Long seen as a club for the privileged and a breeding ground for high-income graduates, business schools are now facing pressure – from outside and from within – to radically change the way they operate to play a powerful role in ensuring a more equitable share of wealth. Can they do this? And how? Silvana Leyva, BBA student and Winner of the 2023 Student CSR Article Competition at IE Business School, explores.
Mind the Gap: The role of business schools in bridging the income divide by Silvana Leyva.
Franklin D. Roosevelt addressed his view on income inequality with this quote as the United States was grappling with the turmoil of the Great Depression in 1937. Transcending time, the former president’s message continues to resonate strongly in today’s world, as the stark wealth gap deepens, and the inequality puzzle remains unsolved.
Income inequality, a complex and multifaceted issue, has existed throughout history due to a myriad of systemic and structural factors that have perpetuated unequal access to resources and opportunities—and the COVID-19 pandemic has only served to escalate this already pressing matter. The pandemic has disproportionately affected the most vulnerable members of society, and it is our responsibility to take concerted action in helping our global community.
With the power of shaping the next generation of leaders and influencing the direction of the economy, business schools therefore play a vital role in this long-term combat against income inequality. So, the question remains: what steps can business schools take to become the agents of change in promoting greater economic and social equality?
Income inequality: A pandemic within a pandemic
Three years ago, the world stood still as an invisible enemy swept across the globe. The start of the pandemic instilled a sense of vulnerability and uncertainty, prompting us to unite in solidarity and work together for a common purpose. This sense of togetherness, however, was short-lived. As the virus persisted, it magnified the deep-rooted inequality issues that have plagued our world. According to OXFAM International (2022), “in some countries, the poorest people are nearly four times more likely to die from COVID-19 as the richest”. The report states that, for instance, “people of Bangladeshi origins were five times more likely to die of COVID-19 compared with the White British population in England”.
The comparison of these two populations demonstrates how marginalized and low-income groups were systematically denied access to proper healthcare and vaccines, ultimately putting them at a higher risk of illness and death during the pandemic. And even those who survived were forced to face another hardship: falling deeper below the poverty line (Eurofound, 2023)
The pandemic served to push over 160 million people into poverty, due to numerous disruptions such as job losses and reduced access to work. But as billions struggled to overcome hard times, billionaires were rejoicing in their increased fortunes. “Billionaires have seen extraordinary increases in their wealth… $26 trillion (63 percent) of all new wealth was captured by the richest 1 percent, while $16 trillion (37 percent) went to the rest of the world put together” (OXFAM, 2023) — this clearly highlights the deep-seated disparities that have resulted from COVID and its lingering effects. With the pandemic, economic violence has worsened, communities have been fragmented, and low-income groups are unjustly enduring the economic and health fallout that comes with income inequality.
This issue therefore goes beyond just an abstract economic concept; it is an issue of life and death, as those at the bottom of the income ladder are more likely to suffer from illnesses and limited access to healthcare. It is an issue that leads to social unrest, causing despair and hopelessness amongst generations of marginalized groups that are trapped in the poverty cycle. And it is an issue that is undermining economic and social growth, harming thousands of people every day and preventing us from creating a sustainable future.
The Influence of business schools in tackling income inequality
The devastation of the pandemic obliged businesses around the world to adapt and face unprecedented challenges; and while some were capable of thriving and accelerating in a dynamic digital landscape, there were many others that were forced to shut down or suffer great economic losses. The Bureau of Labor Statistics reported that, between February and April 2020, more than 22 million jobs were lost in the United States, exemplifying the sudden changes in economic activity.
Despite the recovery of many jobs, the recession had a powerful role in deepening inequality. High-paid workers had the advantage of adequate resources and opportunities to work from home, which helped them maintain their financial stability and health during the pandemic. In contrast, low-wage workers were disproportionately affected, as they were less likely to have access to such privileges. These employees were at greater risk of contracting the virus due to their obligation to continue working in high-exposure industries. Therefore, while some workers were able to adapt and stay safe during the pandemic, others faced greater challenges and vulnerabilities (United States Department of Labor, 2022; OECD, 2022; Collinson, 2021)
Business schools have a distinctive influence in driving innovation for economic growth. In the start of the pandemic, many institutions around the world responded to the crisis by leveraging their resources and entrepreneurial spirits with the goal of assisting businesses. Universities directed their efforts towards aiding the most affected industries by launching various support initiatives, such as conducting research, providing finances, and lending expertise. Cornell University’s School of Hotel Administration, for instance, created a compilation of webinars and research intended to support hotel managers in implementing optimal strategies during the crisis, due to the tourism industry being heavily affected by the pandemic. Although various businesses were able to rebuild and survive, the lingering economic hangover of the pandemic remains— and business schools must continue exhibiting their commitment to contributing towards building a more prosperous society in our post-pandemic world (Bajeux-Besnainou, 2020).
Business schools as agents of change
Business schools around the world are incubators with the resources and knowledge to foster and fuel entrepreneurial spirits. With start-up labs and aims to drive innovation, these institutions are equipping students with tools to transform ideas into reality. Through this entrepreneurial activity, society can be positively affected, and job opportunities are gradually created. Another essential aspect of the role in business schools is access to education.
Offering education opportunities and resources to marginalized groups can have powerful effects on breaking the poverty cycle that many groups struggle to escape. Education is the path to social mobility, as it allows students to grow in knowledge and therefore climb up the economic ladder. Without proper education, people will struggle to reach their full potential and remain competitive in the workforce; education is the tool to level the playing field by promoting human capital and economic prosperity. The solutions may be successful in combating income inequality, but it is essential to focus on how to strive and engage sustainably through a long-term mission.
This, therefore, brings me to my final message: we must rethink the role of business more aggressively than ever. Business schools must shift focus from maximizing profits to creating value for all stakeholders by establishing diversity, equity, and inclusion initiatives. By embracing a more conscious and integrated approach to business, students will be able to consider the long-term impacts of their actions as leaders and entrepreneurs (Birkinshaw, 2022).
This requires a fundamental shift in mindset and a commitment to new business models that prioritize sustainability, social responsibility, and ethical practices. Through collaboration and cooperation between businesses, governments, and society, the role of business in society can be re-imagined. Business schools have been instrumental in introducing innovative ideas and practices that have generated significant value for companies and their stakeholders across the globe. With a unique opportunity to take the lead in addressing one of the most pressing challenges of today’s world, these institutions can begin by making a substantial investment and devising a deliberate approach to ensure that the equitable values become an integral part of both business education and the business world itself.
Albert Einstein said it best. “We cannot solve our problems with the same thinking we used when we created them.”
If business educators, students, and aspiring leaders continue to prioritize the belief that a company’s main goal should be to maximize profits, then a sustainable and equitable society is far from close. If we want to change our world, we must change our thinking, and this begins with rethinking the role of business education.
- Link up with Silvana Leyva on LinkedIn
- Read a related post: Business Schools: Intentionally but mistakenly unequal
- Discover IE Business School
- Apply for the BBA programme at IE Business School.
Learn more about the Council on Business & Society
The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.
Member schools are all “Triple Crown” accredited AACSB, EQUIS and AMBA and leaders in their respective countries.
- ESSEC Business School, France-Singapore-Morocco
- FGV-EAESP, Brazil
- School of Management Fudan University, China
- IE Business School, Spain
- Keio Business School, Japan
- Smith School of Business, Canada
- Stellenbosch Business School, South Africa
- Trinity Business School, Trinity College Dublin, Ireland
- Warwick Business School, United Kingdom.