Pragmatic social constructivist teaching methods require students to construct knowledge by engaging collaboratively with realistic problems, cases or projects. It is hypothesized that they are more effective than traditional didactic teaching methods in developing undergraduate students': (1) theoretical knowledge; (2) profession-specific skills; and (3) knowledge creation capacity. Results of a survey show the second and third learning effects to be salient among Australian university lecturers, but not the first. Lecturers report that these teaching methods have been adopted more widely in human service-related faculties and design-related faculties than in business-related faculties, possibly owing to the lesser emphasis placed by business lecturers on developing students' profession-specific skills and knowledge creation capacity. A corresponding survey of business practitioners revealed a surprising gap between the value that business practitioners place on new graduates' knowledge creation capacity and the rather limited emphasis that business lecturers place upon developing that capacity in their undergraduate students. (Contains 8 figures and 1 table.)