Newspaper article THE JOURNAL RECORD

Business Schools Rush to Counter Study Questioning Value of MBAs

Newspaper article THE JOURNAL RECORD

Business Schools Rush to Counter Study Questioning Value of MBAs

Article excerpt

BOSTON -- These should be heady days for American business schools, with more than 100,000 new students arriving on campus, eager to sit out a weak economy and emerge from the cocoon two years later with a fattened salary.

But despite the strong demand, some MBA programs are feeling uneasy about a new article by two researchers at Stanford's Graduate School of Business who call into question the value of the degree.

Surveying decades of research, Jeffrey Pfeffer and Christina Fong argue that, with the possible exception of the most elite programs, master's degrees in business administration teach little of real use in the business world. They say the degree has little effect on salaries in the long run.

The article has provoked a public relations counterattack from some in the multibillion-dollar MBA industry who bristled at the wide-ranging critique, which appears next month in the debut issue of the journal Academy of Management Learning and Education.

The article lays into everything from a mollycoddling teaching culture to an outdated curriculum. It also questions whether the explosion in the popularity of MBAs has diluted their value. In 1956, only 3,200 MBAs were awarded; today that number has grown more than 35-fold.

The article even notes that 40 percent of U.S. chief executives mentioned in a Fortune Magazine article called "Why CEOs Fail" had MBAs. And the researchers site one report that characterizes life at one top business school as a two-year-long networking and bonding ritual revolving around alcohol.

Students can take on as much as $100,000 in debt to pay for a two- year program, the article notes.

In response, the Graduate Management Admission Council sent out results of a study showing U.S. MBA graduates reported an average starting salary of $77,000, up from an average of $50,000 before they pursued the degree.

The GMAC also noted that global demand to take its GMAT, the admissions test most business schools use, was up 13 percent in the first half of the year, and officials say it's jumped even faster in the past month. Some schools have encouraged media interviews with officials hoping to make their case, and some deans have chimed in with op-ed pieces in newspapers.

"The harsh reality is the demand for the MBA is incredibly strong, it's a hundred years old and it isn't a fad," said Dave Wilson, president of the GMAC.

The article notes how many top executives don't have MBAs. But critics say that's not the point. Sure, some people succeed without MBAs, they say, but think how many use an MBA to go further than they otherwise could.

And not just investment bankers and consultants who graduate from the highest-rated schools.

"The vast majority are going to the Big Three auto manufacturers, the retail outlets, Colgate and Clorox, and not-for-profits," Wilson said. …

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