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Journal of Education for Business
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
An Update on the High-Tech MBA
Reuben Kyle & Troy A. Festervand
To cite this article: Reuben Kyle & Troy A. Festervand (2005) An Update on the High-Tech MBA, Journal of Education for Business, 80:4, 240-244, DOI: 10.3200/JOEB.80.4.240-244
To link to this article: http://dx.doi.org/10.3200/JOEB.80.4.240-244
Published online: 07 Aug 2010.
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ust 3 years ago, as the MBA degree was going “high-tech” and for-profit, the future of graduate business education appeared to be unbounded. Indeed, the hostile takeover of the MBA by for-prof-it, online institutions seemed virtually imminent. Has this vision become reality? What is the future of graduate business study? Who will deliver the program, and what will be the role of technology in the graduate business curriculum? In this article, we report on the current status of the MBA with regard to these questions and reflect on the MBA degree’s prospects.
Incentives for Pursuing Graduate Business Education
It is not surprising that the economic incentives for pursuing postgraduate education, especially the MBA, remain powerful. The U.S. Bureau of Labor Statistics (2003b) reported that full-time workers aged 25 and older with a mas-ter’s degree earn about 19% more than those with an undergraduate degree and 90% more than those with a high school diploma. As of the second quarter of 2003, the premium for women with a bachelor’s degree or higher, as com-pared with those with a high school degree, was 77%; the corresponding fig-ure for men was nearly 83% (U.S. Bureau of Labor Statistics, 2003a).
The Graduate Management Admis-sions Council’s (2003) Global MBA Survey reported that students in 2003 were anticipating a 56% increase in salary on completion of their degrees. The 4,123 students from 96 schools sur-veyed by the GMAC reported that their median base salary earned before start-ing their MBA studies was $50,000 and that their median expected salary on graduation was $75,000. Not surpris-ingly, enrollment in graduate business education programs has responded to these anticipated earnings premiums.
Over the past 3 decades, graduate degrees awarded in business have
increased steadily from about 11% of total graduate degrees awarded in 1970–1971 to almost 25% in 2000–2001. Likewise, the total number of master’s degrees awarded to business majors has grown, with some increases and decreases, from about 26,000 in 1970–1971 to more than 116,000 in 2000–2001 (U.S. Department of Educa-tion, 2003a). Furthermore, enrollment in graduate business programs can be expected to increase, at least in the short term, because the number of Graduate Management Admissions Tests (GMAT) taken worldwide exploded from about 130,000 in 2000 to more than 161,000 in 2001–2002 (Graduate Management Admissions Council, 2003).
Much of this international increase is occurring throughout the Asia-Pacific region. According to an Indian School of Business analysis, there were 170,000 applications and 11,000 MBA degrees awarded in 74 prominent Asia-Pacific business schools in 2002, and this demand is expected to continue (Tan, 2003). The surge in demand for the MBA in this region (e.g., China, Malaysia, South Korea, and Thailand) is being led by managers whose companies have weathered the global economic slowdown and are in a growth cycle (Tan). Perhaps these levels of demand, both current and projected, explain why so many U.S. business schools have
An Update on the High-Tech MBA
REUBEN KYLE TROY A. FESTERVAND
Middle Tennessee State University Murfreesboro, Tennessee
J
ABSTRACT. The popularity of the master’s of business administration (MBA) degree has resulted in boom-ing enrollments in the United States and around the world. In the late 1990s, the MBA degree seemed to be in danger of being taken over by trends in high technology. First, for-profit providers gained students and credibility to such an extent that respected traditional not-for-profit universities were tempted to create new for-profit subsidiaries. Second, online delivery became the “medium of the future.” Third, the dot-com explosion made technology-related programs attractive. In this article, the authors evaluate the current status of the MBA, update these three develop-ments of the degree programs, and reflect on the MBA degree’s prospects for the future.
VIEWPOINT
either gone offshore by partnering with one or more foreign universities or have developed online MBA programs.
For-Profit Programs
During the 1990s, virtually any online enterprise looked like a sure win-ner. However, with the return to eco-nomic reality and the passage of dot-com euphoria, many online ventures disappeared. Such was not the case with for-profit universities. Not only have online enrollments continued to grow, but, through 2003, for-profit higher edu-cation enterprises outperformed the stock market by a wide margin. The Apollo Group’s University of Phoenix now has 124 locations in 26 states with an enrollment of about 152,000 students (Selingo, 2003). University of Phoenix students may pursue an MBA, along with a number of other degree pro-grams, either online, at one of several campuses around the country, or through FlexNet®, a combination of the two (University of Phoenix, 2004a).
