changing educational practices and recruitment of potential students (Gibbs, 2008). In this context, it is no surprise that business education is increasingly gaining technological, innovation, entrepreneurship, and leadership flavors. This presents a departure from the lecture-based, subject-oriented, traditional mode of business education. The spite of the recent efforts of business education to reengineer its educational model, gaps between traditional educational preparation and recent organizational performance expectations have been subjects of concern among scholars and practitioners (Agut& Grau, 2002; Agut, Grau, & Peiró, 2003; Digman, 1990; Kimball, 1998; King, Flower, & Zeithaml, 2001). The extents to which these gaps have been reduced in recent times are yet to be determined. The recent and diligent efforts of the European Union, which are aimed at transforming educational systems and processes in order to be more consistent with the demands of the global marketplace (Floud, 2006) perhaps indicate that such gaps have not yet been eliminated. The Bologna declaration was initially signed by 29 European countries in 1999. Since that time 18 more countries have joined this effort. The main objectives of this initiative focused on the creation of a common educational system, the introduction of a unified European credit transfer system, as well as facilitating the movement of students across European countries. The ultimate goal of this joined educational effort is to create homogenous European higher educational systems. In order to accomplish this goal, comprehensive reforms of curricula and methods of delivery are promoted. In this context, educational programs are being aligned with the job market in order to improve employment prospects of graduates (Winkel, 2010). 3

As institutions of higher learning attempt to prepare their students for the job market, internships are being utilized as important tools (Chi & Gursoy, 2009). In this context, internships are also being used to gage the current practices in business organizations. This process, in turn, can be used to obtain the needed feedback in order to reengineer the current approaches and educational emphasis of business programs. The research at hand attempts to facilitate and enhance the needed link between the business community and business schools through gauging the feedback obtained from internships of business students at both the graduate and undergraduate levels. In this process, the views of business executives on the desired performance characteristics of entering managers are correlated with the performance characteristics stressed by business schools. This line of research has direct practical implications to the business community and business schools, which are preparing future business leaders. Specifically, the first objective of this study is to assess the dimensionality of the entry-level managers desired performance characteristics. The second objective is to gain insights into how organizations are evaluating business students, immediately after they finish their programs of study. This line of research is needed in order to close the gap between business education and the expectations of today s open system business organizations. 2. Methodology 2.1 Instrument In the first phase of this research project, a questionnaire composed of thirty-seven (37) items reflecting the performance-related competencies, attitudes, and behaviors relevant to the expected performance of entry-level managers was used. For each item (characteristics) included in the research instrument, Portuguese executives were asked to classify the level of importance of the performance-related characteristic for entry-level managers on a Likert-type scale, ranging 1 to 5. Based on the analysis of the responses to this questionnaire, a set of entry-level characteristics were selected to be included in the evaluation form used for internships of undergraduate and master business students. In the second phase of this research project, Portuguese executives were asked to classify students performance during their internship on a Likert-type scale, using 1 (notadequate), 2 (fair), 3 (good), very good (4), and 5 (excellent). Executives were also asked to 4

select, from those fifteen characteristics, the two most important weaknesses and the two most important strengths of each business student. The instrument was used to evaluate the internships in Portuguese organizations of business students from the School of Economics of the University of Coimbra for the last five years. 2.2 Sample and Procedure For the purpose of this study, two sources of information were used. First, a questionnaire was sent to the largest one thousand organizations in the Portuguese Center Region. This region includes six main administrative regions (Districts) in Portugal. It is considered as the main source of internships for students enrolled in the business programs at the University of Coimbra. Hundred and six (106) completed questionnaires, representing different industries, were received. On the other hand, sixty-two (32) were returned with some reasons for unwillingness to participate in the study. Due to the sensitivity of the information requested, the responses rate was relatively low (11%). Second, the records of the School of Economics at the University of Coimbra were used to obtain the evaluation forms related to business students who completed their internship in the last five years. During this period, European countries, including Portugal, engaged in the Bologna educational reforms. During 2007/08 academic year, the Undergraduate Degree in Business was changed from 4 years (8 semesters of class work plus 1 semester of a mandatory internship), to 3 years (6 semesters of class work). Therefore, the internship requirement was eliminated as mandatory. Currently, the internship requirement is considered as an option for the thesis option required for graduate students (3 semesters of class work plus 1 semester of an internship). Overall, two hundred and eighty (218) evaluation forms filled by Portuguese executives were obtained. One hundred and forty five (145) of these forms were related to the mandatory internships of undergraduate students that finished their business program before Bologna reform implementation. While seventy three (73) forms were related to the internships of master graduate students that finished their graduate program after implementation of the Bologna reform in Portugal. The main difference between these two groups of students is on semester of class work. 5

