A Farewell to Arms Races?

Elite business schools have introduced bold new programs in recent weeks, but college leaders say they're far more driven by mission than competition.

September 25, 2008

When leaders of some of the nation’s premiere business schools rolled out ambitious plans for new programs and expanded facilities in recent weeks, most school officials expected some skepticism. In the rough and tumble rankings game, business programs have in times past been accused of focusing too much on building lavish facilities, and not necessarily building better leaders. They insist, however, that this time it’s different.

“I think competition matters, but we’ve always been wrong when our ambition drove what we did rather than our mission. Always,” said Blair Sheppard, dean of Duke University’s Fuqua School of Business, which just announced a major global expansion into five foreign countries. “So when we’ve built big just to get big it was a mistake. When we’ve built buildings just to keep up with the Joneses, it was a mistake.”

Sheppard, who takes on something of a missionary zeal when discussing Duke's expansion, says the global campus is much more than an attention getter.

“Our job is to prepare students for the world we created for them. We’re not doing it," he said. "That’s a moral issue.”

In addition to Duke’s announcement, several other business schools have signaled significant new initiatives. The Massachusetts Institute of Technology’s Sloan School of Management is starting a new master's in finance program, with an eye toward creating another master's degree in management science. At the University of Pennsylvania’s Wharton School, a combined M.B.A. and law degree is in the works. And, in service to an updated M.B.A. curriculum, Stanford University just broke ground on an entirely new eight-building campus.

Stanford’s new campus will sprawl across 360,000 square feet. The university changed its M.B.A. curriculum last year, focusing on the development of a more “personalized” academic experience that stresses leadership and communication skills. The new facilities will feature small breakout spaces, allowing students to work in teams of six or eight people. In fact, all the new brick and mortar is being laid with overall mission in mind, Stanford officials say.

Dan LeClair , vice president and chief knowledge officer at AACSB International: The Association to Advance Collegiate Schools of Business, said he’s encouraged that recent developments at Stanford and several other elite business schools appear to be mission-driven. While the schools are all under the same pressures to evolve in a changing world, they’re playing to their strengths and taking quite different approaches, he said.

“It’s not really to pander to students. At least that’s my opinion,” said LeClair, whose association accredits business programs. “I think perhaps in the ‘80s -- and to some extent in the ‘90s -- it was driven to some extent by trying to cater to the students, and it was driven by rankings and reputation. But I think there’s something quite a bit deeper going on now.”

One of the chief criticisms of competition among business schools -- and across higher education, for that matter -- is the perception that colleges parrot each others' programs just for the sake of saying they have them, too. LeClair said he's encouraged, however, that the one-upmanship doesn't appear to be happening as much in this round of changes.

Stanford, for instance, isn't itching to move abroad, even if other institutions are making a splash by doing so. Dan Rudolph, senior associate dean at the Stanford, said the university's focus is on teaching students to "get up to speed" quickly on another country, "not to teach them about all the global economies in the world."

“We don’t see anything that other folks are doing that we’re concerned about [in terms of competition]," he said. "We do not think another campus or a long-term exchange program is in our interest. Frankly, our students are not that interested in long-term exchanges or going to an overseas campus.”

Rankings Battles Still Loom Large

While there may be some good reasons for the latest expansions at elite business schools, some still suspect that rankings and prestige are still the key drivers for change.

“There definitely seems to be an arms race among business schools,” said Scott Shrum, author of Your MBA Game Plan: Proven Strategies for Getting Into the Top Business Schools.

Shrum is director of MBA admissions research at Veritas Prep, a GMAT preparation company that also provides admissions consulting to students applying to some of the nation’s most respected business schools. Shrum and his colleague, Chad Troutwine, both note that business schools are developing more niche programs and fervently playing up their global focus.

Photo: Duke University Fuqua School of Business

Performers from various countries were on hand this month to celebrate Duke's new global campus.


“It’s keeping up with the Joneses and ‘We’re more international than you are,’ ” said Troutwine, co-founder and chief executive officer of Veritas Prep.

There’s little doubt that Duke’s international expansion and investment is quite real. In Dubai, London, New Delhi, Shanghai and St. Petersburg, Duke will place new faculty, research centers and technology support personnel. But there are some rather cosmetic marketing efforts as well. Visitors to the school’s Web site, for instance, are sure to notice a weather gauge at the top of the page, which dutifully reports the temperature in Durham, N.C., as well as in the six countries where the campus is expanding.

Niche Programs See Growth

One of the clear areas of growth for business schools is in specialized programs, which include joint degree programs like medicine and business, or niche degrees that go beyond the M.B.A., like a master's of science in finance.

Among the specialized programs that the AACSB accredits each year, about 10 percent are brand new. The AACSB estimates that the specialized programs now grow at a rate of about 2.3 percent a year.

In most cases, specialized programs play to the existing strengths of an institution. The University of Pennsylvania, for instance, is counting on the reputation of its business and law schools to lure students to its combined J.D./M.B.A. degree program.

Peggy Bishop Lane, an administrator at Penn’s Wharton School of Business, said complex regulations -- including the post-Enron reforms of Sarbanes-Oxley -- have created career opportunities for business people with legal savvy.

“It’s true that in business, knowing the law now is becoming more and more important,” said Lane , deputy vice dean for academic affairs in the graduate division of the Wharton School. “Even if you just look at Sarbanes-Oxley, it’s important that you’re not just relying on your legal team.”

So do tomorrow’s business leaders really need law degrees, too? Lane’s not quite ready to say that.

“Rather than the word 'need,' I think the word 'opportunity' is better,” she said.

Like the joint law and business degree at Northwestern University, Pennsylvania’s joint degree program takes three years. Many similar programs, like those at Harvard University and Duke, take four years.

Pursuing a law and M.B.A. degree separately would typically take a student five years, but Lane said she’s confident students can acquire the skills they need in both areas in just three years. She concedes, however, that it may be more difficult for joint degree students to make time for all of the same enriching experiences available to students who pursue a single degree.

“They may not be able to do law review,” Lane said. “They may not be able to take a ton of electives on the law side, outside of corporate law.”

After Long Pause, MIT Launches New Degree

While other business schools have been churning out new degree programs with some regularity, MIT has been -- depending on one’s point of view -- either slow or prudent in its endeavors. The new master's degree in finance at MIT’s Sloan School of Management is the first new degree the school has introduced in 20 years.

Jaing Wang, faculty director for the new MIT program, said the college has actually been hoping to introduce a finance master's for several years. The 2009-10 academic year, however, has proven an opportune time to roll out the new program, he said. The Sloan School expects to have a new building constructed by then, and new faculty should be in place after an aggressive hiring campaign.

While MIT has been waiting for the right time to act, college officials have been feeling pressure from those who said a finance master's should have been introduced sooner, Wang said.

“We do get feedback from industry, because MIT has had a very strong finance tradition,” he said. “We are constantly getting questions like that, given that Berkeley and Carnegie [Mellon] have been offering these programs.”

So how much is competition with those other colleges driving new programs at MIT?

“Certainly we are sort of all competing more or less within the same domain,” Wang said. “But at the same time institutions have their own strengths. For us we’re always trying to build on our strengths and be innovative.”


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