The MBA is at a crossroads. Over the past two years we have seen unprecedented change as schools have grappled with the fact that the gold-standard qualification must innovate and add value if it is to continue to meet the needs of employers and of the senior executives who pay substantial course fees.
The Audencia survey reveals some of the thinking behind the decisions taken by business schools on how to run their MBA programmes; what content they should provide; and how the qualification should be promoted.
This sample of 58 business schools covers a range of MBA courses, from those with small cohorts of fewer than 30 students to those with intakes of 100 or more. It includes university business schools and private schools, and its geographical spread includes Europe, Asia, Africa and Latin America, but not the United States.
Why study the MBA?
One of the survey's most significant findings was the extent to which salary is no longer the major motivator when it comes to applying for an MBA. Personal development – the acquisition of soft skills and self-insight – is regarded by course directors as the overriding reason individuals decide to study an MBA.
While just over half of MBA directors feel their courses provide the springboard for a salary rise, the majority recognise that in turbulent times self-development is more important. Professor Emmanuel Dion, of Audencia Business School, explains. "The MBA is about creating leaders. Professional experience plus personality is what forms you as a leader and enables you to deliver results for your company."
IMD in Lausanne runs a full-time MBA of 90 students and an executive MBA of between 60 and 70 students. "People study our MBA to develop themselves as leaders," says Martha Maznevski, academic director of the MBA. "They are interested in making a bigger contribution and changing two or three out of the major factors that govern their working lives – industry, geography or business function."
A growth market
The Audencia survey showed that 17 per cent of the sample started their MBA programme in the past 10 years. This proportion reflects the strong growth of the global MBA market over the past decade.
Business students are globally mobile, and thanks to greater competition between countries, the fact that MBAs are taught in English and the harmonisation of standards, they have a benchmark with which to compare business schools. The standardisation process has been fostered by the work of international accreditation bodies such as the Association of MBAs (AMBA), the Association to Advance Collegiate Schools of Business (AACSB) and the European Foundation for Management Development (EFMD), which runs the quality kitemark Equis.
The rise in demand for the MBA is being driven mainly by the developing economies in Brazil, Russia, India and China. Business schools have prospered by marketing the MBA to a new generation of international students. This has resulted in sizeable cohorts of Chinese, Asian, South American, Middle Eastern, and East European students, all of which enrich the MBA experience.
Boosted by eight business school rankings tables, including those of the FT, The Economist, Forbes and Times Higher, the MBA is the most internationally recognised qualification. More than half of students worldwide are now studying the MBA online or by distance learning.
But the recent period of growth may be over. The 2011 survey carried out by the Graduate Management Admission Council (GMAC) revealed that two-thirds of MBA programmes reported they had received fewer applications than the year before. Julia Tyler, executive vice-president of GMAC, comments: "This is not surprising as application levels reached historically high levels two years ago and are now beginning to soften as the economy continues to struggle. People are more hesitant to leave the workforce to go back to a full-time programme of education."
A multicultural experience
One of the surprise findings of the Audencia survey was that only 32 per cent of respondents believed that international students should make up more than 60 per cent of their MBA cohort. Eleven per cent thought such students should make up less than 20 per cent of the total.
MBA directors have always tried to avoid the accusation that their programmes are mono-cultural or inward-looking. The received wisdom is that top-ranked MBAs attract higher numbers of international students, giving their classrooms a vibrant cultural mix.
There could be several explanations for this. One is that as the recession deepens, full-time MBA numbers are falling as students look to study nearer to home. Part-time and executive MBAs tend to recruit locally among senior managers looking to fit study around demanding careers.
Another explanation is that business schools in mainland Europe are understating numbers of international students as they tend not to regard participants from neighbouring countries as foreign. For them, international means coming from outside Europe.
In any case, the issue of recruiting students from abroad is coming under scrutiny. Internationalisation is becoming a thorny issue for many developed economies, particularly in Europe. In the UK, student visa restrictions and reducing the numbers of postgraduate work permits is beginning to deter overseas students. And graduate unemployment in Europe has meant that countries such as Germany and France have imposed quotas on student visas. Phil Eyre, MBA programmes director at Grenoble Graduate School of Business, says: "In France, cutting back on postgraduate work permits will make recruitment of overseas students a little difficult."
