|
The MBA degree does make a difference
Research by: Mark Wellman
The Smith School of Business has an internationally
renowned research program where leading scholars from
various disciplines are continuously striving to improve our
understanding of the business world. But perhaps no research
is as directly relevant to the Smith School itself as Mark
Wellman’s research on the value of the MBA degree. Wellman
and his co-authors show that the MBA degree has a positive
impact on salary, promotions and managerial status. Their
research also shows that employers do give importance to the
MBA school rankings.
Wellman is a Tyser Teaching Fellow in the department of
management and organization. Along with co-authors Mary A.
Gowan and Susan C. White, George Washington University,
Wellman has written a paper called “MBA Degree and School
Tier as Human Capital: Comparative Study of MBA and Non-MBA
Career Success.” This paper was judged by the Academy of
Management reviewers to be one of the best accepted papers
and was published in the Best Paper Proceedings of the 2006
Academy of Management Meeting.
It is perhaps not very well known outside academia that
there is a great degree of controversy on whether the MBA
degree is of economic value. Prior research on this subject
is either not very clear or suggests that there is little
evidence that obtaining the MBA degree positively impacts
salary or career attainment. Wellman and his co-authors
argue that prior research on this subject suffers from a
variety of shortcomings such as the use of a limited sample
(e.g. studying students from only one business school) or
examining a small set of variables (e.g. only looking at
impact on salary).
The study uses a large, nationally representative,
longitudinal sample of MBAs and non-MBAs to address some of
the discrepancies found in previous studies. The study used
a comparison group of non-MBAs and controlled for factors
such as GMAT scores, undergraduate GPAs, occupational
industry and job type. They also examined the impact of the
MBA on various objective measures of career success such as
salary, managerial attainment, and promotions.
Wellman and his co-authors found that MBAs tend to have
greater career success outcomes in the form of higher
salaries, promotions and greater management responsibility
than non-MBAs. Skeptics may argue that MBAs were more
successful because of factors such as a high undergraduate
GPA, attending a prestigious undergraduate university,
having high cognitive skills, and previous work experience.
But even after controlling for undergraduate GPA, GMAT
scores, years of work experience, undergraduate major, and
ranking of undergraduate institution, Wellman and his
co-authors found that having an MBA led to a higher salary
and a greater likelihood of being promoted.
The study also looked at whether human capital variables
have an influence on which business school MBA students
attend. The authors found that higher GPA, GMAT scores and
number of years worked, along with the higher ranking of the
undergraduate program, resulted in students pursuing an MBA
from a higher ranked business school. They then found that
even after controlling for human capital variables, business
school rankings have a partial impact on an MBA’s career
success. Thus, although human capital variables such as GPA,
GMAT scores, and others are important, having an MBA from a
highly ranked school adds value beyond what is received from
attending a lower-ranked school. This suggests that
employers tend to give importance to the otherwise
much-maligned business school rankings.
One of the most remarkable things about Wellman’s study
is the quality of the data analyzed. The Battelle Center for
Public Health Research and Evaluation designed the GMAT
registrant survey and collected the data with the Graduate
Management Admissions Council (GMAC) funding the survey. The
resulting data comprises the only nationally representative
sample of GMAT registrants and contains detailed information
about the impact of an MBA on career outcomes. The survey
data is unique since it allows comparisons between the
registrants who completed the MBA degree and those who
dropped out of the pipeline at earlier steps and went on to
other endeavors.
Wellman is well aware of both the tremendous impact of
this work as well as its limitations. “This paper impacts
not just the MBA schools and students, but also the
employers who hire MBAs. However,” he adds, “there is always
the possibility that salary outcomes were affected by
macroeconomic supply and demand forces.” Not one to rest on
his laurels, Wellman is already immersed in his next paper.
This time he is using data from the Baccalaureate and
Beyond Longitudinal Study to address some familiar, and
some new, questions about the value of an MBA degree. His
latest research has received support from the Graduate
Management Admissions Council. |
