The Role of the Market and Competition in M.B.A. Degree Program Rankings: The Reliability and Validity of Rankings of M.B.A. Programs

Abstract

In light of increasing popularity of rankings of M.B.A. programs among prospective students, employers, and the general public, this dissertation research seeks to explore five ranking systems of full-time M.B.A. programs in the United States: U.S. News & World Report, Bloomberg Businessweek, The Financial Times, The Economist, and Forbes, from four different perspectives. First, the study assesses the quality of the M.B.A. rankings through the lens of the Berlin Principles on Ranking of Higher Education Institutions. Further, the study compares the resulting ranking of M.B.A. rankings, which is based on the objective quality assessment of these ranking systems, with students’ evaluation of the importance of various M.B.A. rankings for their decision to enroll as reported in the 2012 mba.com Prospective Students Survey (Graduate Management Admission Council, 2012b). The finding that only the top two rankings were the same brings into focus the necessity for a better alignment between the two groups. Second, by exploring first-order autocorrelation of the error terms for the four rankings of M.B.A. programs: U.S. News & World Report, Bloomberg Businessweek, The Financial Times, and Forbes, this study demonstrates that methodological changes made to these rankings between 2000 and 2013 have enhanced their reliability in terms of predictability, which suggests that ranking entities have made an effort to improve their methodologies. The results of the correlational analysis of the five M.B.A. ranking systems in the United States across 14 years strongly support the hypothesis about the stability of ranking scores. The examination of convergent and discriminant validity of the Bloomberg Businessweek M.B.A. rankings using multitrait-multioccasion confirmatory factor analysis provided evidence for the validity of measures that are used in the rankings of M.B.A. programs to determine the hypothetical construct of quality of an M.B.A. program. Third, by examining the anchoring effect of rankings and reputation in higher education, this study demonstrates that the current university reputation has a strong impact on the future reputation of its business school. These associations solidified from year to year which suggests practical implications for collaboration between university and business school administrators. Finally, this study explores how M.B.A. rankings affect funding streams to higher education institutions. Disentangling the differential impact of the rank of a business school on R&D funding coming to the university demonstrates positive associations between business school rankings and funding coming from the federal government and nonprofit organizations and negative associations between rankings and funding coming from the state and local government and institutional funds.