Which MBA?

American schools are in the ascendancy in The Economist’s ranking of full time MBA programmes 

This is the ninth year that The Economist has published a ranking of full-time MBA programmes. Our latest ranking is probably the most turbulent in that short history. Usually, schools move up or down just a few places year on year. This time around, however, swings have been wilder. 

The main reason for this is the difficult job market. A school’s ability to open new career opportunities for its graduates and the salaries those graduates can expect to be paid have a combined weight of 55% in our ranking (see methodology). The careers data in this year’s ranking are from 2009, when the situation was bleak for almost everyone. But some schools stole a march on their sluggish counterparts. 

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The lessons of globalisation

The more people search, the more business schools they find. A month ago, AACSB, an accreditation agency, estimated that there were 12,600 institutes conferring Bachelor’s or Master’s degrees in management. Since then a few more have been unearthed. The latest figure, says Bob Bruner, dean of the University of Virginia’s Darden School of Management, is more than 13,000. Like distant galaxies, there are likely to be plenty more as yet undiscovered.

Mr Bruner is one of the authors of an AACSB study on the state of business schools. He reckons that less than 10% of those 13,000 schools are accredited, making them of uncertain quality. This, he says, should be of concern to anyone who cares about management.

The biggest problem, according to the report, is that MBA programmes still don't place enough emphasis on globalisation. This is an issue for the top tier schools and the fly-by-nights alike, says Mr Bruner.

But is this really true? Many of the backstreet business schools in developing parts of the world cater for poor students, eager to learn skills that will help them run small, local businesses. Surely their time and money are better spent learning how to do business locally? What is the point of them poring over case studies of investment banks' acquisition strategies for the Chinese market?

It is an argument that doesn’t sway Mr Bruner. “Globalisation is a disruptive force; managers need to prepare for it," he says. "And the rate of globalisation is only going to increase. When [current students] are middle aged, they could be confronting a much larger challenge." 

But do the lessons of globalisation hold true for business schools themselves? There has been a huge increase in the number of cross-border partnerships between institutions and joint degree programmes. Some schools hook up in such a frenzied and experimental fashion that Mr Bruner describes it as “speed dating”. But he generally sees it as positive response to globalisation. Nonetheless, for any other industry as diversified as management education, the inevitable result would be consolidation. Yet there is little sign of this happening among business schools. The main reason is that many of the leading players are non-profit organisations, says Mr Bruner. “Bigger is not better,” he says, “better is better. Many for-profit schools [who have pursued rapid expansion] are not necessarily better. Drop out rates, for example, are high.”

Many of these for-profit behemoths use technology to lower costs and increase student numbers. With many schools’ lectures now available on the web, conferencing technology improving and case studies, text books and the like available digitally, there is seemingly little need for a student to attend a campus at all. (It is said that some American medical students now attend less than 50% of their lectures in person.) So will those schools looking to turn a profit gain an advantage over those traditionalists who espouse face-to-face teaching, such as Darden?

“We teach the Socratic method,” says Mr Bruner. “Most business people have had a transformational experience due to a face-to-face meeting: a difficult deal, a misunderstanding—I’m willing to bet it was transformational because it was face-to face and [they] could read all of the cues. Could that same transformation occur a-synchronously or through a video lecture or through Skype?”

If the number of business schools continues to rise, and competition becomes fierecer, it is a question that will be answered sooner rather than later.

Writing wrong

Diana Middleton has been arguing in the Wall Street Journal that MBA's writing skills are poor and declining. Speaking as someone who wades through literally tens-of-thousands of MBA questionnaires every year, when we produce our MBA ranking and school profiles, I think this is only half right. MBA's writing skills are certainly bad. But I don't think they are necessarily getting worse. The quality has changed little over the last decade. Mostly, these questionnaires are platitude- and cliché-ridden. Seemingly every MBA is "passionate" (about logistics, investment banking or spreadsheets, say). Usually they are “privileged” to have spent time with their classmates and lecturers.

