Disrupt or Be Disrupted

A Blueprint for Change in Management Education

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• Publisher: Jossey-Bass
• Year: 2013
• Print ISBN: 9781118602393
• eBook ISBN: 9781118653548
• Edition: 1
• Topic: Business
• Subtopic: Business Education
• Index: Business

An evidence-based approach to improving the practice of graduate management education

Compiled by the Graduate Management Admission Council (GMAC) and with contributions by administrators and professors from the top global MBA programs, this book provides business school decision-makers with an evidence-based approach to improving the practice of graduate management education. The book is designed to help navigate the pressures and create revolutionary platforms that leverage a school's unique competitive advantage in a design distinctly tailored for today's business realities.

• Offers a unique handbook for improving graduate management education
• Contains contributions from an international group of deans and professors that lead MBA programs
• Sponsored by GMAC, owner of the Graduate Management Admission Test (GMAT) exam used by over 5, 000 programs worldwide

This important resource gives academics a proven approach for improving graduate-level management programs.

1

Ensuring and Enhancing Future Value

Erich C. Dierdorff

DePaul University

Denis J. Nayden

Oak Hill Capital Management

Dipak C. Jain

INSEAD

Subhash C. Jain

University of Connecticut

Key Topics Covered in This Chapter

• Value of graduate management education for individuals, organizations, and society
• Challenges and pressure facing future success
• Imperatives for future relevance, effectiveness, and value

Consider for the moment that there is not a single occupation in the vast world of work for which the MBA is a mandatory entry requirement. Yet, even the most casual observer of business schools would note the substantial growth in graduate management education's popularity since its inception more than a century ago. This juxtaposition suggests that although graduate management degrees may not be strict occupational prerequisites, they are indeed perceived as worthwhile investments.

But what exactly is the value of graduate management education? As it turns out, the answer may not be entirely self-evident and is most certainly taken for granted by various business school stakeholders. In fact, uncovering a cohesive narrative that articulates the value of graduate management education is quite difficult. This does not mean that significant scholarship does not exist. However, this body of work is not rooted in a particular academic domain and is challenging to comprehensively grasp and clearly explicate. With this in mind, our primary aim is to convey the central case for why graduate management education matters. Building this case is not only crucial for a deeper understanding of the current state of graduate management education but also for addressing the myriad challenges that lie ahead if it is to continue to be a valuable mechanism for professional education.

We also believe the time is ripe to remind ourselves that graduate management education has broad implications for individuals, organizations, and society. We say “remind ourselves” because the value provided by graduate management education is not often extolled in either the popular press or scholarly literature. Consider, for example, that the past two decades of scholarship regarding graduate management education have been absolutely replete with criticism. These frequently scathing critiques have ranged from the philosophical (for example, Ghoshal, 2005) to the functional (for example, Mintzberg, 2004). Even a blithe perusal of this literature is likely to cause one to ask, Does graduate management education do anything well? We believe the answer is resoundingly affirmative. Further, we maintain that too often, the critiques of the past decades have failed to generate ways to enhance graduate management education. In other words, we contend that it is critical to simultaneously recognize that what we do has value, but that it also needs meaningful improvement. Only a balanced perspective can bring a reinvigoration in the way graduate management education is delivered in contemporary business schools.

To fulfill our primary aim, this chapter seeks to accomplish three general goals:

1. To build a case for the value of graduate management education at the individual, organizational, and broader societal levels

2. To outline several pressures that are likely to amplify the need for innovation in the way we currently conceptualize and approach graduate management education

3. To describe a key set of imperatives for business school policy-makers and faculty to address in order to sustain and enhance the value of graduate management education.

Ultimately, we hope not only to establish the clear value proposition of graduate management education but also to compel business schools to recognize that the time is now to reexamine the fundamental tenets on which graduate management education is built.

But before we begin, let us briefly acknowledge a few premises from which our ensuing discussions flow. First, we assert that the raison d'être of graduate management education involves (a) inculcating individual competence in managing various organizational resources (financial, technological, and human capital) and (b) fostering a particular set of values that shape the way individuals view and interpret the world of work. This initial assertion naturally leads to another premise, which is that graduate management education has its most direct impact on individuals. This means that its influence on organizations and ultimately society occurs through a compilation process in which individual competence and values exert bottom-up effects. Simply put, graduate management education starts with people. Finally, although we recognize that graduate management education encompasses a variety of programs (for example, master of science, executive, and joint degrees), we concentrate much of our discussion on MBA programs. This acknowledges both the predominance of the MBA degree in graduate management education and the fact that the vast majority of previous scholarship has exclusively focused on the MBA.

The Impact of Graduate Management Education

Why would someone pursue graduate management education? Why would organizations seek to hire those with graduate management degrees? What are the implications of graduate man­agement education for society at large? Such questions are fundamental to the ultimate purposes of today's schools of business. Still further, questions about the value proposition of graduate management education undergird many of the recent criticisms of business schools and, at the same time, overlay the very reasons that renovations of our current practices are critical. In the sections following, we discuss the various ways graduate management education shapes individuals, organizations, and society.

Individual Value

Here, the question of value centers on the potential individual-level benefits that coincide with graduate-level training in business schools. Considering the substantial investments of time, money, and effort that graduate-level business training requires, one would hope there would be evidence to support a viable value proposition. Indeed, there are ample reasons to suggest the value of graduate management education for individuals.

