Despite the warnings to would-be business postgraduates regarding salaries and various concerns about academic and career success from some quarters, the following report presents current evidence of media encouragement to study for an MBA:
‘MBA programs are regarded as one of the most financially rewarding advanced degrees, and for good reason. According to research done by the Graduate Management Admissions Council, students who attend two year, full-time MBA programs earn an average of 64 percent more than they did pre-MBA. For those in part- time programs, salaries increased by about 55 percent post- graduation. Additionally, chief executives, marketing managers, financial managers and sales managers, all jobs that usually require an MBA are consistently among the Bureau of Labour Statistics (BLS) list of top-25 highest-paying occupations.’
(Madden, 2010)
What would be interesting is to compare the actual career and salary outcomes for postgraduates from all institutions. It appears that some UK HEIs endeavour to keep track of the career destinations and the employment data of their international (non-EU) students with voluntary input data collecting software, and/or alumni reporting data. However, the findings and analysis of any data collected are not found on most institutions’ internet web sites.
129 Even the more highly ranked Russell Group institutions, who appear to collect alumni data for their institutional relationship marketing activities (Heckman & Guskey, 1998), which is seen by many as important for university networking success (Binsardi & Ekwulugo, 2003) for alumni networking, career support, or fundraising, require other researchers, to submit a ‘data request form’, to be completed before information regarding international students’ destinations is divulged.
It is not clear if this is because data is not actually collected, or not collected in a structured way, or if what data there is does not reflect the findings that would encourage other students to enroll on masters business programmes at the institution. It could be that the institutions consider that their statistical information is confidential to the institution for their future marketing strategy. However, the approach to sharing destination information of graduates may have to change in the future, to ensure that data is more transparent. That is, of course, if potential postgraduate international students are to have more detailed information regarding the outcomes of previous graduates, i.e. average salary and career destinations, and in order to justify the return on their financial investment. There may also be other perceived social benefits for Indian graduates, but, due to the sensitive nature of these findings, they too are not highlighted on any HEI’s web site. These perceived social benefits were investigated in this study of Indian postgraduate business students.
The Higher Education Statistics Agency (HESA) collects data from UK higher education institutions to record the destinations of UK and EU domiciled students. Data is collected for longitudinal studies on students covering several criteria which include; full time, part time employment, further study and salary (HESA, 2009). HESA does not, however, collect career destination data from the thousands of Indian, or other international, students who study in the UK; a spokesperson from HESA indicated on the telephone that ‘this may happen in a couple of years’ time’ (HESA, 2011). This was the same message that was provided in 2009.
130 It should also be noted that the findings of Diaz & Moll (2002) suggest that UK institutions did collect data on their alumni and support career and alumni networking activities, but that their respondents considered that the services were of a poor quality. I also wondered if this was true for Indian postgraduates too.
Companies wish to recruit the best work force and individuals wish to improve their skills and competences to become good managers (Baruch, 2009). It is therefore suggested that Masters business students pursue their degrees to ensure the best possible return, ‘the enhancement of opportunities for advancement’ (Gannon & Arlow, 1985, p20).
Examples of what MBA candidates consider as ‘constituting this advancement’ include various tangible and intangible factors, i.e. ‘improve job opportunities...change career direction...obtain general business knowledge, experience intellectual stimulation, improve earnings and increase self-confidence’ (Baruch & Peiperl, 2000, p69; Baruch, 2009), all of which may impact, as previously suggested, upon social identity, and play an important role in managerial status and recognition (ibid), if of course they really deliver there expected outcomes. Gannon & Arlow (1985, p25) concur with the previous views of greater transparency regarding outcomes of postgraduate programmes when they propose that ‘business schools must focus on measuring output, for otherwise, the mystique of the MBA degree may well decline’.
Lawton & Lundsten (1998) contrasted the expected benefits with, those that were delivered from the study of a US Masters programme, at a private Midwestern university, and they suggest that there was a surprising lack of information on the topic when they began their research:
‘only one study was found that dealt directly with the benefits MBA students expected from an MBA programme (Stolzenburg and Giarusso (1988b) and no information was found regarding whether students who complete an MBA programme perceived that they realized those benefits.’
