Business school rankings from the Financial Times: Do we need them?

by Urs E. Gattiker on 2008/01/30 1 views

in white papers research

2010-12-06 Update – various links added and tidbits here and there.

The study of business is afflicted by confusion between:

    – the results of a survey of what people think about the world and
    – a survey of what the world is really like.

Newspapers, broadcasters and consultants will start to distinguish bogus surveys from substantive knowledge only when their audience demonstrates that it knows the difference. (Research that aids publicists but not the public John Kay, Financial Times , 2007-10-30)

    Do we need MBA rankings?

The above two sentences (slightly changed – bullets) where taken from the article cited. Whenever I come across rankings I think about these sentences.

Rankings have been done for quite some time. The US News and World Report (USNWR) rankings are probably best known and based on:

    – 25% on fame,
    – 30% on institutional wealth,
    – 40% on exclusivity, and only
    – 5% on quality

How this could be improved has been suggested by Carey, Kevin who wrote a report called Carey, Kevin (2006). College rankings reformed: The case for a new order in higher education. Washington DC: Education Sector.

Even the US News and World Report’s own FAQs raise some interesting questions regarding how valid these assessments are when using peer evaluations or comparing rankings across years.

The above report indicates that whenever we do rankings, it is difficult to satisfy methodological, sociological as well as statistical concerns. Nonetheless, the interest in those rankings is unsurpassed. For this reason the Financial Times publishes its own rankings for MBAs as well as executive programs and others annually at different times of the year:

Financial Times Global MBA 2008 rankings and the latest business school rankings from the FT.

    How do the FT’s MBA rankings work?

In this story we look at the Financial Times MBA 2007 and 2008 rankings that are published annually during the month of January (2008 rankings were published this week Monday – 2008-28-01).

What people think about their MBA education and what the world does regarding quality of MBA education is really at the heart of the matter here.

Some of the sub-indices that are being calculated in order to get the overall ranking are as follows:

    a) exchange programmes with overseas business schools,
    b) average number of days overseas working on projects,
    c) overseas study
    d) tours and overseas internships.

Aims achieved: The extent to which alumni fulfilled their goals or reasons for doing an MBA. This is measured as a percentage of total returns for a school
Intl. course: Weighted average of four criteria that measure international exposure during the MBA program. These are:

Reccommends: Alumni were asked to name three business schools from which they would recruit MBA graduates. The ranking is calculated according to the number of votes received by each school. Data for the current year and the one or two preceding are included where available.
Value: This is calculated by using the salary earned by alumni today, course length, fees, and other costs, including the opportunity cost of not working for the duration of the course.

To go into more detail and show you the difficulty faced by doing these kind of rankings we have prepared a Table below. The Table compares Wharton (U.S.), globally ranked as the nr. 1 school, with IMD (Switzerland), nr 14.

Figures don’t lie, liars don’t figure

Criterion Wharton IMD
international faculty (%) 36 100
international students (%) 45 98
international board (%) 68 75
international mobility rank 44 1
student body (annual intake) 800 90
Rank – international exposure 25 48

The above comparisons are difficult to make because programs differ on such factors as:

    – annual intake,
    – size of faculty (e.g., Wharton over 250),
    – having lived outside home country prior to entering program (see hyperlinked name of school above for more info),
    – languages known (4 at IMD – program in English, Lausanne – city where school is located French is being spoken),
    – frequency of advertising in Financial Times or other magazines that publish rankins (total amount spent).

In addition, there are many more things that are hard to account for (i.e. what statistical controls are being used and how to account for effects by moderating or mediating variables).

For instance, IMD boasts that 90% of its MBA students graduating in 2007 have lived/worked outside their home country for a minimum of 6 months prior to the program. The question we must pose is if travelling for a one month abroad to do a study project makes a difference. Or studying at a partner university for a semester during the MBA program itself makes you more exposed to international issues compared to:

    – having worked or lived abroad before entering the program,
    – enjoying class discussions with people coming from different countries where no one country makes up more than 10 % of the student body, and
    – being fluent in several languages?

According to the above Table, it surely does!

Wharton is perceived as providing its students more international exposure than IMD because its students can benefit more from having:

    – spent time abroad during their studies (e.g., site visits and projects),
    – been given opportunities to do international internships, and
    – participated in one or the other exchange programs

than their IMD counterparts.

Using this rational, living and working abroad, while learning the local language to conduct business better before entering an MBA program seems to be less important than a 2-week visit during one’s MBA program. Incidentally, the time of such a short visit is surely spent working on a study-related project and discussing it with fellow students. How much an MBA gets to learn about the locals and how things work in the country one visits, including appreciating the history, art and finer things of life about the place remains a mystory to us.

But you be the judge. According to the Financial Times Global MBA Rankings, greater cultural understanding is served better by jetting into and out of a country, than doing it the old fashioned way —- working and living there while also learning the language. Of course this is putting it harshly. Just because the working abroad and being immersed in another culture was being done before entering an MBA program, this can surely not mean that this provides less exposure and understanding of cultural and international differences in the global marketplace than a 2 week visit, does it?

    Bottom line

Reading the Financial Times regularly our staff have also commented on the fact that all of the top 15 ranked schools have spent quite a few Euros for advertising their programs . Especially, counting the number of ads put in the Financial Times’ Business Education section is costing them a bundle but, of course, represents well invested advertising dollars they hope.

The Business Education section appears most weeks and sometimes every two weeks. Ooops, of course, advertising is kept strictly separate from the journalist side at the Financial Times, no influence there. Unfortunatly, the rankings do not provide any controls for such factors as advertising and especially as done in the FT. These and other factors could influence the overall score for each school.

But the bottom line is – do we need these rankings?

We believe the biggest flaw of the FT’s MBA rankings is that such a ranking system implies that one institution is better for all MBA students than is another.

This simply is not true. FT staff and others have done us a great service in looking hard at some of the variables and factors available for ranking MBA programs. For this work we must give them credit.

But we don’t need a ranking system. Much better would be a data base of information that allowed the users to weight the various inputs according to their own interests, educational needs and preferences. This would mean, a ranking system that offers every potential student the opportunity for weighting these factors according to her needs and preferences. As research has shown, people make choices based on preferences…… and no, these are often not rational (look at the cars we purchase). Does this not also apply to educational programs and MBA ones in particular?

Hence, coming back to our quote provided in the Table at the beginning of this post, the Global MBA Rankings are probably what people think about the school they attended for getting an MBA degree (e.g., the rankings are in part made up from information collected from alumni – what they think, how much money they earn three years or a few more after graduating, etc.). However, do these rankings provide a surevey of what the world is really like? …..

Finally, while we may disagree with a few things, Ursula Milton and here team at the FT have done a thorough and careful job. Yes, things may not be perfect. Nevertheless, the rankings are surely interesting to read. Just be aware that your preferences about a post-graduate program may require you to look at things using different criteria. But for starters, this is a better place to begin exploring your options than most if not all of the others that are available out there trying to rank MBA programs.

That said, research indicates that it is better to “play the game” than to boycott the rankings as bad publicity is better than no publicity. Lastly,rankings have brought some external scrutiny to the performance of business schools and have, in part, contributed to quality improvement among MBA programmes specifically and business schools generally.”

PS. By early 2011 the ranking methodology has not changed much if any. Therefore concerns raised above are still valid.

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