2.3 Data Analysis In the first phase of the data analysis, an exploratory factor analysis procedure was used to extract the underlying dimensions of the entry-level managers performance aspects using the data obtained from the questionnaire. In the second phase of the data analysis ANOVA and a multiple regression procedures were used to explore the relationships among the performance dimensions of the business students using internships evaluation data. 3. Results and discussion 3.1 Factor Analysis Results Using the Kaiser-Meyer-Olkin test, sample adequacy for all variables was analyzed. A sample adequacy overall value of 0.85 was obtained. This value reached the value considered acceptable in the literature for this type of analysis (Hair, Black, Babin, & Anderson, 2009). The principal component method, with a Varimax rotation was used to extract relevant factors. The results of the Bartlett test confirmed the appropriateness of the factor analysis procedure as used. Based on the factor analysis procedure, a five-factor solution was extracted (see Table 1). This factor solution explained 68.67 per cent of the total variance. The five factors extracted based on this solution are presented next. Factor One Adaptability and Leadership (AL) This first factor included a set of characteristics associated with the adaptability of the entry-level managers to the organizational culture, and the way they can influence it. This factor included the characteristics below. - Acceptance and willingness to work within the boundaries of the organizational culture - Contribution to promote and to keep a good work environment. - Ability to overcome barriers or limitations in association with performing the job. - Ability to maintain efficiency under time pressure situations, disagreement, and conflict. - Acting with courtesy, cordiality and good sense. Factor Two Organizational Learning (OL) 6

This factor clearly underscored the importance of the organizational learning process, in relation to the overall organizational performance. This factor included the characteristics below. - Ability to acquire new knowledge quickly and understand the organization s business environment - Personal motivation to learn and to perform the job or task. - Openness to continuous learning and the search for new ways to do things. - Ability to be self-motivated and to perform the tasks with enthusiasm. Factor Three Effective utilization of IT (EI) This factor captured the importance of utilizing new information and communication know-how within the boundaries of established organizational rules and procedures. This factor included the characteristics below. -Total acceptance, respect and full execution of orders. - Ability to use new information and communication technologies Factor Four Timely achievement and responsibility (TR) This factor emphasized the interaction between actions and responsibility. The factor included a set of characteristics directly related to the decision making process of managers. It included the characteristics below. - Ability to live up to responsibility for the consequences of taken actions. - Ability to achievement under time constraints. Factor Five Intrapeneurship and accountability (IA) This factor emphasized the importance of entrepreneurship and innovation within existing organizations. The factor included the characteristics below. - Having entrepreneurial spirit, and generating innovative solutions to problems. - Awareness of impact of decisions. In the first phase of the data analysis, the business students performance characteristics during the internship were grouped in five factors. The relationships among these performance factors and the overall performance evaluation are explored next. For 7

this purpose, ANOVA and multiple regression analysis procedures were used. The observation unit was based on the extracted factors. For this purpose, data obtained from the School of Economics records related to internships evaluation obtained from Portuguese executives was used. Using this data, an average of the measures included in each factor was calculated. 3.2 ANOVA and Regression Results ANOVA procedure was used to compare the results of undergraduate students and master students (Table 2). Differences in the means for these two student groups were found to be significant (α=.05). In order to shed some light on these differences, the five dimensional performance characteristics were ranked (Table 3). The results show that executives of Portuguese organizations tended to rank the characteristics of both groups of students similarly. The regression analysis investigation focused on the link between all performance dimensions (factors) and the overall performance (OP) of a student during the internship, as provided by executives. For this purpose, a stepwise regression model was utilized. The model utilized OP as the dependent variable and the remaining factors as independent variables for both undergraduate and master students. Based on the results in Table 4, only two performance dimensions were retained for the undergraduate business students, thus resulting in the model below: OP Us = 0.351 + 0.684OL + 0.192AL Where: OP Us Overall performance achieved by undergraduate students. OL Organizational learning. AL Adaptability and leadership. Based on the regression results, it appears that Portuguese executives tended to believe that the overall performance for business undergraduate students during their internships was, mainly, dependent on their organizational learning capability, and willingness to work within the cultural boundary of the organization. 8