131 The findings from the Lawton & Lundsten (1998) study further indicate that the MBA ‘inquirers expectations exceeded the expectations of the alumni on almost all dimensions’ (ibid, p23). These Expectations include an increased salary, new career opportunities. The results however indicate that the respondents achieve greater job stability. They further suggest that:
‘MBA granting institutions should be cognisant of the gaps between expectations and experiences (and of course should endeavour to reduce the discrepancy) (ibid, p26).
Three streams of research were employed by Baruch & Peiperl (2000, pp70/85) in order to study the outcomes of Masters business programmes. The first stream was linked to social identity theory as discussed by ‘Turner (1975) and Tajfel (1981)’, from which they suggest that individuals derive ‘personal identity’ from their abilities and interests. The second stream was managerial performance and the third stream managerial competencies. Their findings suggest that the qualification helped to improve an individual’s social identity because managers became more ‘professional’ which, they argue provides:
‘a better position in the workplace so that others with whom they interact will see them as professionals. In terms of ‘recognition and respect’, the MBA seems to provide a tangible asset for its holders’. (Baruch & Peiperl, 2000, p85/86)
Their findings also suggest that the MBA enables graduates to have improved managerial competencies thus gaining an advantage over their peers. They further argue, however, that ‘managerial performance’ in output terms is difficult to assess. Their findings also indicate that overall, there was no evidence of increased earnings between MBAs and non-MBAs.
There is, however, some positive objective evidence from other studies of an increase in income and mobility for graduates, but only from ‘top-schools’ (Baruch & Peiperl, 2000; Pfeffer & Fong, 2004; Baruch, 2009)
132 Another example of ‘objective benefits’ is as previously mentioned represented by the widely published business school rankings. These give some broad indication of evidence of the outcomes of the salaries of MBA graduates and are linked to the quality of the institution (Hussain, McNally, & Telhaj, 2009) these objective benefits may, however, not turn out to be so rewarding for graduates from less prestigious institutions.
There is also other research evidence which suggests that MBA programmes from various US institutions, at all ranks or levels, do have a ‘modest impact’ on personal economic capital and career success i.e. better job promotion than non-graduates (Inderrieden, Holtom & Bies, 2006). Seibert, Kraimer & Linden (2001) also indicate that there is evidence of the development of social capital for career development from masters programmes. Hirshman (1984 cited in Kliksberg, 2001, p45) argues that social capital is ‘the only capital to increase with use’ and Kliksberg (2001) further argues that social capital is one of the important capitals, together with human capital theory, on the current political scene. A more detailed review of social capital theory is developed in a later section of this chapter.
Baruch & Peiperl (2000, p77) also argue that outcomes from their ‘respondents’ self-perceptions’, suggest that the MBA provides an advantage in ‘competency’. This was expressed by the respondents as self-efficiency to perform tasks. They further argue that the effect of this competency results in overall better performance, and may also result in career gains. However, it is not clear from this study how the impact of improvement was actually gained (ibid).
Baruch & Peiperl (2000) further argue that their results provide partial support for the benefits of the MBA, benefits which business schools should indicate to potential graduates to ensure awareness of ‘actual outcomes’ ‘rather than their expectations’. This is a marketing strategy which is clearly appropriate, but also one that is unlikely to be adopted by the less successful and the more lowly ranked institutions, or those that are simply regarded as ‘diploma mills’ (Snart, 2010). Baruch & Peiperl (2000, p84) further argue that:
133 ‘graduates should also be provided with realistic expectations of their degree to prevent them becoming disillusioned later. In particular, this means publishing statistics of job placements, income differentials and career patterns over the longer term.’
Other studies have assessed career changes subsequent to the MBA, demonstrating evidence of career progression, with men benefiting more than women (Simpson, 2000).
