A master's degree in business administration is not a "magic potion" for career success, Hawaii college professors say. MBA study
criticized by schoolsStar-Bulletin staff and news services
But coupled with other opportunities during the MBA program, such as internships, international study, entrepreneurial classes and competitions, graduates learn skills that allow them to earn substantially more than they otherwise would, according to the professors.
However, a recent study by two researchers at the Stanford Graduate School of Business calls into question the value of the MBA degree, and is drawing strong rebuttal from business schools.
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 that will appear 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The article lays into everything from a mollycoddling teaching culture to an outdated curriculum.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 times.
Hawaii Pacific University economics professor Leroy Laney, who teaches in the MBA program, said that even though the number of MBAs has grown over the years, people should not be deterred from pursuing the degree.
"If you're the only one in the corporation that doesn't have an MBA, then you're probably going to need one more than ever," he said. "That's your competition."
The article even notes that 40 percent of U.S. chief executives mentioned in a Fortune Magazine article called "Why CEOs Fail" had MBAs. 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.
Marsha Anderson, assistant dean at the University of Hawaii College of Business Administration, questioned whether a comparison can be drawn between high-priced institutions such as Stanford -- where many of the students study full time -- and Hawaii's universities, where the majority of MBA students attend classes part time while continuing to work.
"The Stanford study is probably based on going two years full time. Most of our students choose to go part time, usually evenings and weekends, and continue to work so there isn't lost wages or lost progression in a career," she said.
The graduate admission council also noted that global demand to take its GMAT, the admission test most business schools use, was up 13 percent in the first half of the year, and officials say it has jumped even faster in the past month.
"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.
UH's Anderson said interest and enrollment in the UH program continues to grow locally. Enrollment for the upcoming fall semester is up 25 percent to 30 percent compared with last year, she said. More than 300 full- and part-time students are expected for the fall semester.
Pfeffer acknowledged some of the criticism, saying there is certainly value in the networking that is often part of getting an MBA and that salary is an imperfect measurement of the degree's value.
But he said in an interview: "The question which I believe remains unanswered ... is, Do you learn anything at business school?"
The real problem, he says, is that no one in the business education industry is asking such tough questions.
"There is a role for truth-telling inside all organizations," said Pfeffer, who said some of his Stanford colleagues were none too pleased with the article, but that he has received requests for copies from colleagues at other schools.
Even some who criticize the article's conclusions say it raises some important issues.
"An MBA may no longer be enough," said Louis Lataif, dean of the School of Management at Boston University. "There are too many of them out there. ... There are lots and lots of schools in the MBA business who in fact may not be adding value."
Star-Bulletin reporter Lyn Danninger and
the Associated Press contributed to this report.