Table 5 shows that only two performance factors were retained for the graduate business students, thus resulting in the model below: OP Ms = 0.231 + 0.598OL + 0.349TR Where: OP Ms Overall performance achieved by master students. OL Organizational learning. TR Timely achievement and responsibility. Based on the regression results, it appears that Portuguese executives tended to believe that the overall performance for the business graduate students during their internship, as was in the case of the undergraduate students, was mainly dependent on the students organizational learning capability. These students overall performance appears to be also linked to their ability to timely achieve their tasks, and to take responsibility for their actions and decisions. Executives were also asked to choose the two most important strengths as well as the two most important weaknesses of students which they observed based on the internship. Based on the results obtained (Table 6), the two most cited strengths for undergraduate students were personal motivation and adaptability to organizational culture. On the other hand, the two most cited weaknesses for these students were lack of innovation and entrepreneurship, and lack of focus. For graduate students, personal motivation, and continuous learning and development were the two most cited strengths identified by executives (Table 7). On the other hand, the two most cited weaknesses for these students were lack of focus, and lack of awareness of impact of decisions. The examination of the results for undergraduate and graduate students performance during their internships tended to point to different patterns of characteristics representing the performance dimensions of these two groups. These differences in performance dimensions as discussed next. 9

3.3 Profile of undergraduate students during their internships According to the results, executives attached varying importance to the different performance dimensions, when evaluating the overall performance of the undergraduate students during their internships. They gave more importance to the organizational learning dimension (OL), and adaptability and leadership (AL) dimension (Table 4). In this context, the overall average performance of 3.89, given by executives to undergraduate students can be explained by the fact that they included three of the four characteristics of the OL dimension in the five most cited strengths of these students during their internships (Table 2). This value could and should be improved, if characteristics such, being more focused and more creative problem solving skills are emphasized more. Although other characteristics could be improved, these ones were identified as major weaknesses by Portuguese executives. 3.4 Profile of graduate students during their internships Based on the results, executives also tended to attach varying importance to the different performance dimensions when evaluating the overall performance of the graduate students during their internships. They gave more importance to the organizational learning dimension (OL), and timely achievement and responsibility (TR) dimensions (Table 5). In this context, the overall average performance of 4.21, given by executives to graduate students can be explained by the fact that they included all the four characteristics of the OL dimension in the five most cited strengths of these students during the internship (Table 7). However, this value could and should be improved, if characteristics such, being more focused, and more creative problem solving skills are emphasized more. Although other characteristics could be improved, these ones were identified as major weaknesses by Portuguese executives. 4. Conclusion In recent times, business organizations have become more opened systems. In the process, they are becoming more aware of the importance to have leaders rather than execution managers. Such organizations are emphasizing innovation, continuous learning, entrepreneurship and leadership, as important aspects of organizational performance. This 10

has created an apparent gap between traditional business education and the expectations of the business community. Based on the results of this study the following conclusion are in order. First, students improvements in all performance dimensions was found as a result of the transaction from the undergraduate program with 8 semesters plus internship to the two level programs (undergraduate + master), with 9 semesters plus a internship. Therefore, it appears that recent changes which the University of Coimbra undertook in association with the bologna reform are paying off. Second, the entrepreneurship and innovation, and leadership educational aspects appear to still under emphasize by business education. This is the case, despite the increasing importance to business organizations of these aspects. Third, some improvements in key educational aspects where detected. However, executives of business organizations are still demanded more educational efforts in other key areas. Innovation, entrepreneurship and leadership are cases in point of these key areas. Four, today s business organizations are looking for leaders who are comfortable with undertaking innovative approaches to business problems, and willing to take the responsibility for their actions and decisions. As business schools prepare the future business leaders, they should take into account the new realities of the business environment. Finally, as business education attempts to reengineer its business model in order to be more consistent with the open business model, it must adopt new approaches which emphasize leadership rather than business. In this context, the integration of the different aspects of business education into a comprehensive innovation based, problem solving and leadership orientation is needed. The research presented in this study is part of a stream of research aimed at closing the gap between business education and the expectations of the business community. Such research effort will contribute to the strengthening the relationship between higher business learning and potential employers. In this context, the formulations of strategic joint ventures between these two entities will result in better job placement for students. 11

