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

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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.

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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

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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

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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

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