At a general level, graduate management education holds perceived value for individuals across a number of business school stakeholders. For example, prospective students frequently indicate that graduate management education will bring them increased job opportunities, salary potential, and business-related knowledge and skills (Graduate Management Admission Council [GMAC], 2012a). Such positive perceptions hold after graduation, when the vast majority of MBA alumni indicate that, knowing what they know now, they would pursue the degree again (GMAC, 2013). Among the key benefits these alumni frequently cite are opportunities to develop management knowledge and technical skills, network and form relationships of long-term value, and expand their career options (Bruce, 2010). In addition, potential employers consistently recognize the value of graduate management education when they recruit graduates, acknowledging that it instills competencies needed for successful job performance (GMAC, 2010).

In addition to perceptions of value, there is evidence that graduate management education has significant competency and career consequences for individuals. For example, graduate management education is capable of increasing cognitive and interpersonal competencies related to managerial effectiveness (Boyatzis, Stubbs, & Taylor, 2002; Hoover, Giambatista, Sorenson, & Bommer, 2010). MBA programs typically require coursework that, at a minimum, touches the key competencies required for managerial performance, including managing human capital, strategy and innovation, decision-making processes, administrative activities, external constituents and context, and logistics and technology (Rubin & Dierdorff, 2009). MBA programs generally include instruction on additional key areas of business management, such as integrative or systems thinking (Atwater, Kannan, & Stephens, 2008). The personal competence that is gained from graduate management education benefits individual careers in both the long and short term (Zhao, Truell, Alexander, & Hill, 2006). For instance, longitudinal studies show that individuals who complete the MBA report greater early career success than similarly qualified individuals without the degree (Inderrieden, Holtom, & Bies, 2006). Finally, building social capital and increasing networking opportunities are frequently listed as advantages of pursuing graduate management education (Vaara & Fay, 2011).

Graduate management education also provides significant economic consequences for individuals. For example, those who complete their MBAs stand to earn as much as 81 percent more after graduation than before they entered the MBA program, and employers report a five-year stable salary premium of US $40,000 for an MBA graduate over someone with a bachelor's degree (GMAC, 2012b). Such findings are consistent with other research showing that MBA salaries and rates of return are substantial (Connolly, 2003). As a result, some have concluded that the “MBA yields an excellent return on investment for nearly everyone, regardless of the type of program, the race of the student, or even the ranking of the school” (Holtom & Inderrieden, 2007, p. 36).

This discussion strongly suggests that graduate management education holds both perceived and actual consequences for individuals. This is not to say that current models of graduate management education are without need of improvement, a point to which we return later in the chapter. However, graduate management education does appear to be a fruitful, systematic training ground for managerial competence that brings with it numerous personal benefits coinciding with its completion.

Organizational Value

Given the consequences of graduate management education for individuals, the question becomes whether or not organizations benefit as well. There are several reasons to believe they do. For example, graduate management education offers cross-functional exposure that is difficult to either imitate or systematically implement in other organization-specific training settings. In addition, graduate management education serves as a filter of sorts; organizations can reasonably assume that individuals who apply and eventually matriculate from business schools possess demonstrated ability and motivation that underlies effective job performance. Finally, the intent of graduate management education is to train individuals in evidence-based, state-of-the-art management practices that help solve complex organizational problems. By continuing to hire MBAs, organizations give the impression that they perceive such value in graduate management education. As an example, a 2012 survey of 1,096 employers found that nearly four in five companies planned to hire at least one MBA candidate (GMAC, 2012b).

Beyond simple market demand, there are other reasons to believe such training adds value to organizations. For instance, at their essence, MBA programs are formalized management development programs, and research has consistently demonstrated the effectiveness of formal programs in promoting managerial competence (see Burke & Day, 1986; Collins & Holton, 2004). Of particular value to organizations is the fact that managerial competence has been linked to a variety of outcomes. These outcomes include reductions in large employee-related costs such as turnover (Griffith, Hom, & Gaertner, 2000) and counterproductive behaviors (Greenberg, 1990); increases in employee and team performance (Judge & Piccolo, 2004; Stajkovic & Luthans, 2003) and organizational citizenship (Podsakoff, MacKenzie, Paine, & Bachrach, 2000); and improved overall commitment and satisfaction (Podsakoff, Bommer, Podsakoff, & MacKenzie, 2006). Still other research suggests that when it comes to outcomes such as revenue and environmental sustainability, companies led by executives with graduate management education often outperform companies with executives who do not (Jiang & Murphy, 2007; Slater & Dixon-Fowler, 2010).

Another way in which graduate management education benefits organizations is through management practices that are first taught to students and then transferred to the students' eventual employers. Not only do many of these strategies defy the “commonsense” approaches routinely found in contemporary organizations (Pfeffer & Sutton, 2006), but evidence also indicates that effective management practices are quite rare in industry (Bloom, Sudun, & Van Reenen, 2012). For example, the evidence is rather clear that downsizing seldom, if ever, makes a firm more competitive (see Cascio, 2005; Datta, Guthrie, Basuil, & Pandey, 2010), yet the practice is commonplace in today's organizations. Other specific management practices, such as internal promotion or succession planning, have been convincingly linked to better organizational performance...

Table of contents

• Cover
• Title page
• Copyright page
• Foreword
• Introduction: The Change Imperative
• 1: Ensuring and Enhancing Future Value
• 2: Framing and Making Strategic Choices
• 3: Managing Aspirations, Resources, and Cost Structures
• 4: Intellectual Signatures: Impact on Relevance and Doctoral Programs
• 5: Curriculum Matters: Toward a More Holistic Graduate Management Education
• 6: Overlooked and Unappreciated: What Research Tells Us About How Teaching Must Change
• 7: Student Engagement: Selection, Management, and Outcomes
• 8: Reclaiming Quality in Graduate Management Education
• Epilogue
• Acknowledgments
• About the Contributors
• Name Index
• Subject Index