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MBA may not be worth investment
The Digital Collegian (Penn State) ^ | Monday, July 29, 2002 | Evan Miller

Posted on 07/29/2002 9:23:27 AM PDT by Willie Green

For education and discussion only. Not for commercial use.

New studies indicate that the probable success achieved through a Masters of Business Administration (MBA) may not be worth the investment spent obtaining the degree.

Jeffrey Pfeffer, a Stanford University business professor, contended that achieving an MBA has little effect on graduates' salaries or career success. His research is scheduled for publication in the fall edition of the journal Academy of Management Learning and Education.

Penn State's Smeal College of Business was ranked ninth in the most recent study by Business Week for the fastest return on investment from an MBA. None of the Ivy League schools made this list, while nine out of the top 10 schools were public institutions.

"Looking at starting salaries to indicate return on investment is only the tip of the iceberg," said Judy Olian, Penn State dean of graduate business administration.

She says that the intangible learning experience that takes place during business school, including lab work, internships, and trading room simulations, allow students to test business theories in the classroom and prepare for the business world.

"Today's market strangely affirms the value of an MBA," Olian said. "The growth of the global market is unprecedented in the programs responding to the need for the MBA degree. The complexity of business today requires a sophisticated grasp of that [business system], and while an MBA is not the only way to get the analytical framework for that complexity, it is one of the only ways to develop and prove it."

According to the Graduate Management Admissions Council, the purpose of an MBA education is to provide training in the theory and practice of business management. The annual survey of current students studying for their MBA indicated that 41 percent of students gave the highest possible agreement rating to a statement saying an MBA will increase their career options.

Thirty-three percent were extremely confident in the ability of an MBA to increase their earning power. Seventy-two percent say an MBA is allowing them to switch industries, or diversify the types of organizations with which they can seek employment.

The typical graduate began his or her studies for an MBA with a $48,000 salary. The average income after graduation is now $75,000, down from $80,000 in 2001, but still a 56 percent increase from the salary earned without an MBA.

Steve Infanti, coordinator of Penn State college public relations, spoke of the invaluable significance of an MBA degree.

"MBA programs get you to think strategically," Infanti said. "It's great to have job experience, but an MBA will provide students with skills that cannot be acquired any other way."

Bob Wheeler, assistant dean and director of Penn State's MBA program, commented on Pfeffer's statements. "I thought it was a misleading article. I almost wrote a letter to the editor against it. The beauty of Penn State is you're paying a lot less for an MBA, which makes the average student's debt significantly lower, while bringing a great research school's name the bear when seeking employment."

Wheeler says that the value of an MBA now is equal to any time in history.

"It may have been easier to earn money five years ago, but today's economy should prove that the skills achieved through the study for an MBA is even more necessary now than ever."

Wheeler says Penn State is one of the greatest university's to prepare for the business world, as one third of the university's business graduate students are international.

"Students can use that experience to become successful in the global economy," Wheeler said. "An MBA proves that a person has the hard quantifiable skills that you need along with outstanding communication skills that are the most valuable in the workplace."

Steve Infanti was confident in his certainty in the value of an MBA.

"Recipients of professional degrees have the highest rates of income nationally," Infanti said. "And if the current market demand of corporate skills is an indicator, global demand for an MBA is at an all-time high."


TOPICS: Business/Economy; Culture/Society
KEYWORDS: diplomamills
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There was a time when Academic Institutions maintained high educational standards, and an MBA truly represented an achievement level of high value.
Sadly, diploma mills recognized the revenue potential of such a degree, and turned to low-quality, mass-production techniques in pursuit of their own financial gain. The result is that we, as a nation, are encumbered with a massive swarm of incompetents whose only skills are pushing paper and boogering corporate accounting systems.
1 posted on 07/29/2002 9:23:27 AM PDT by Willie Green
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To: Willie Green
I think it may be more than a case of the business schools turning out ill-educated graduates. I would even go so far as to say that they are teaching them bad business.