The bigger institutions, such as London Business School, Insead and IMD, whose rankings and reputations ensure they can have their pick of MBA students from around the world, remain relatively unaffected. IMD's cohort is entirely international. It has 45 nationalities represented; only two of its students are from Switzerland. "We aim for a balanced intake," says Maznevski. "We never have more than four or five students from any one country. We tend to attract the most students from China, India and Japan."
Balancing the number of international and domestic learners is tricky. "Students want the best of both worlds. They want something that is highly international and yet they want an MBA that conveys something of the local business culture," says David Simmons, MBA director at Cranfield School of Management.
Despite visa restrictions the UK's best business schools continue to attract international students. Around 75 per cent of the students on Cranfield's full-time MBA are from abroad. "Overseas students come here wanting to be a part of a very multicultural group. But there shouldn't be any one nationality dominating the mix," says Simmons.
Modes of study
In the Audencia sample, 76 per cent of the schools offered a full-time MBA. However, part-time and executive MBAs combined outweighed this total. This is significant as there is no universally agreed definition for these two modes of study. A true executive MBA demands a higher bar for applicants, and candidates are normally expected to have a minimum of 10 years' management experience. However, with both modes taught part-time, the boundaries of age and management experience often become blurred especially in middle-ranking business schools. What one business school might call part-time another might refer to as "executive".
GMAC's figures bear out Audencia's findings. "Throughout the global economic downturn, our surveys have shown that the number of schools reporting increases in applications to part-time and executive programmes has remained relatively stable compared with full-time programmes," says Tyler.
The Audencia survey also reveals that only 13 per cent of schools in its sample offer a distance-learning MBA. This reflects the fact that distance learning is concentrated in the hands of a few major players. The Open University, the University of Phoenix and the University of Strathclyde Business School cater for high numbers of MBA distance learners; most schools have none.
Despite receiving a disproportionate amount of press coverage, the specialised MBA makes a poor showing in the Audencia survey.
It seems counter-intuitive that only 16 per cent of respondents should offer specialised MBAs. In today's technocratic world, the urge to study in depth may appear tempting. But sector-specific MBA programmes, such as Bocconi's luxury marketing stream, Bordeaux University School of Management's Aeronautics MBA and BPP Business School's legal MBA, sponsored by Simmons & Simmons, are the exceptions rather than the rule.
MBA course directors are quick to point out that their mission to teach a general management qualification remains unchanged. Most believe specialisation should be an add-on rather than a replacement for the core modules. "Our mission is not industry specific, it's about educating people – creating capability for people to manage in any environment. If you're going to specialise you're going to study a Masters degree," says Simmons. Audencia's Dion agrees: "Studying quantitative methods might make you a good statistician, but it won't necessarily make you a good manager. MBAs are not technical specialists; they are business focused."
But specialisation is useful when its purpose is to create electives that reflect current business practice. "The specialist option route is a way a university can add value by bringing in faculty from other departments," says Simmons.
Rankings, accreditation or brand?
To an outsider fresh to the world of business schools and MBAs, the rankings – score cards based on a narrow set of parameters and published by media such as the FT and The Economist – allow prospective students to judge schools at a glance.
The Audencia survey of MBA directors reveals that 88 per cent of them consider international accreditation and brand to be more important criteria for attracting students than rankings.
The lack of faith in rankings is well known to anyone who has ever talked to a business school dean the day after results are published – except of course when their school comes out on top. Accreditation is a far more objective benchmark for improving quality.
"For academics, the accreditation process, or the judgement of your peers, is more important than external rankings. Managing the process, particularly if your school is triple-accredited is a large part of an MBA director's job," says Professor Dion.
Branding of business schools is an often-overlooked factor and the Audencia survey rightly highlights this. "The brand is a collection of quality cues that includes rankings, accreditation, image and the quality of the learning experience," says Professor Amanda Broderick, dean of Salford Business School.
The relative importance of criteria such as the quality of faculty, facilities, lifestyle and international intake in attracting students makes branding an interesting topic. The faculty quality comes first in terms of attracting candidates – 77 per cent of the survey respondents considered it the most important factor for garnering applications to their MBA programmes. It would be interesting to compare this with a survey of what candidates see as a school's most important selling point.
Today, social networking sites are starting to play an ever more central role in the way brands are perceived, and this is something that business schools cannot afford to ignore. "Social media plays an increasingly important part in building up a brand. We are using our website so that prospective students can find communities of people of their own age to get information that will help them make their decision," says Eyre.