Report Questions M.B.A. Degree's Value, but Students Seem Unconcerned By KATHERINE S. MANGAN
Although master's programs in business administration continue to attract record numbers of applicants, little evidence exists that they enhance a person's career or earnings potential, a Stanford University business professor contends in a controversial new report.
The professor, Jeffrey Pfeffer, examined 40 years' worth of studies that purported to prove the economic value of an M.B.A., which can cost $100,000 or more at an elite school.
"There is little evidence that mastery of the knowledge acquired in business schools enhances people's careers, or that even attaining the M.B.A. credential itself has much effect on graduates' salaries or career attainment," he concluded in an article scheduled for publication in the fall issue of the journal Academy of Management Learning and Education. His co-author is Christina T. Fong, a doctoral student at Stanford's Graduate School of Business.
Mr. Pfeffer's findings drew prompt rebuttals from some management educators, who pointed to other studies showing that M.B.A. graduates earn more money and feel that their education was worthwhile.
His report was, however, was bolstered by another critical report issued by the primary accreditor of business schools, AACSB International: The Association to Advance Collegiate Schools of Business. The association's report didn't challenge the validity of the degree, but it did question the relevance of much of what is taught in M.B.A. programs, and suggested that many textbooks and professors are out of date.
In a report titled "Management Education at Risk," a special committee set up by the association concluded that business schools don't do an adequate job of teaching interpersonal, leadership, and communication skills. It also suggested that faculty members should forge closer ties with business practitioners to ensure that students are learning needed skills.
"Preparation for the rapid pace of business cannot be obtained from textbooks and cases, many of which are outdated before they are published," the report said. Students also don't learn enough about the global aspects of business, largely because their professors haven't had much international experience, the authors added.
Business schools might be more innovative if they weren't pouring so many resources into changes aimed at improving their standings in national-magazine rankings, the panel said.
The sorts of criticisms contained in the two reports haven't kept students from flocking to M.B.A. programs. Eighty-five percent of the business schools responding to a survey by the Graduate Management Admission Council this spring reported that applications to their full-time M.B.A. programs were up this year.
The vast majority of second-year M.B.A. students feel that their investment has been worthwhile, said the council's chief operating officer, Nicole M. Chestang.
A survey of more than 5,000 second-year M.B.A. students this spring found that they expected to earn an average base starting salary of $75,000, compared with their average pre-M.B.A. salary of $48,000. The council also surveyed corporate recruiters, who confirmed the $75,000 starting-salary figure.
"These findings suggest a high level of confidence in the value of an M.B.A.," Ms. Chestang said. "No one is saying that the M.B.A. is a magic bullet, but students view it as a way to improve their skills and protect themselves against economic fluctuations." And, she argued, with an estimated 100,000 students graduating with M.B.A.'s each year, business schools must be doing something right.