Canada's schools of business administration say the federal and provincial governments must move quickly to increase funding for research and personnel for management education to plug a major gap in the national innovation system. The Canadian Federation of Business School Deans (CFBSD) says that the lack of management skilled in innovation management and international commerce is contributing to Canada's notoriously low productivity rate. It is generating compelling data that it hopes will convince federal and provincial governments to provide the necessary financial support to increase staffing and enrollment levels in the country's 60+ business management programs, and buy the necessary equipment to teach students entering technology-intensive sectors.

The CFBSD argues that the failure to do so will accelerate the establishment of cost-recovery graduate programs such as those at Queen's Univ and Dalhousie Univ - a trend that would increasingly restrict such an education to those with the money to pay. It also contends that if human capital is not bolstered, the financial commitments governments have made to technological innovation and capital accumulation and investment will be rendered largely impotent, stranding Canada at the bottom of the productivity ladder. In 1996, the OECD ranked Canada 21st out of 22 both for capital productivity and total factor productivity, while labour productivity ranked 19th.

To help avert an impending crisis in the supply of qualified management, the CFBSD has launched a low-key campaign to illuminate the issues surrounding the funding shortage and increase awareness for the Federation and its goals. Business school deans across the country are being encouraged to meet with senior decision-makers in government and industry, as well as persuade university governing bodies to place more emphasis on research as it pertains to business management. An aggressive lobbying campaign along the lines of the current microelectronics initiative (R$, December 22/99) is not planned for the near future although it is not being ruled out.

"We have a package consisting of several papers and a cover letter, but the initiative is not strident, it's reasonably quiet," says Dr William Blake, CFBSD's new chair and dean of Memorial Univ's faculty of business administration. "The (federal) government has recently recognized that the area of human capital is an important area that can make a difference and what we're saying is that business schools have a lot to offer."

In recent months, the CFBSD has produced several papers outlining the critical state of Canadian business schools and proposed remedies to increased the flow of skilled management into the economy. The most cogent document - Investment in Management Education: A Key to Productivity Growth - was prepared by David Conrath and presented last November to the House of Commons Standing Committee on Finance. And more papers dealing with faculty issues are currently being prepared.

While the Federation credits the federal government for its initiatives to fund R&D and provide an attractive tax environment for private sector R&D activity, it contends that the rapid adoption of electronic commerce and other forms of technology in the economy has only heightened the need for new funding. Business schools urgently require professors well versed in technology and its employment in the economy, but a lack of funding combined with the lure of better financed US schools makes recruitment exceeding difficult, especially for smaller faculties.

federation cites lack of funding sources

The Federation is also pushing to open up the avenues of funding for business research, which currently comes primarily from the Social Science and Humanities Research Council (SSHRC). Blake says the mandates of both the Canada Foundation for Innovation (CFI) and the Canada Research Chairs Program (CRCP) are skewed in favour of other disciplines, notably the so-called hard sciences underpinning science and technology development. Blake says the CFI "is nicely done to benefit the science and engineering communities but there are few avenues to access funding through its programs". He adds that some business schools in Quebec have had limited success, but in general the CFI door is largely closed.

The CRCP is further weighted against business research through its allocation process to universities based on the amount that each receives in granting council funds. With SSHRC disciplines eligible for just 20% of the chairs, that leaves scant room for business and administration faculty, which must compete against the combined weight of the arts and humanities.

That leaves SSHRC as the primary funding vehicle, and while Blake says the grant-ing agency acknowledges the problem and is highly supportive, its own funding woes limit its ability to respond effectively. Federation representatives met with SSHRC officials in late August to discuss the myriad issues surrounding the funding problem and Blake says he's encouraged by the response. The two groups have struck a steering committee to examine ways to improve the situation and try to build a vibrant research culture across the country. Currently, a handful of business schools are significant research players, but the vast majority are hampered by funding and personnel constraints, as well as an historical lack of research in the discipline.

"There's a very real need for research in the Canadian context," says SSHRC policy analyst David Moorman. "This has started a debate among the business schools themselves and SSHRC supports this."

One of the papers produced by the Federation details the low success rate business schools have had in SSHRC grant competitions, although Blake acknowledges that the data doesn't take into account other funding sources or reflect the relatively low application rate by business school faculties. Janet Halliwell, special advisor to SSHRC president Dr Marc Renaud, contends that seeking answers to the problems of the business schools is an immediate issue for the agency. She says a range of collaborative activities are being planned to create a research environment that will serve the future needs of the economy and society as a whole.

"There's the whole question of the New Economy and how we deal with it intellectually in terms of innovation. Our community has a lot to offer, and the business schools are an important component," says Halliwell. "There's no tradition in many business schools of application to SSHRC. It's often easier to get money outside the regular granting system, but it's more constrained and not the same as high risk, speculative research."

Among the joint planned initiatives are the implementation of a communications strategy, the production of more data, a workshop or symposium to identify intellectual opportunities, and work on defining an effective research agenda.

The problem of research funding and gaining access to SSHRC funding is often accentuated by the internal allocation of resources by individual universities. Because innovation management is not as established as other disciplines, universities tend to support grant applications from more traditional disciplines, leaving business schools to build their programs with scarce or non-existent resources.

This becomes particularly onerous with the rapid introduction of technology into the curriculum. As the need for equipment, training and technical maintenance increases, so does the cost of offering business management education geared specifically towards innovation, prompting some of the bigger schools to offer graduate degrees on a cost-recovery basis. While the Federation doesn't oppose such an approach, is it concerned that if more schools go the same route, innovation management will only be open to students able to pay the high tuition fees.

"We're looking at the whole funding issue because the problem is created by under funding of universities at all levels," says Timothy Daus, CFBSD's director of operations. "Technology, medicine and engineering are on people's radar, but business schools aren't yet and we need to be."

Low operating funds seen as key problem

While lack of research funds is a growing problem, perhaps the most immediate concern facing business schools is the woefully inadequate level of operating funds , which is allocated by provincial governments with the support of federal transfer payments. With the cutbacks of the 1990s still largely in place, disciplines facing high enrollment demand must raise the bar for entry, leaving many who aspire towards management by the wayside.

Compounding the situation is a growing scarcity of teaching personnel, exacerbated by an impending flood of retirements and the lure of big US schools. Universities south of the border are having growing success attracting Canadian teaching talent with much larger salaries, research support and a higher degree of government support than Canada. Here at home, some larger business schools have responded by hiking salaries, but that has also had an impact on smaller Canadian faculties.

"The US business schools are buying out good Canadian researchers and Canadian business schools are doing the same to smaller Canadian universities," says Blake.

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