Anyone with a brain and the ability to reason could see the false bubble of the economic boom of the '90s. People were pouring money into businesses that had nothing and did nothing, and none of these business geniuses seemed concerned. And now they are paying for it.

Excellent post. Thank you.

2 posted on 07/29/2002 9:34:51 AM PDT by Cacophonous
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To: Willie Green
Notice how Assistant Dean Wheeler's response focused on the prestige of having a degree from a "name" school, rather than on any educational benefits from completing the degree program?
3 posted on 07/29/2002 9:38:55 AM PDT by Redbob
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To: Cacophonous
I would even go so far as to say that they are teaching them bad business.

Excellent point.

It has long been recognized that our Insititutions of "Higher" Education have become pestilent bastions of liberal, socialist mediocrity.

4 posted on 07/29/2002 9:40:51 AM PDT by Willie Green
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To: Willie Green
Whether there is signficant value to an MBA depends largely on where one goes for the degree, and what use one puts it to. An MBA with top grades from one of the top dozen or so schools can land one an otherwise probably unobtainable position in financial services or consulting, opening the possiblity of creating signficant wealth. An MBA with average or below average grades from a no-name school will not even get one a promotion in an existing job.
5 posted on 07/29/2002 9:49:47 AM PDT by CatoRenasci
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To: Willie Green
The MBA is nothing more than the key to open certain doors. What happens after that is up to the MBA holder. MBA is one of the easy master's degrees in many universities, so it might attract some less-able students now and then who won't do all that well once they are on their own. There are tough business schools, too, and that is a different story.
6 posted on 07/29/2002 9:54:29 AM PDT by RightWhale
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To: CatoRenasci
An MBA with top grades from one of the top dozen or so schools can land one an otherwise probably unobtainable position in financial services or consulting, opening the possiblity of creating signficant wealth.

Most MBA salaries are classified as "fixed or variable overhead" or "burden". They are non-productive labor and add no wealth-creating value to the production process.

7 posted on 07/29/2002 9:58:19 AM PDT by Willie Green
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To: Willie Green
It has long been recognized that our Insititutions of "Higher" Education have become pestilent bastions of liberal, socialist mediocrity.

That's exactly right, but socialism is being taught in the guise of "pure" capitalism, as if capitalism were all about "getting all you can, while you can". Which is distinctively not capitalism, or at least it's not responsible capitalism.

Once corporations start to act this way, they stop at nothing--buying votes, buying officials, cooking books, etc. At this point, since they have the government in their pockets, any distinction between them and the government becomes blurred.

Because their goals are "get all they can, while they can", they have no particular loyalties, except to their short term bottom lines. They have no loyalty to their stockholders, or their customers, or, most tragically, their country.

8 posted on 07/29/2002 10:00:15 AM PDT by Cacophonous
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To: Willie Green
Any MBA earned immediately after undergraduate studies are completed ... is a waste. Most good MBA programs require a minimum of 3 to 5 years in the real work-a-day business environment, before enrollment in a MBA program. The ideal MBA candidate, who stands to benefit most, should be around age 30 ... with a minimum of five years practical business experience behind them before going on for their MBA.
9 posted on 07/29/2002 10:00:22 AM PDT by BluH2o
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To: Willie Green
I got a little sidetracked on another rant and did not complete my first point:

...socialism is being taught in the guise of "pure" capitalism, as if capitalism were all about "getting all you can, while you can"...any distinction between them and the government becomes blurred.

The point I am trying to make here is that when corporations can control the government, and force the government to put controls on the means of production and distribution, you have socialism. Or maybe a wierd variant of fascism...not that the distinction is that large. Whether the ultimate string-holders are corporations that care only for their bottom lines, or a government that cares only to retain power, is irrelevant.

10 posted on 07/29/2002 10:06:31 AM PDT by Cacophonous
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To: Cacophonous
The point I am trying to make here is that when corporations can control the government, and force the government to put controls on the means of production and distribution, you have socialism. Or maybe a wierd variant of fascism...not that the distinction is that large.