Another qualitative exploratory UK study of part-time MBA graduates found that most managers considered the MBA beneficial, for broadening personal perspectives of behaviour and thinking, and also for enhancing a positive sense of self. It was also regarded as useful for learning about management techniques, all factors which are of a qualitative value to the practicing manager (Hay, 2005). These findings, however, differ greatly from those espoused by others, who suggest that these career benefits were not found and thus they questioned the ‘professional relevance of managerial scholarship’ (Pfeffer, & Fong, 2002, p1).
This is a view which various bodies have attempted to address e.g. the UK Association of Masters in Business Administration (AMBA), and the Graduate Management Admissions Council (GMAC), and the Association to Advance Collegiate Schools of Business (AACSB), and the Certified Masters of Business Administration (CMBA), in the USA. These efforts have increased more recently and been accompanied by several other research studies, as more criticisms and concerns over the value and benefits of the MBA and other Masters business degrees have developed over the years.
Extrinsic and Intrinsic Outcomes
Many theorists, as already noted above, concentrate on the outcomes of objective external/extrinsic career measures, such as salary, management titles and hierarchical positions, status, greater security and marketability, factors which were also found in other studies of part time MBAs (Hay & Hodgkinson, 2005; Simpson, 2000: Simpson et al, 2005). However, it is
134 argued, that these extrinsic factors neglect the individual’s more dynamic perception of career success or career confidence (Simpson et al, 2005), and when career success was identified, the causal nature appeared complex. Career success or career confidence, are referred to as intrinsic benefits (Simpson, 2005, p238) for example ‘job satisfaction, enhanced credibility and the development of interpersonal skills’ or may be referred to as ‘the internal career’ (Hay & Hodgkinson, 2005, p110). These are, it is argued, more closely related to measures of, for example, job satisfaction, fulfillment, autonomy, challenge, balance of work and life commitments competence, respect, marketability and employability (Hay & Hodgkinson, 2005; Simpson et al, 2005). There may also be the possibility of an improvement in the individual’s cultural and social capitals, and, as previously suggested the chances for increased social mobility (Moore, 2008; Simpson et al, 2005).
Simpson et al, (2005) further argue that, in the UK, age and gender appear to influence the extent to which postgraduates gain intrinsic benefits of management education. They suggest that ‘Older MBA’s are more likely to focus on intrinsic career factors...and women have greater orientations towards intrinsic career rewards’ (Simpson, et al, 2005, p238). They also further recommend, that business schools should be aware not only of, and highlight the extrinsic benefits when they promote their programmes to potential postgraduate students, but also, the more important intrinsic benefits of team working and interpersonal skills, which are regarded as an important requirement by employers (ibid), and identified as such in the UK Government reports of Dearing (1997) and Leitch (2006).
A survey carried out by GMAC in 2008, the ‘Global Graduate Survey’, which recorded the data from approximately 5,000 students from 149 participating institutions world-wide, indicated that students from business schools offering MBAs, (95% of responses), and other MAs, business programmes, MScs and PhDs, were achieving some benefits from their awards.
135 It should, however, be noted that the survey was carried out ‘before’ the students actually graduated from their business programmes, so the survey is really related to what their ‘expectations were’, and not the actual reality of their experiences in employment situations. It would be useful to find out what graduates’ experiences are after various time intervals for example after one year, three years and five years.
GMAC (2008) survey:
‘Key Findings from GMAC survey:
Schools are meeting the expectations of students and students are learning the skills they had hoped to develop in the program. Thus, the overall value of a graduate business degree remains high and the value proposition for business schools is positive.
The main drivers of overall value are the schools ability to meet student expectations and the quality of the curriculum. In addition, quality of the faculty, program management, and student skill development are key drivers of overall value. These intrinsic and systematic values drive overall value while extrinsic values, such as increases in salary and job level, do not play a significant role.’
(GMAC, 2008, p2)
Perhaps these ‘extrinsic factors’ become more important when graduation takes place due to the fact that financial concerns are not an issue until they do not meet expectations.
