the global future of the mba - hulttools.ashridge.org.uk/website/ic.nsf/wfaratt/the global future...
TRANSCRIPT
kai petersCEO, ASHRIDGE BUSINESS SCHOOL (UK)
kurt aprilPROFESSOR AT UCT & RESEARCH FELLOW, ASHRIDGE BUSINESS SCHOOL (UK)
The globalfuture of the MBA
“In 1955-56, graduate management was virtually non-existent, with
only 3200 MBA degrees awarded. By 1997-98, this number had
grown to over 102,0008. By the fall of 2000, 900 American
universities offered a Master’s in business.”9
Business schools in Europe caught on more slowly than in the US, but
have since taken off. The first schools were established in the 1950s and
1960s: Henley (UK) in 1954, INSEAD (France) and Ashridge (UK) in 1959,
LBS and Manchester Business School (UK) in the wake of the Franks
report in 1965. By the late 1990s, there were approximately 400 MBA
programmes offered in Europe. In German-speaking Europe alone,
where there were five programmes in 1990, there are 182 today.
Through the introduction of the Bologna Process, which will split the
traditional Continental European first-cycle Master’s degree into a two-
cycle Bachelor’s/Master’s system, it is estimated that European MBA
volume will nearly double from 20 000 to 37 500 MBAs graduating per year1.
Additionally, Bologna will create an entirely new market for MSc
management education
16
c o n v e r g e n c e v o l 7 n o 4
ABSTRACT: There is no end in sight to the growth of
the MBA market as waves of new programmes are
launched throughout the world. In the first phase of
expansion, the MBA proliferated in the US. Later on,
Europe and Africa followed, with Asia and Latin
America catching up quickly.
016 19 kurt leadership.qxd 2006/11/21 02:02 PM Page 16
programmes, potentially launching 12 000 specialised
Masters’ across the continent, and leading to the further
market orientation of the business school sector.
In South Africa, the University of Pretoria led the way
in 1949 and the Universities of Cape Town, Witwatersrand,
South Africa and Stellenbosch followed in the mid-1960s.
At the turn of the century there were over 100 programmes
on offer in South Africa, which has been scaled down by the
HEQC to 37 accredited programmes.
Asia traditionally exported candidates for the MBA to
English-speaking schools in the US and Europe, but in
recent years local MBA markets have exploded. In 1990, the
first MBA programme was introduced in China with an
enrolment of just 86 students. Fourteen years later, there
are more than 160 MBA programmes offered by more than
80 institutions across China, with enrolment estimated at
roughly 10 000 in 2003. In India, there are presently over 900
MBA programmes on offer. And predictions are of further
growth globally.
Yet with all of this growth has come doubt, not
optimism, around the MBA along some basic strands.
Mintzberg2, perhaps the most prolific critic of MBA
programmes, maintains that the degree is too analytical
and that management is not something one can study, but
a craft that one must practise. In his recent book
Managers, Not MBAs, he expands this basic premise to
point out that business schools transmit second-hand
experience or provide students with case studies which
depict business as a series of problems with neat
solutions, rather than recognising the complexity of day-
to-day management challenges. Furthermore, he
criticises the functional subjects taught in business
schools, pointing out that management is not functional,
but integrative and complex.
Pfeffer & Fong3, in their attacks, conclude that they can
find no link between career success measured in terms of
salary and the MBA degree. Where they do find seeming
evidence, they state that the selectivity of the programmes
– rather than the education – was responsible. They also
suggest that there is little evidence that business school
research is influential on management practice because it
is too theoretical, and “... theorists often write trivial
theories because their process of theory construction is
hemmed in by methodological strictures that favour
validation rather than usefulness3a”.
Ghoshal4, in a posthumous article, goes even further
and suggests that the model of management taught to
MBAs at business schools makes simplistic Hobbesian
assumptions about human nature revolving around self-
interest, utility maximisation and control. He posits that
the philosophical belief in maximising shareholder value
originated from the “Chicago School” of economists
around Milton Friedman. Furthermore, these views are
attractive to business school academics because they
appear simple and scientific, and can be modelled and
described in quantitative academic journals which are
attractive to business school professors who want to be
seen as properly academic.
Throughout varied media, a litany of further critiques is
made: the MBA is bad because class sizes are too large;
MBAs are too young; the teaching is too interesting and if it
were worse, students would learn better; academics have
become entertainers; schools are too student-friendly and
provide hand-outs which discourage engaging with the
material; courses are graded, which disincentivises
learning and encourages grade-chasing, and many students
simply get drunk.
In some of these articles, the polemic has reached an
ideological fever pitch. Ghoshal4 suggests that “by
propagating ideologically inspired amoral theories,
business schools have freed their students from any sense
of moral responsibility”. Leavitt5 claims that the MBA
distorts students into “critters with lopsided brains, icy
hearts, and shrunken souls”. Journals and articles have
sought out failed CEOs, embezzlers, swindlers and US
presidents, and have noted with some glee that a significant
number held an MBA6.
