Business theory is an important part of higher level college. Graduate schools churn out graduates that will hopefully have the skills needed to rise to executive status where significant decision making power is concentrated. In today's world, company decision-making requires a higher level of analysis and application of theoretical principles to real life scenarios.
Abstraction is not easy for students. Students find it easier to see, touch, and smell the items they are working with. Models and theory require the ability to think creatively and abstractly. You can't touch it so you must envision it within your head. This requires the ability to create images and associations to formulate a picture of what is going on.
Models are created to explain some event that is occurring in our environment. If an experiment produces a positive outcome it is possible to start creating theories that apply to similar situations. The model is used over and over to either support or deny a theory lending or taking credibility over time.
For example, a researcher develops a model that could potentially improve productivity and successfully applied that model to solve a problem. Another company sees what is happening and applies that model again successfully. Eventually a theory develops that can be used to explain and predict outcomes.
Applying theory is important for executives. They will face unforeseen problems and will need to use their strategic thinking skills to solve them. How does one create a strategy if they can't research what other companies are doing, find new solutions, and apply those solutions? If they cant do this their utility as an executive are limited.
Graduate school is sowing the seeds that will make it possible for graduates to be high end users of existing theory by knowing how to apply models to their workplace. Teaching application of abstract ideas to concrete situations is helpful in showing students how to use modern knowledge to solve practical businesses dilemmas. If a school does this well their graduated will have market demand as companies seek employees with the capacity for higher performance.