Monday, January 31, 2011

Is an MBA really worth the money?

The Economist challenges the conventional wisdom on the usefulness of an MBA education:
When you look at today’s most evolved business organisms, it is obvious that an MBA is not required for business success. Apple, which recently usurped Microsoft as the world’s largest technology firm (by market capitalisation), has hardly any MBAs among its top ranks. Most of the world’s top hedge funds prefer seasoned traders, engineers and mathematicians, people with insight and programming skills, to MBAs brandishing spreadsheets, the latest two-by-twos and the guilt induced by some watery ethics course.

In the BRIC economies, one sees fortunes being made in the robust manner of the 19th-century American robber barons, with scarcely a nod to the niceties of MBA programmes. The cute stratagems and frameworks taught at business schools become quickly redundant in the hurly-burly of economic change. I’ve often wondered what Li Ka-Shing of Hong Kong or Stanely Ho of Macao, or Rupert Murdoch, for that matter, would make of an MBA programme. They would probably see it for what it is: a business opportunity. And as such, they would focus on the value of investing in it.

They would look at the high cost, and note the tables which show that financial rewards are not evenly distributed among MBAs but tilt heavily to those from the very top programmes who tend to go into finance and consulting. Successful entrepreneurs are as rare among MBAs as they are in the general population.

They would think to themselves that business is fundamentally about two things, innovating and selling, and that most MBA programmes teach neither.
I must disagree with The Economist here. An MBA may not be required for business success, but it does pay more. According to, the average MBA salary is about 45% higher than the average Bachelor of Arts salary. Where you get your MBA does matter a lot, though. For example, the average Duke University MBA pays 80% more than the average University of Phoenix MBA. Also, while it doesn't take an MBA to be a successful entrepreneur, few people are actually entrepreneurs (and few entrepreneurs are actually successful).


  1. The demand for an MBA has become another bubble, just like the university degree in general. When people are pushed by a social expectation to gravitate towards a debt-financed, State-subsidized career track, the cost of attending university (especially graduate level, but even at the undergraduate level) becomes excessive and out of proportion to the actual career benefits or monetary benefits gained.

  2. I have to agree that an MBA decision is based on a lot. I mean, if
    someone truly wants a job that requires an MBA, then it makes sense to
    pursue it. Or if the MBA is relatively inexpensive compared to the new
    salary that is pretty much lined up. But most decisions seem to be made
    on feelings more than the numbers, so it ends up being really personal.