Mark Vandenbosch looks at shifting preferences for business education in North America and explains why the market domination of the MBA is not threatened.
The history of North American business education dates back to 1635, when records show a school in Plymouth Colony, America’s first permanent Puritan settlement, advertised that it taught “reading, writing, and the casting of accounts”.
North America’s first collegiate business school was established in 1881, thanks to self-taught businessman Joseph Wharton, who gave a US$100,000 donation to the University of Pennsylvania to teach finance and economics.
The first graduate school of management was launched in 1900, when Edward Tuck donated US$300,000 worth of stock in the Great Northern Railway to found the Amos Tuck School of Administration and Finance, which offered a Master of Science in Commercial Sciences.
Eight years later, Harvard opened its Graduate School of Business Administration — with 15 faculty members, 33 regular students and 47 special students — and introduced the world’s first Master of Business Administration (MBA). Harvard added a doctoral programme to its business degree offerings in 1922.
In Canada, the first MBA programme was launched shortly after the second world war by Western University (known as the University of Western Ontario at the time), which added the country’s first doctorate in business administration to its programme offerings in 1961.
Over the years, the various forms of business education offered in Canada and the US have evolved differently. The two-year MBA, for example, is the standard among top-tier US schools, while top Canadian schools offer a variety of programme lengths. Nevertheless, the MBA has remained the foundation of business education in North America for well over a century. And although that foundation is currently under strain, the MBA is not dead — not by a long shot.
Enrolment in North American MBA programmes has been declining since before the financial crisis, and it remains unclear when the market will hit bottom. Meanwhile, demand for other forms of business education is rising.
As noted in “Empty Seats: An MBA Case Study,” an article recently published by Canada’s Globe and Mail newspaper, the strain on MBA programmes in North America can be clearly seen in the weakening numbers of people taking the Graduate Management Admission Test (GMAT), an MBA application requirement. In the US, for example, about 87,000 GMATs were administered last year, down from 127,000 in 2010. In Canada, GMAT numbers reportedly declined 23% between 2010 and 2013, when fewer than 6,000 people took the test.
In addition to increased competition from alternative forms of business education, MBA programmes are under pressure from shifting preferences among recruiters and students. As a result, the negative narrative that keeps rearing its ugly head is that the MBA is dying a not-soslow death, destined to be eventually replaced as the foundation of North American business education by Master of Science in Management (MSc) programmes, which dominate the business education market in Europe, or even Masters in Management (MiM) programmes, which are growing in popularity. But the fact of the matter is that not all MBA programmes are threatened because not all MBA programmes are created equal.
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