Another survey also performed by GMAC in 2008, the GMAC Alumni Perspective Survey, included Indian alumni results. However, from an analysis of their data, there were only 109 respondents who were actually citizens of India, a low number considering that GMAC also reported that 21,481 Indians had originally taken the test. The test under review does not identify the percentage of test participants, or what number actually passed, or the number who failed from the total 21,481. It is also unclear what numbers of Indian nationals take the test and pass, and then actually go onto a business school to study.
136 Of those 109 who did respond to the survey, 61% were graduates of a US business school, with 14% from Asia and 14% from Europe. It is also interesting to note that 76% of Indians who took the survey, and who stated that they worked for an employer, actually worked in other countries. Therefore, from this data, it appears that only 24% of the alumni report they are working in India, which implies that only a total of 24 respondents work in India and have responded to the survey. This seems to be a very low response rate from Indian participants.
The survey does, however, highlight some of the external and some internal career success measures, and does consider the concept of managerial experience highlighted by Hay & Hodgkinson (2005). It would be interesting to see the data collected on these 24 Indian respondents to compare with the results of those respondents who were listed as working abroad. Also, it would be interesting to compare current students’ views before they graduate, with their views to the same questions, post-graduation.
‘Key Findings
A majority of alumni feel that pursuing a graduate business degree— as well as their choice of school, program, and area of academic concentration—was the right decision.
(GMAC, 2008, p2)
Interestingly, the GMAC survey 2007-2008 also highlights that:
‘There is only a slight match between the career goal orientation of alumni and their current job. However, there is greater consistency between goal orientation and current job for alumni who have been out of school longer. The match between the two strengthens over the years, as alumni gain greater job experience and time to evaluate career and goals. (GMAC, 2008, p2)
Baruch, Bell, & Gray (2005, p64) suggest, from evaluations of US alumni, that there is evidence of some positive outcomes from an MBA and specialized masters level business programmes, and in terms of internal and external measures of career success, ‘learning, intellectual stimuli,
137 knowledge gains, and increased salary’. They also suggest that these findings:
‘may be partially due to improved self-development process, which results in higher levels of self-esteem and self-efficacy for handling managerial processes. The impact of these could lead to better job performance and career success.’
(Ibid)
It is, however, important to note that the study by Baruch & Peiperl (2000, p83) suggests that the MBA is perceived as follows:
‘a passport to the managerial ranks in or across companies, or as the means to accomplish a career move, either internal or external. It increases employability and looks good on a CV, as long as one is looking for a managerial career. Otherwise it may make its holder appear overqualified, in particular for non-managerial positions which are sometimes a necessary stage in organisations which draw their managerial cadre from internal labour markets.’
However, the Baruch & Peiperl (2000) study found that ‘there may be an increase in managerial competencies and enhance self-esteem, but… no compelling evidence of higher compensation, or even recovery of one’s investment’ (Baruch & Peiperl, 2000, p83).
The Master’s business qualification may, however, have other benefits. It may result in a ‘reputation effect’ (Baruch & Peiperl, 2000, p82), which may actually result in better career opportunities (Wilton, Woodman and Essex, 2007) due to the individuals’ increased cultural and symbolic capital (Webb, Schirato & Danaher, 2002) It may also result in greater respect from others, e.g. future employers, family, friends. An improvement in social identity and a greater increase in ‘reputation effect’ (ibid) may also occur for Indian nationals, if the qualification is awarded from a higher ranked institution, or a foreign institution e.g. from the UK; this particular question is explored in this study.
138 The MBA and other Masters postgraduate business programmes do have tangible advantages for individuals, employers and the UK economy as a whole, as noted in the UK Leitch review of 2006, which indicated the importance of postgraduate skills for leadership, entrepreneurship and management (Leitch, 2006). However, it is also important to note that postgraduate expectations should be realistic, as the degree may not always live up to its reputation, especially in terms of its financial return on investment (Baruch & Peiperl, 2000). These were views also explored in this study.