Other major for-profit institutions are Capella University, DeVry University, Strayer University, and Sylvan Learning Systems’ National Technological Uni-versity, all of which offer graduate busi-ness degree programs. In fact, according to Selingo (2003), there are about 750 for-profit degree-granting institutions with more than 400,000 undergraduate and graduate students.
Just before the dot-com bubble burst, the appeal of for-profit operations attracted some traditional, even distin-guished, not-for-profit universities. For example, New York University created NYUonline, Inc. as a for-profit sub-sidiary in 1998. In 2000, Columbia University teamed with the London School of Economics and Business and a number of other prestigious institu-tions to create a for-profit operation, Fathom.com, to explore opportunities for online education. Unlike the true commercial education companies, these ventures by traditional universi-ties have not met with success. By November 2001, the NYUonline ven-ture was shut down, and its successful courses were transferred to the Univer-sity’s School of Continuing and Profes-sional Studies (“N.Y.U. Shuts Down an
Internet Venture,” 2001). Likewise, in January 2003, Columbia announced that the Fathom experiment was being closed down (Information Today, Inc., 2003). Clearly, these for-profit MBA “wannabes” found that the transition from the traditional collegiate model to business-managed institutions was not easy or guaranteed. However, for-profit higher education has proven to be a very successful business enterprise for some, and market analysts predict it to be a high-growth industry for the fore-seeable future.
Online Degree Programs
The time when students entered the academy and sequestered themselves in a remote rural location for 4 or more years is long past. According to the National Center for Education Statistics (NCES; U.S. Department of Education, 2003b), only 27% of 13 million U.S. undergraduate college students fit the traditional age cohort and attend college for 4 consecutive years.
In 1970, about one third of full-time college students were employed. By the mid-1990s, that percentage had increased to nearly 50% (U.S. Depart-ment of Education, 2003b). Over 65% of the high school graduating class of 2002 enrolled in college, and, of those, 90% became full-time students. Among full-time students, nearly 43% were employed or looking for work in Octo-ber 2002, whereas almost 76% of part-time students were employed (U.S. Bureau of Labor Statistics, 2003b).
In response to the changing work-related circumstances of students, col-leges and universities have offered courses and entire degree programs in formats that are much more flexible than the traditional one-size-fits-all model. The NCES (U.S. Department of Education, 2003c) reported that, in 2000–2001, 56% of 2- and 4-year degree-granting institutions offered some distance-learning courses. A study just released by the Sloan Consortium (2003) reported that more than 1.6 mil-lion students took at least one online course in the fall semester 2002, and that by fall 2003 that number was pro-jected to grow to 1.9 million, represent-ing more than an 18% growth rate.
The 2003 MBAInfo database indicated that 208 institutions worldwide offer MBA programs online or through dis-tance learning. As of October 2003, USNews.com (2003) was listing 246 online graduate degree programs, up from 48 in 2001. This Web site listed 41 graduate business programs accredited by the Association to Advance Collegiate Schools of Business (AACSB) Interna-tional. The AACSB Overview of U.S. Business Schools reported that 8 of the 303 institutions that it surveyed had full-time distance-learning MBA programs, and 43, with 3.1% of total enrollment, had part-time distance-learning programs (AACSB International, 2002).
Virtual universities such as Capella University (http://www.capellauniversity. edu/), Western Governors University (http://www.wgu.edu/wgu/index.html), and the National Technological Univer-sity (http://www.ntu.edu/)1 represent a new type of university. Capella, like the University of Phoenix, is a for-profit institution, but it is entirely an online operation. Western Governors University, founded by the governors of a group of western states, offers no courses of its own but coordinates access to the courses of more than 40 colleges, universities, and corporate institutions. The university presently offers associate’s and bache-lor’s degrees and a master’s of arts in learning and technology.
Students earn degrees and certificates by demonstrating competence in speci-fied areas of a program instead of earning credits by taking and passing courses. To prepare for the competency examination, students may take courses at the partici-pating institutions via distance learning, either online or through correspondence. The National Technological University (NTU, 2004) also is a consortium of uni-versities (27) that provide online courses under the NTU name. Eighteen master’s degree programs are offered, including an MBA. Tuition varies by course and institution but typically is $1,000 per credit hour.