IMHO, the actual mechanism is more subtle and convoluted. Corporations "go with the flow" and follow the path of least resistance and minimum cost. They've essentially conceded any form of direct socialism the government wishes to impose upon the American people, so long as they can import goods to our market unimpeded by any of the socialist millstones hung on the neck of American-based production.

11 posted on 07/29/2002 10:21:21 AM PDT by Willie Green
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To: Willie Green
Corporations "go with the flow" and follow the path of least resistance and minimum cost.

Make that "minimum short-term cost".
Long-term, corporate myopia is going to cost an arm and a leg.

12 posted on 07/29/2002 10:25:07 AM PDT by Willie Green
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To: BluH2o
Any MBA earned immediately after undergraduate studies are completed ... is a waste. Most good MBA programs require a minimum of 3 to 5 years in the real work-a-day business environment, before enrollment in a MBA program. The ideal MBA candidate, who stands to benefit most, should be around age 30 ... with a minimum of five years practical business experience behind them before going on for their MBA.

This is the correct take, not "Willie Green's." An MBA can't teach you how to be a business man but formalizes a course of study. It is a paricularly valuable career-enhancing educational tool when it is paired with another discipline which is outside of what is is termed "business" (e.g., science disciplines of all types). It speaks to an ability of someone to differentiate their tought processes, in order to develop a multifaceted approach to more complicated problems.

All the more reason to do as BluH20 describes by taking a hiatus from formal scholastic pursuits to get your feet wet in the real business world, then enroll in an MBA course...hopefully while still employed.

13 posted on 07/29/2002 10:25:19 AM PDT by Agamemnon
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To: Willie Green
EVERY person that I have met with an MBA...could not, I repeat: could not effectively think for themself, use common sense, or come to any kind of conclusion in a logical manner.
14 posted on 07/29/2002 10:28:14 AM PDT by BureaucratusMaximus
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To: Agamemnon
This is the correct take, not "Willie Green's."

The respective points being made are not mutually exclusive as you seem to imply. They are comments on different facets of the situation, capable of coexistance with both perspectives being "correct".

15 posted on 07/29/2002 10:32:17 AM PDT by Willie Green
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To: BluH2o
The ideal MBA candidate, who stands to benefit most, should be around age 30 ... with a minimum of five years practical business experience behind them before going on for their MBA.

Agree. Many of these older folks are identified by their companies as people who are on the promotion track.

I did my MBA in a group of 21 people, at a public university. All of us were older students, and all but 1 or 2 had our expenses paid by our employers.

The degree did help my earnings significantly, as I am sure it did for most of my cohort.

16 posted on 07/29/2002 10:33:25 AM PDT by Taliesan
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To: BureaucratusMaximus
EVERY person that I have met with an MBA...could not, I repeat: could not effectively think for themself, use common sense, or come to any kind of conclusion in a logical manner.

I don't know about that. For example, I'm drawing some logical conclusions about you right now.

17 posted on 07/29/2002 10:42:46 AM PDT by LouD
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To: LouD
I don't know about that. For example, I'm drawing some logical conclusions about you right now.

Perfect...sounds like your management material.

18 posted on 07/29/2002 10:54:32 AM PDT by BureaucratusMaximus
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To: BureaucratusMaximus
EVERY person that I have met with an MBA...could not, I repeat: could not effectively think for themself, use common sense, or come to any kind of conclusion in a logical manner.

I'm not at all impressed with the people I've known with an MBA. Practical business experience is worth far more

19 posted on 07/29/2002 10:56:46 AM PDT by 1Old Pro
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To: 1Old Pro
A few exceptions to what you say, but by and large, your observation is more than correct. Lack of experience (crisis management, reading people, motivating them) is what counts at the end of the day, rather than book knowledge which can be merely academic and abstract, at best.
20 posted on 07/29/2002 11:01:50 AM PDT by AmericanInTokyo
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