But much worse is their embracing of jargon. Angela Rassi, one of Ms Middleton's interviewees, is spot on when she says that MBAs "tend to talk about their analytical methods to show they are good at their jobs." An MBA programme is one of the last bastions of the opinion that talking in jargon makes one sound intelligent. But this is hardly surprising because MBA students are certainly not the worst writers at business school. If you have ever read an essay in a management journal, you will know that professors are proof that the longer you are at business school, the more impenetrable your writing becomes. 

Which raises the question: if MBA's writing skills are poor, who exactly is going to improve them? 

The Qaddafis and European universities: The fall-out continues

Khamis Qaddafi is the son of a despot and the commander of the Khamis brigade, which is currently fighting to wrest back control parts of Libya for his father. In his spare time he is also a part-time MBA student at Spain's IE Business School.

Or, at least, he was. The school announced over the weekend that it had decided to expel him from its expensive International MBA programme. Like hundreds of other students, he was reportedly due to start an internship in America this week, to learn how to put all that management theory in to practice. Until the urge to quell the uprising lured him back home.

The announcement comes a few days after Howard Davies resigned as director of the London School of Economics due to its connections with Qaddafi regime, including accepting some large donations. It also accepted another of the Libyan leader's sons, Saif al-Islam, onto its PhD programme. (Mr Qaddafi's thesis, as our Schumpeter columnist points out, at least proves he has a sense of irony.)

On Friday, Emmanuel Akpan-Inwang argued in The Guardian that the problem of LSE associating with some dodgy types is going to get worse as the pressure to increase fees grows. This, he reckons, goes against the institution's Fabian roots:

LSE's predicament serves as a warning as to what happens when fee levels are allowed to spiral out of control. For the last three years, roughly 70% of students at the institution have come from overseas. International students are cash-cow consumers with no cap on how much universities can charge. Only around 15% of LSE's funding now comes from government; the rest has to be clawed in from wherever it can be found: tuition fees, corporate donations and evidently cheques from dictators.

An institution built by Fabians to provide education to the best and brightest around the world is now relegated to one that only the only the richest can afford to attend. Under Davies's stewardship the LSE has distanced itself from its Fabian origins and allowed itself to become the finishing school for the world's global elite, so it comes as no surprise that there would be questions over the authorship of Saif al-Islam Gaddafi's PhD thesis.

MBA diary: Chaos theory

Last month, MBA students from Canada’s McGill University travelled to India to investigate business, culture and national competitiveness. Here one of them, Melanie Walsh, says that six-sigma management theory is thriving among the dabbawalas of Mumbai

TEN students stand on the would-be shoulder of a road under construction. “One, two, three…” calls one student. There is a pause, then “four, five, six,” calls a second and everyone laughs at their own hesitation at crossing the street. Who gets priority? Some say the largest vehicle. However, small motorised rickshaws are bypassing trucks, busses move at different paces, and cars and taxis seem to be going where ever they want. Yet, pedestrians still cross between the cars without causing accidents or stopping the flow of traffic. Flow is perhaps the best word I have to describe India; everything is moving and growing in a seemingly chaotic manner, yet there must be some method to the madness because it is growing incredibly.

Conflict of interests

Some interesting research published by two professors from Milan's SDA Bocconi School of Management looking at the effect of war on stockmarkets. Counterintuitively, it has found that stockmarkets generally become buoyed when a conflict starts. The researchers claim that while markets "don't love war...they undoubtedly hate the uncertainty usually preceding a conflict." When war finally breaks out, says the report, markets "react with a collective sigh of relief, which on average, boosts stock markets".

The researchers, Massimo Guidolin and Eliana La Ferrara studied the effect of 101 conflicts in the 1971-2004 period. Understandably, war had a less benign effect on commodity markets:

As for commodities markets, the evidence is mixed. The reaction of an overall commodities index is positive in 6.9% of the cases and negative in 4.9%...but there are many exceptions, including the strong reaction of oil futures prices at the onset of conflicts in the Middle East, which is negative in 45.5% of the cases and positive in 27.3%.