Still other graduate business opportuni-ties exist in what might be considered hybrid or niche markets. For example, Duke University offers a 19-month global executive MBA costing $107,000, in which students spend some time in class and some online (http://www.fuqua.
begun to fade. For example, beginning in 1997,ComputerWorld has been sur-veying 1,000 campus recruiters to pro-duce its ranking of top U.S. university techno-MBA programs (http://www. computerworld.com). The magazine has not published the survey since 2001. What happened? Perhaps the skills required to function effectively in the global marketplace changed.
We can predict with a high degree of certainty that tomorrow’s MBA gradu-ates will find themselves operating in an increasingly global environment that employs increasing amounts of technol-ogy (Richards-Wilson, 2002). However, although these skills are critical, success in tomorrow’s global marketplace will demand skills that transcend traditional and homogeneous areas of expertise. For example, future MBA graduates will continue to be trained to function inter-nationally, but that training will become more culturally specific. Such culture-specific training is already available from both academic institutions (e.g., the French DESS degree/system, which offers French MBA students seven nation-specific study programs) and commercial providers (e.g., http://www.MiddleEast Training.com). Increasing competition, financial pressures, and myriad forms of (http://www.mb ainfo.com/), which pro-vides details on 2,500 MBA programs from 1,300 universities, business schools, and management colleges in 126 countries, indicates that there are 85 programs at 65 institutions worldwide with a focus on e-commerce, new tech-nologies, technology management, and information technology and communi-cations management.
These numerous technology pro-grams notwithstanding, the appeal of information technology apparently has
work, for which no business prerequisite or GMAT test is required, consists of 3 modules of multiple topics, to be complet-ed primarily via the Internet.
Why have these programs succeeded? In the case of UTK’s online physician’s executive MBA program, one can sur-mise that (a) the offering may be filling a void in a market that can afford the lofty price of the degree, (b) the students in the program do not have the time to take a comparable set of courses in the classroom, or (c) the students generally are seeking the degree for reasons other than employment or career advance-ment. Likewise, the image and prestige associated with Duke’s national ranking among top-10 MBA programs allows it to command top dollar for its global executive degree.
Technology-Oriented Degree Programs
During the glory days of the dot-com bubble, many new degree programs in information technology and electronic commerce were developed. The AACSB International reported 66 member MBA programs with e-commerce emphases in existence (AACSB International, 2002). A search on the MBAinfo.com database
risk will only accelerate the demand for such specificity.
The Future
The evidence suggests that the high-tech MBA program is alive and well, sur-viving both boom and bust. Despite some retrenchment, there is little question that online delivery and technology-oriented programs will continue to survive and likely prosper. However, there are hurdles that must be overcome.
The question facing many institutions of higher learning—and schools of busi-ness in particular—is how to meet this future. How important is the quality of the education? Is mode of delivery, along with the associated convenience factor, critical? Is the value of an MBA delivered largely or totally online by a for-profit institution equal to or greater than that of a traditional MBA?
Regarding the quality issue, how do the major for-profit universities—the University of Phoenix, Capella Univer-sity, and Strayer University—measure up? What is the relationship between price and quality? How do the faculty members compare with those at the tra-ditional programs?
Many for-profit programs do not require admissions tests. The University of Phoenix (2004b), which is accredited by the North Central Association of Col-leges and Schools, charges $545 per cred-it hour and requires 3 years of work expe-rience and an undergraduate grade point average (GPA) of 2.5 for admission. Some for-profit programs even advertise that no GMAT is required. Capella Uni-versity, which is accredited by the Higher Learning Commission, charges $1,575 for a 3-hour online MBA course and requires a 2.7 undergraduate GPA for admission. Strayer University, which is accredited by the Middle States Commis-sion on Higher Education, charges $324.50 per credit hour for each 4.5-cred-it-hour course in its 54-hour curriculum. Admission to Strayer’s program is based on acceptable performance in one of the following three criteria: (a) GMAT score (at least 450), (b) GRE score (at least 1,000), and (c) GPA (minimum 2.75). With a little arithmetic, we can deduce that all three institutions charge around $1,460–$1,600 per course.2
duke.edu/admin/gemba/index.html). Cur-rently, admission to this program does not require the GMAT but is based on the applicant’s work experience and previous academic work for determination of stu-dent–program suitability. Likewise, the College of Business at the University of Tennessee–Knoxville (UTK) offers a physician’s executive MBA program online (http://www.pemba.utk.edu/). The 12-month $48,000 program, exclusively for physicians, requires four 1-week, on-campus residence periods. The
course-Future MBA graduates will continue to be trained to
function internationally, but that training will become
more culturally specific.