So why does a programme which continues to grow in
popularity throughout the world, and where participant
reviews are fundamentally positive7, garner such extensive
The MBA continues
to grow in popularity
the world over
management education
17
c o n v e r g e n c e v o l 7 n o 4
016 19 kurt leadership.qxd 2006/11/21 02:02 PM Page 17
management education
attention and criticism, largely from business school
professors? And what is the real value of an MBA?
As Pfeffer & Fong3 point out, “the overriding value
proposition business schools’ offer, particularly through
their MBA degree, is the enhancement of the careers,
mostly measured in terms of salary, of their graduates”.
This emphasis on salary pervades the academic
literature7, 10, 11.
We posit that traditionally this emphasis on salaries,
and on the nature of the MBA, was equated with
unjustified “individual greed”. Commentators regularly
pointed out that individual MBAs had salary expectations
incommensurate with their level of skills, insight or
maturity12 and often were indeed, extensively overpaid.
Since 2001, however, we feel there has been a
significant shift, and the MBA has come to favour
systemic approaches, pushed students to find their moral
centre and encouraged them to consider the common
good, as opposed to individual greed.
The main trigger for this change was the collapse of
Enron, as noted in the New York Times13: “The Enron
debacle is not just the story of a company that failed; it is
the story of a system that failed. And the system didn’t fail
through carelessness or laziness; it was corrupted.”
Within days of the 2 December 2001 collapse of Enron, the
press had latched onto a connection between Enron and
the MBA. Business Week on 17 December 2001 noted that
not only did Jeffrey Skilling and Andrew Fastow have
MBAs, but that Skilling “recruited more than 250 newly
minted MBAs each year from the nation’s top business
schools”. In February 2005, the Economist still
mentioned MBAs and Enron in one breath, while a search
today on Google generates 123 000 mentions of the MBA
and Enron together.
The MBA has thus become emblematic of the reflection
underway in a post-communist, capital market society
coming to terms with corporations and their role in wider
society. It has come to represent all manner of discontent
and has been described as a degree for the corporate
environment of the past, rather than one that is geared to
the future needs of organisations14.
REAL VALUE OF THE MBA. Within the MBA literature, some
evaluation frameworks are based on distinctions
extrapolated from concepts of intrinsic and extrinsic
benefit theory. These theoretical frameworks posit that
workers seek intrinsic benefits (job satisfaction,
fulfilment, communication) and extrinsic benefits (pay
and status) from employment. The MBA is evaluated on
the basis of satisfaction against these criteria. Simpson et
al10, 11 have applied this framework to measure the
difference between men and women following their MBAs
in the UK, and have extended the study to include
Canadian MBAs. In the first study, they conclude that
“women benefit more from the MBA in terms of instrinsic
career factors, while men have the advantage in terms of
pay and status”.
The second study provides a considerably more
nuanced view. By dividing the study group, not only along
gender lines but also by including age profiles, Simpson et
al conclude that younger men (<28) gained most in terms
of extrinsic career advancement by obtaining an MBA.
Older men and women both indicate increased intrinsic
benefits at the expense of career advancement and salary
increases. The authors conclude that of the older male
participants on MBA programmes, many were already on
high pay scales and were often not physically mobile.
Additionally, they were the least likely to value salary and
status as benefits from the MBA programme.
For older women, benefits from the MBA were
reported as enabling career re-entry or career flexibility,
often following family prioritisation. The group which
appear to benefit least from the Canadian study were
women <28. While many did achieve extrinsic or intrinsic
benefit from their MBAs, a significant proportion did not,
and Simpson et al conclude that perhaps other cultural or
organisational factors are responsible.
A second approach to evaluating the value of an MBA
can be extrapolated from a needs-based practical
leadership perspective. Vermeulen, April and Blass16 have
conducted interviews and biographic research of senior
The new MBA
favours
systemic/moral approaches
18
c o n v e r g e n c e v o l 7 n o 4
016 19 kurt leadership.qxd 2006/11/21 02:02 PM Page 18
leaders around the globe, investigating their learning
acquisition techniques for sourcing from, and impacting,
organisational culture, history and language. What is
evident from their research is the importance of
cultivating sound and sensitive judgement amidst volatile
constellations of feeling and motivation, and the type of
judgement change demands (in how to intervene in
complex systems in the face of urgent deadlines and
ambiguous information). This practical leadership
requirement can be evaluated along its three strong roots:
personally, a clear sense of identity and moral values
coupled with “robust vulnerability” - embracing others’
strengths to complement one’s own; strategically, comfort
with ambiguity and risk and the ability to sustain the
creative tension between different perspectives which is
vital to keep organisations finely tuned to changes in the
environment; organisationally, acceptance that
leadership is a collective challenge, the answers to which
span the furthest reaches of the organisation.