Doctor death

IT IS worth heading over to our Schumpeter blog, where our management editor has been musing in his notebook about a study done by Virginia's Darden School of Business into the mind of an entrepreneur: "How do entrepreneurs think? This is a question that has produced lots of cliches (they thrive on chaos, embrace risk, break moulds) but very little hard research." 

He has also dug out a copy of Saif al-Islam Qaddafi's doctoral thesis, completed while at the London School of Economics. With no apparent sense of irony, the son and heir of Libya's embattled despot gives us his thoughts on "The Role of Civil Society in the Democratisation of Global Governance Institutions". 

An editor's tale

KNOWLEDGE@WHARTON has recorded a charming interview with Sir Harold Evans, in which he talks about his journey from humble roots in the north of England to becoming editor of the Sunday Times. He says that he realised that he wanted to become a journalist after his father started talking to bedraggled soldiers on a beach, shortly after they had made it back from Dunkirk in 1940:

I was very annoyed with him for spending time talking to them. They told him a story of deprivation and lack of equipment, and their morale was very bad, very low. They just had a terrible time escaping from the Nazis. But the newspapers were giving the completely wrong impression about what had gone on. They were all suggesting that these men, these defeated soldiers, these survivors, wanted to get back to Dunkirk as soon as they could. It wasn't true. It was an epiphany for me.

Indeed, the whole interview is a fascinating insight into a journalist's mind.

 

In the money

THE FINANCIAL services sector is still the biggest employer of recently graduated MBAs, according to the 2011 Alumni Perspectives Survey which is published by the Graduate Management Admission Council. Twenty-two percent of MBAs found their way into finance or accounting last year, compared with 15% who entered consulting, the other traditional draw. What is more, as many others in the economy see their pay squeezed, the salaries of MBA graduates are increasing. The median base salary for students who graduated in 2010 was $78,820. This compares with a median salary of $75,000 in 2009. Students could also expect a bonus of $15,000.

The survey, based on responses from close to 7,000 business-school alumni, also found that 93% of last year’s MBAs are in work, including 7% who are self-employed. The average student submitted 33 CVs, attended six interviews and received two job offers. 

Correction: This article originally stated the median salary of MBA graduates to be $94,500 in 2010 and $91,000 in 2009. These figures are, in fact, the median current salaries of all those who graduated between 2000-2010 and 1999-2009.

Subject matters: Economics

Eminent professors explain their subjects

ECONOMICS is an important component of the core MBA curriculum because economic principles are behind almost all managerial activity. Economists at business schools research and teach about how markets work (and when they don’t work); how scarce resources get produced, consumed and allocated; and how various participants in the economy make optimal decisions. 

News from the schools, February 2011

Rolling news from the business campuses

*Alison Davis-Blake has been named as the new dean of Michigan's Ross School of Business. Ms Davis-Blake, currently in charge of Minnesota's Carlson School of Management, will take up her new position in August.

*The financial services sector is still the biggest employer of recently graduated MBAs, according to the 2011 Alumni Perspectives Survey which is published by the Graduate Management Admission Council. Twenty-two percent of MBAs found their way into finance or accounting last year, compared with 15% who entered consulting, the other traditional draw. What is more, as many others in the economy see their pay squeezed, the salaries of MBA graduates are increasing. The median base salary for students who graduated in 2010 was $78,820. This compares with a median salary of $75,000 in 2009. Students could also expect a bonus of $15,000.

The survey, based on responses from close to 7,000 business-school alumni, also found that 93% of last year’s MBAs are in work, including 7% who are self-employed. The average student submitted 33 CVs, attended six interviews and received two job offers. 

*In what seems to be becoming a trend among business schools, future MBAs at the University of California, Berkeley are being given two free days on one of the school’s executive education programmes. The offer will be open for five years after their graduation. The news comes after the Wharton School announced a similar scheme in December, allowing its MBAs to take a free executive education class every seven years.

January's news

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