Still other online programs, such as Capella University (2004a), give acade-mic credit for nonacadeacade-mic experi-ences. The contact hours may be sub-stantially less than those of traditional programs (e.g., the University of Phoenix [2004a] requires students to sign on at least five times per week and post comments twice per week).
One means of quality assurance is accreditation of institutions and pro-grams by recognized accrediting orga-nizations. The latest AACSB standards for master’s level degree programs, specifically Standards 18 and 19, indi-cate a responsibility by the institution for assuring “the quality of learning . . . regardless of where or how it takes place” (AACSB International, 2004, pp. 67–69). Standard 20 requires that master’s programs “provide sufficient time, content coverage, student-effort, and student-faculty interaction to assure that the learning goals are accomplished” (AACSB International, 2004, p. 69). These standards, deliber-ately or otherwise, would affect the ability of online graduate degree pro-grams to become accredited by the AACSB International.
Many of the for-profit institutions are accredited by the Higher Learning Com-mission, member of the North Central Association of Colleges and Schools.
Capella University (2004b) adds the fol-lowing phrase to that information: “the same agency that accredits Big Ten schools in the Midwest.” Clearly, Capella is eager to assure prospective students of the quality of its product.
At the same time, none of these insti-tutions are accredited by the AACSB International, the most highly regarded and sought-after form of business school accreditation. A few AACSB-accredited graduate programs do offer online MBAs (e.g., Indiana University and the University of Colorado–Denver). How-ever, achieving AACSB accreditation for many online programs is likely to be a long-term challenge.
Still another quality-related issue associated with the for-profit model concerns faculty credentials. All busi-ness schools accredited by the AACSB International require terminal qualifica-tions for graduate faculty members. Faculty members with PhDs constitute a
certain percentage of the faculty mem-bers of the three major for-profit gradu-ate business programs mentioned. How-ever, the distribution of faculty members holding PhDs and MBAs is not mentioned. Specific qualifications for faculty members recruited by the University of Phoenix, for example, may be viewed at http://www.phoenix. edu/faculty/index.asp.
For-profit institutions counter con-cerns about their faculty members by suggesting that their instructors are prac-titioners and, therefore, offer “real world” education. Still others shun qual-ity issues by suggesting that they do not compete with traditional programs. In fact, some for-profit institutions make the point that their programs deliberately tar-get students (customers) who would not enroll in traditional programs.
What makes these programs success-ful? Three factors appear to make the greatest contribution: (a) cost, (b) admission, and (c) convenience. Although the cost of each of the three programs appears to be similar to that of a traditional, classroom-based MBA program, the programs’ admission requirements appear to be much less rigorous. However, in our opinion, the remaining factor of convenience is a significant force behind the success of these high-tech programs. For example, the University of Phoenix (2004c) notes that “a large part of our mission is con-venience.” Citing Thomas Russell’s (2002) book,The No Significant Differ-ence Phenomenon, the University of Phoenix’s Web site (2004d) implies that, when compared with an in-class pedagogy, distance learning is more effective. From a consumer-oriented perspective, these three factors are clearly desirable and provide a substan-tive basis for competing in the higher education market.
A key to the future of the online MBA is employer receptiveness to the degree. Although the University of Phoenix (2004e) responds with an emphatic “Yes” to the question of whether employers grant equal value to the new degrees and traditional ones, it offers no evidence to support the claim. The fact is that it is still too early in the life of this new technology to give a definitive assessment.
Never-theless, there is some evidence on which to draw.
First, there is ample indication that the business community sees technology-based education and training as cost-effective. For example, Drake Beam Morin (2001), a training consulting firm, conducted a recent survey of training and human resource managers and found that 94% considered technology-based learning a viable option for teach-ing professional development. Seventy-four percent indicated that they believed that it would be the most common pro-fessional training medium within the next 5 years. Finally, 81% of those respondents found technology-based learning to be a cost-effective alternative to classroom instruction for business professionals.
Second, there is indirect evidence that employers see distance-learning MBA programs as desirable. Several online institutions, such as Capella University and Western Governors University, prominently list their business “partners” on their Web sites (http://www. capella.edu/ and http:// www.wgu.edu/).
Third, the reputation of Duke Univer-sity’s (2004) global executive MBA implicitly requires the support of the students’ employers. The criteria for admission state that applicants should have a minimum of 10 years of manage-ment experience and should have, or should expect to have shortly, interna-tional managerial responsibilities. Chase Manhattan Bank’s director of education was quoted as saying that the Duke program attracted Chase’s support of employees’ enrollment because the program requires students to work as managers do in a real-life international environment (Vogelstein, 2000).