The last approach in the debate involves actually
asking MBA graduates what they think – a measure
excluded from many of the academic publications. When
MBA graduates are cited in the academic literature, the
emphasis is placed primarily on salary developments. In a
2003 GMAC study conducted by Bruce and Edgington7 and
a follow-on 2004 report and presentation17, a model was
constructed to determine the value of an MBA on the basis
of three fundamental pillars: MBA experience factors,
programme factors, and skill and ability improvement.
Globally, 67% of MBA graduates reported that their
overall rating of the MBA was outstanding or excellent.
Business Week (2003) surveyed the MBA class of 1992
from 30 of the top business schools in the US: 89% of
graduates indicated that they would do the MBA again,
and 80% said they would do so at the school they had
attended. Anecdotally, benefits cited included increased
confidence, business acumen, personal friendships,
career-switching opportunities and global mobility
facilitation.
MBA graduates do not comment on the irrelevance of
the business education curriculum, the one-sided
capitalist paradigm or the excesses of the publish-or-
perish culture inherent in academia. They seem to feel
that a one- or two-year survey course on business which
brings together interesting, smart people with
experience in a variety of industries and various
national backgrounds, provide an excellent opportunity
to learn about private sector, public sector and civil
society organisations. Additionally, they make friends
and develop important networks, think about career and
lifestyle options, gain personal awareness and
ultimately shape their characters. Finally, they are
willing to pay for the experience.
Why is it that if “the customer is always right” in so
many areas of business, in this case the customer – the
student – does not seem to be given the benefit of the
doubt when it comes to the MBA and business schools?
There are certainly improvements that can be made to
curricula, to research paradigms and various elements in
and around MBA programmes, but the end is not near!
References:1. Loades, R. et al (2005). The Future of Graduate Management Education in the Context of the
Bologna Accord, GMAC.
2. Mintzberg, H. (2004). Managers, Not MBAs. New York, Berrett-Koehler.
3a. Pfeffer, J and Fong, CT (2002). “The End of Business Schools? Less Success Than Meets the Eye”,
Academy of Management Learning and Education 1, 78-95
3b. Pfeffer, J and Fong, CT (2004). “The Business School ‘Business’: Some Lessons From the US
Experience”, Journal of Management Studies 41 (8), 1 501-1 520.
4. Ghoshal, S. “Bad Management Theories are Destroying Good Management Practices”, Academy of
Management Learning and Education 4 (1) 75-91.
5. Leavitt, HJ (1989). “Educating our MBAs: On Teaching What we Haven’t Taught”, California
Management Review 31 (3) 38-50.
6. Mintzberg, H and Lampel, J (2001). “Do MBAs Make Better CEOs? Sorry, Dubya, it Ain’t Necessarily
So”, Fortune, 19 February, 142 (4) 244.
7. Bruce, GD and Edgington, R. For All It’s Worth: Assessing the Value of the MBA. Selections 3 (1)
12-17.
8. Zimmerman, JL (2001). Can American Business Schools Survive? Rochester, NY: unpublished
manuscript, Simon Graduate School of Business.
9. Leonhardt, D (2000). “A Matter of Degree? Not for Consultants”, New York Times 1 October, Section
31, 1-18.
10. Simpson, R (2002). “Winners and Losers: Who Benefits Most From the MBA?”, Management
Learning 31 (3) 331-351.
11. Simpson, R, Sturges, J, Woods, A and Altman, Y (2005). “Gender, Age and the MBA: An Analysis of
Extrinsic and Intrinsic Career Benefits”, Journal of Management Education 29 (2), 218-247.
12. Mintzberg, H (1996). “Ten Ideas to Rile Everyone who Cares About Management”, Harvard
Business Review, July-August: 61-68.
13. Krugman, P (2002). “A System Corrupted”, New York Times, 18 January.
14. Blass, E and Weight, P (2004). “The MBA is Dead: Part 2 –- God Save the MBA”, On the Horizon.
15. Edgington, R (2005). “MBA Market Fluctuations” in an interview with Kai Peters.
16. Vermeulen, P, April, K and Blass, E (2006). “Leadership Competence: A Socially Networked
Process”, Leadership Quarterly.
17. Edgington, R and Fassinger, T (2005). MBA Skill Development: Perspectives from Students,
Alumni and Employers. Proceedings, GMAC Annual Conference.
18. Edgington, R.. Global MBA Graduate Survey 2004, GMAC Report.
19. Peters, K (2004). “Dance of Radical Change Begins”, Financial Times, 6 September.
20. Peters, K (2005). “The Implications of Bologna”, European Business Forum, Fall 2005, (23).
Important networks
develop and lifestyle choices
are made
management education
19
c o n v e r g e n c e v o l 7 n o 4
016 19 kurt leadership.qxd 2006/11/21 02:02 PM Page 19