Institutions Of Consequence: Why The Case Against Business Schools Looks Different From Latin America

The case for abolishing business schools rests on evidence from advanced economies, where business-trained managers redistribute value that already exists. Latin America has the opposite problem: an innovation and competitiveness gap that frequently prevents value creation. Developing the leaders to close that gap is the public good a business school here must answer for.

Chris Marquis’s essay in The New York Times has sparked one of the richest debates on business education in years, with most voices from the United States and Europe, and one question at its center: What is an MBA for? Marquis has since told Poets&Quants that his aim is reinvention. I want to take him at his word and ask his question from another latitude – because the answer changes with the latitude.

As dean of EGADE Business School, I serve on several advisory boards of business schools and accreditation organizations, and I am convinced business schools have an important role in society. Few people have more reason to disagree with him, so let me start where he is right. A case built around a single decision-maker narrows the imagination, and one approved by the company it describes is closer to public relations than to research. A school that measures itself only by rankings and placement will eventually be shaped by them. These flaws do not stop at borders; we have them in Latin America, too.

There is a deeper point on which Marquis and I agree, and it is the one that makes his essay worth answering. I believe that business schools are institutions of consequence. What we teach changes how companies are run, and how companies are run changes how people live, in their wages, the prices they pay, whether their town has a factory, a maquila or nothing at all. That is why he calls for our abolition. If we were inconsequential, his essay would not have been written. We disagree on what that consequence is, and that depends on latitude: a business school in Britain or the United States and one in Mexico face very different challenges.

THE OPPOSITE PROBLEM

The study he cites, by Daron Acemoglu and colleagues, finds that in the United States and Denmark, firms led by managers with business degrees cut wages and labor’s share of income without raising productivity. Managerial capacity used to redistribute, with nothing created. That is a diagnosis of surplus. Latin America’s condition is the opposite one: not creating enough value in the first place. Per capita GDP did not grow between 2014 and 2023, what the UN’s Economic Commission for Latin America (ECLAC) calls a second lost decade. Productivity, the deepest cause, has stagnated and in some periods declined. ECLAC estimates output per hour fell 3.3% from 2014 to 2024. In the 2026 Global Innovation Index, no Latin American economy makes the top 50, and Mexico fell to 65th. Ours is not only a region where managers can extract value from sophisticated firms. It is also a region with too few firms sophisticated enough to be extracted from.

Let me be clear, since no one in this debate is neutral, and neither am I. I am convinced that business is the engine of progress. Not the only institution that matters, and never one to trust without governance, but the engine. Longer lives, cheaper food, medicines, the phone in the pocket of a farmer in Oaxaca: none of it came from government action or philanthropy alone. It came out of a loop economists have understood for a century and that last year’s economics Nobel honored again. Firms innovate. Competition forces the rest to adopt the innovation or disappear. The gains leak out to society as lower prices, better products and higher wages. Innovation creates the value, competition distributes it, and social progress is what the loop leaves behind. The Nobel committee added a warning that could have been written for us. Growth cannot be taken for granted, and when creative destruction is badly managed, incumbents and interest groups block change and stagnation returns.

The loop is broken at both ends. At one end, innovation is thin. At the other, competition is weak, with protected incumbents in formal markets and an informal majority that competes by evading taxes and rules rather than by improving. Mexico’s statistics agency, INEGI, puts informality at 55 percent of workers. When the loop breaks, business stops driving progress and becomes what Marquis fears, a mechanism for capturing rents. His manager, who redistributes, and ours, who protects inherited advantage, are the same leader in different clothes. So the question for a business school here is which leaders to form: those who earn their returns by innovating, or those who defend the rents they inherited. That is what consequence means for us.

LEADERS WHO INNOVATE, BUILD & INCLUDE

Our answer shapes how we have built our school: not only the capabilities we develop but the values and priorities we encourage in our students. I offer it to colleagues across the region as priorities, not programs.

We need leadership that competes by innovating, because what we most lack is the capacity to build new value in markets that reward incumbency: entrepreneurs who scale, and executives who treat innovation as a discipline rather than a department, now that software increasingly does the optimizing.

We need leadership that builds firms meant to last. According to our Institute for Enterprising Families for Mexico and Latin America (IFEM), family firms make up 90 percent of Mexico’s businesses and generate more than 70 percent of its employment. Every failed succession destroys productive capacity that took a generation to build, which is why transgenerational value creation belongs in productivity policy as much as in family governance.

We need leadership that includes, because a loop that leaves out the micro-firm without credit, the worker without social security and the household without a bank account is not a market at work but a system for sharing rents among insiders, whatever it calls itself. Financial inclusion and the shift to the formal economy are where business and social progress meet.

LEADERS WHO EARN TRUST & LOOK AHEAD

We need leadership that is trusted, because business can only be the engine of progress if society believes it is. Trust in institutions here is low by every survey I know, including the OECD’s, and the gap between what a company is and what it says it is kills the engine faster than any regulation. That is why, when we created our Conscious Enterprise Center a few years ago, we conceived it as a forum where the question is argued rather than assumed. What would it take to build an economy on a more conscious form of capitalism, and can our companies get there? A center that only celebrates its own premise is exactly the badge Marquis describes.

And we need leadership that can anticipate, because a region that has lived through so many booms and busts cannot afford leaders who manage quarter to quarter, and strategic foresight belongs in the core curriculum. Growth must also be sustainable: Latin America’s future advantages, in clean energy, biodiversity, food and its demographic dividend, are exactly what careless growth destroys first.

Across Latin America, many business schools have been built around these same gaps. Their approaches differ; the conviction behind them is the same.

AI PLUS HI

Which brings me to the real question: what should business education become in the age of artificial intelligence? Marquis argues that the age of AI requires the humanities, and that business schools are crowding them out. I agree on the first point, but the humanities alone do not run organizations. What this age requires is something the humanities and business schools must build together: judgment. AI makes information and analysis abundant and cheap. What becomes scarce is the capacity to decide what is worth optimizing, for whom and over what horizon, and then to answer for the consequences. The future of management is AI plus HI, with machines doing the analysis and people exercising the judgment. That is where the leadership competencies of the next decade will be built, and it matters most in our economies.

Latin America has been preparing leaders in those competencies for a century, in a region defined by uncertainty, scarcity and great complexity. That experience can be an advantage in shaping how global business works, and it is why I believe the next model of business education does not have to be imported.

Marquis is right that business schools must be reinvented. If they are institutions of consequence, and I believe they are, the only honest question left is what consequence we choose to have. From this latitude the answer is clear enough. We live in a region with far more talent than progress, and our consequence will be measured by how much of that distance we help close.

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Horacio Arredondo is Dean of EGADE Business School and of the undergraduate School of Business at Tecnológico de Monterrey.

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