Fourth, there is market evidence that investors see a bright future for the for-profit, online university. The Apollo Group, Inc., the parent company of the University of Phoenix, continues to out-perform the broader market and the
Chronicle Index of For-Profit Higher Education(2005). In short, investors see this company as having a very bright future. The Chronicle Index,a composite of nine publicly traded higher education companies, was up more than 500% since December 31, 1999 (Chronicle Index . . .).
Sloan Consortium. (2003). Sizing the opportunity: The quality and extent of online education in the United States, 2002 and 2003. Retrieved October 2003 from http://www.sloanc.org/ publications/freedownloads.asp
Tan, S. (2003, August). Tough going. AsiaInc., 23–25.
University of Phoenix. (2004a) Welcome page. Retrieved November 2004 from http://welcome. phoenix.edu/
University of Phoenix. (2004b). Graduate admis-sion requirements.Retrieved November 2004 from http://online.phoenix.edu/Graduate.asp University of Phoenix. (2004c). Who are our
fac-ulty? Retrieved November 2004 from http://www.phoenix.edu/faculty/index.asp University of Phoenix. (2004d). Does the online
format provide the same quality of education offered by a traditional campus? Retrieved November 2004 from http://online. phoenix.edu/FAQ.asp#q2
University of Phoenix. (2004e). Will my degree from University of Phoenix be accepted in the business community?Retrieved November 2004 from http://online.phoenix.edu/FAQ. asp#q15 U.S. Bureau of Labor Statistics. (2003a). College
enrollment and work activity of 2002 high school graduates.Retrieved June 25, 2004 from http://www.bls.gov/news.release/hsgec. nr0.htm
U.S. Bureau of Labor Statistics. (2003b). The edi-tor’s desk earnings and educational attainment: Second quarter of 2003 monthly labor review.
Retrieved Spring 2004 from http://www.bls.gov/ opub/ted/2003/jul/wk2/art05.htm
U.S. Department of Education, National Center for Education Statistics. (2003a). Digest of edu-cation statistics 2002, Table 253. Washington, DC: Author.
U.S. Department of Education, National Center for Education Statistics. (2003b). Condition of Edu-cation 2003. Retrieved Spring 2004 from http://nces.ed.gov/programs/coe/2002/analyses/ nontraditional/index.asp
U.S. Department of Education, National Center for Education Statistics. (2003c). Post-secondary quick information system. Retrieved March 7, 2004 from http://nces.ed.gov/surveys/peqis/ publications/2003017/
USNews.com. (2003). Online graduate degree programs. Retrieved November 2004 from http://www.usnews.com/usnews/edu/elearning/ directory/gradonline.htm
Vogelstein, F. (2000). The $85,800 distance degree: Duke’s successful online executive M.B.A. program could start a trend. U.S. News and World Report’s America’s Best Graduate Schools 2000. Retrieved November 2004 from http://www.usnews.com/usnews/edu/beyond/ grad/gbemba.htm
Despite these pieces of indirect evi-dence, the question remains regarding whether employers will value the job candidate with the online degree as much as the candidate with the tradi-tional degree. There is no definitive answer yet to this question. Human resource managers are maintaining a neutral position at this point (Fisher, 2003; Lankford, 2001).
The high-tech MBA degree is evolv-ing. The demand is there, and there are many willing suppliers in this market. It seems likely that there will always be a variety of MBA programs avail-able, ranging from the traditional on-campus program to the strictly online program, as well as all kinds of com-bined programs.
Graduate business education is less than a century old, and this latest techno-logical revolution in higher education is still in its infancy. However, the institu-tional forms that have been developed for this type of education have adapted to new technologies and new environments at an increasingly rapid pace. The demand for knowledgeboth the
cre-ation of that knowledge and its transferis growing. The delivery of
that knowledge will certainly change, and the form of the institutions will nec-essarily respond to those changes.
NOTES
1. At least 37 states have distance-learning high-er education Web sites. A numbhigh-er have some con-sortium of institutions that offer online degree pro-grams. For example, the Kentucky Virtual University offers degrees ranging from associate of arts to master’s degrees, including the MBA (http://www.kcvu.org/). The state of Tennessee offers two programs, the Regents Degree program by the Tennessee Board of Regents (http:// www.tn.regentsdegrees.org) and the University of Tennessee’s New College (http://newcollege. ten-nessee.edu/homepage.htm). Initially, these pro-grams only offer associate’s and bachelor’s degrees.
2. A little arithmetic will indicate that all three charge around $1,460–$1,600 per course.
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