MBA Rankings, a controversial topic

10 June 2013 15:43

The rankings of business schools are a hugely controversial topic in business education. Nevertheless, they are tremendously popular among prospective students and alumni. They have contributed to greater transparency in the marketplace. And they have often drawn attention to good schools that might otherwise have been ignored. However, MBA rankings contribute to a myopic view of what makes a business school “best”. And in the worst cases they are based on poor research. This can cause a misallocation of student interest, alumni funding, and faculty and administrator attention.

Most ranking are administered by for-profit organizations with a journalistic and profit-making intent. And there are certainly differences in the level of rigor applied. The primary difference between rankings, however, is one of perspective. To understand the rankings, it is necessary to understand the basis on which their judgments are made.

The ranking of business school MBA programs can be interpreted as either a ‘strong form’ or ‘weak form’ comparative measure of the reputations of the schools. The strong-form interpretation claims that the measured reputation is an accurate evaluation of the school’s resources and capabilities. It is a signal of potential quality and prominence for prospective students, recruiters, donors, and faculty. The weak-form interpretation of the rankings is that they are a noisy signal, formulated from poor data about the school’s characteristics, program, and the evaluations of key stakeholders. Even though the rankings could be interpreted as ‘weak form’, there is a wide variety of advantages to be successful as a business school in these

rankings:

  • A lot of students use the rankings as a guide to choose their Business School/University.
  • It helps get the school into the consideration set for the best students and faculty, and to convert an offer into a place at the school
  • It helps attract more and better quality recruiters and helps students to get job offers form these companies
  • It may support a price premium for students.
  • It may help to reduce any post-purchase cognitive dissonance. (Yes I really did make the best choice)
  • It may help to enhance the perceived quality of the student’s educational experience – a type of halo effect.
  • It may help to cross-sell the school’s open-enrolment executive programs.
  • It helps to create a feeling of pride and achievement among alumni, faculty, staff and trustees.
  • It helps the dean and the corporate office to raise funds for the school.
  • It helps to raise the reputation of the parent university. On the other hand, negative factors of the ranking are:
  • It takes a lot of time to gather al the information for the survey which is sent to the Business Schools on which the ranking is based.
  • A Ranking doesn’t only ‘make’ a Business School, but is also able to ‘break’ it.It takes years to build a good reputation and to acquire a good position in a ranking.

Business Schools in Europe believe Ranking are not fair in comparison with the Business Schools in the United States. They claim that the American Business School context is biased because of the culture, the program and because of differences in employment contracts of staff. The job security in the United States is less in comparison with Europe, which results in a short term view because of the fact the employees have to perform. This results in a short-term policy which is an advantage according to the rankings.

As an example, we take the Financial Times (the leading indicator). The Business Schools can be divided in two groups; the first group is the top 25, the second group is the next 75 schools. The positions of the top 25 schools in Financial Times’ full-time MBA rankings over the past six years have remained reasonably stable. In the next 75 schools, however, changes in position seem more unpredictable, as some schools increase their positions, some decline, and some fluctuate significantly.

It is obvious that a Business School ranked within the top 25, is able to attract students with a high GMAT-score. On the other hand, if a Business School is able to attract students with a high GMAT-score, the Business School will probably penetrate the top 25. The situation described above is a vicious circle which is difficult to break and is reinforced by the summary points mentioned above. (Better job offers results in a better judgment by an alumnus for example).

Trends in MBA Program content are: Customizable, Shorter and Flexible programs, Bilingual programs, leadership programs, entrepreneurial modules, social responsibility, off-campus activities, service, housing, extensive employability skills enhancements, internships and consulting projects, partnerships, dual degrees and dual campuses.

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