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Table 1 Factor Analysis Results FACTORS F 1 F 2 F 3 F 4 F 5 Comm 1 (Cronbach s alpha value) (0.821) (0.783) (0.583) (0.659) (0.452) F1 ADAPTABILITY AND LEADERSHIP - Adaptability to organizational culture 0.757 0.603 - Positive influence 0.696 0.629 - Creative problem solver 0.662 0.660 - Focused 0.647 0.618 - Collegiality 0.586 0.676 F2 ORGANIZATIONAL LEARNING - Quick learner 0,730 0.652 - Personal motivation 0,705 0.695 - Continuous learning and development 0,666 0.721 - Task oriented 0,509 0.636 F3 EFFECTIVE UTILIZATION OF IT - Obedience 0,826 0.729 - Technical skills 0,701 0.509 F4 TIMELY ACHIEVEMENT AND RESPONSIBILITY - Responsibility 0,851 0.744 - Effective time business 0,682 0.719 F5 INTRAPENEURSHIP AND ACCOUNTABILITY - Awareness of impact of decision 0,802 0.823 - Innovation and entrepreneurship 0,661 0.683 Eingvalues 3.10 2.30 1.80 1.73 1.37 Percent of total variance 20.65 15.35 12.01 11.54 9.12 Cumulative percent 20.65 36.00 48.01 59.55 68.67 1- Communalities 13

Table 2 Significant differences* revealed by ANOVA tests Sum of Squares df Mean Square F Sig. AL Between Groups 2,158 1 2,158 6,358,012 Within Groups 73,319 216,339 Total 75,477 217 OL Between Groups 3,241 1 3,241 9,364,002 Within Groups 74,757 216,346 Total 77,998 217 EI Between Groups 1,910 1 1,910 6,641,011 Within Groups 62,123 216,288 Total 64,033 217 TR Between Groups 2,453 1 2,453 5,582,019 Within Groups 94,934 216,440 Total 97,387 217 IA Between Groups 3,496 1 3,496 7,824,006 Within Groups 96,499 216,447 Total 99,995 217 * Significant different at the.05 level. Table 3 A comparison between students DIMENSIONS UNDERGRADUATE MASTER Mean SD Rank Mean SD Rank - Effective utilization of IT - Organizational Learning - Adaptability and Leadership - Timely achievement and responsibility - Intrapeneurship and accountability 4,20 0,57 1 4,40 0,46 1 4,05 0,61 2 4,30 0,54 2 4,03 0,62 3 4,25 0,51 3 3,80 0,66 4 4,02 0,67 4 3,66 0,67 5 3,93 0,67 5 14

Table 4 Stepwise Regression Results for undergraduate students R R 2 Adjusted R 2 Std. Error of the Estimate 0.808 0.781 0.647 0.368 Unstandard. Coefficients Standardized Coefficients B Std. Error Beta t Sig. VIF (Constant) 0.351 0.215 ----- 1.633 0.105 OL 0.684 0.081 0.663 8.397 0.000 2.636 AL 0.192 0.080 0.189 2.393 0.018 2.636 a. Dependent Variable: Overall performance Table 5 Stepwise Regression Results for master students R R 2 Adjusted R 2 Std. Error of the Estimate 0.804 0.782 0.633 0.405 Unstandard. Coefficients Standardized Coefficients B Std. Error Beta t Sig. VIF (Constant) 0.231 0.368 ----- 0.627 0.533 OL 0.598 0.126 0.500 4.746 0.000 2.200 TR 0.349 0.101 0.362 3.439 0.001 2.200 a. Dependent Variable: Overall performance 15

Table 6 Strengths/Weaknesses of undergraduate students during their final internships Characteristics Freq (%) Mean Std Most cited strengths Personal motivation 26.8 Adaptability to organizational culture 25.4 Quick learner 23.2 Continuous learning and development 22.5 Collegiality 18.8 4.18 4.20 4.02 4.05 4.48 0.73 0.82 0.74 0.71 0.71 Most cited weaknesses Innovation and entrepreneurship 40.0 Focused 39.2 Awareness of impact of decision 27.5 Creative problem solver 22.5 Effective Time Business 22.5 3.62 3.57 3.71 3.69 3.77 0.83 0.74 0.73 0.74 0.75 Table 7 Strengths/Weaknesses of master students during their final internships Characteristics Freq (%) Mean Std Most cited strengths Personal motivation 37.5 Continuous learning and development 37.5 Collegiality 23.2 Quick learner 17.9 Task oriented 17.9 4.45 4.36 4.53 4.12 4.35 0.60 0.64 0.63 0.68 0.69 Most cited weaknesses Focused 42.5 Awareness of impact of decision 30.0 Creative problem solver 30.0 Effective time business 30.0 Innovation and entrepreneurship 25.0 3.77 3.78 3.91 3.98 4.07 0.79 0.80 0.73 0.69 0.84 16