The impact of an MBA on graduate careers
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The impact of an MBA on graduate careers
Yehuda Baruch, University of East Anglia
Maury Peiperl, London Business School
E
ducation is a key element in achieving individual development and life success.
The Master in Business Adminis tration (MBA) degree is a widely accepted
quali® cation in business management, recognised around the globe. As such, it is
expected to lead to enhanced managerial success, though this is not universally accepted.
The aim of this article is to examine the impact of an MBA degree on manageria l
performance and career success.
Though there have been investigations into the effects of MBA studies, most published
reports have focused on the MBA graduates alone. We know of no work published to date
that has compared a population of MBAs with their colleagues who lack simila r
qualifications. This study was undertaken to fill that gap, in order to more accurately
quantify the effect of an MBA on job performance.
The MBA degree arose, in part, to create a base for managerial professionalism and to
provide a conduit for disseminating scienti® c advances resulting from inquiry into the ® eld.
Management is a relatively new academic discipline, with some still questioning whether it
is an academic discipline at all, and management as a profession is in many ways different
from any other. Where there are many vocationally chartered professions such as the law,
medicine and accountancy, the de® nition of the term `manager’ is less clear and there is no
formal or necessary chartered quali® cation in management.
Having an MBA is perceived by many as a passport to senior managerial roles and a `fast
track’ career. Prospective students are typically concerned with acquiring managerial
competencies quickly and ef® ciently, and thus `leapfrogging’ peers and improving career
prospects. Ascher (1984) studied graduates of four leading UK business schools in the early
1980s: Aston, Bradford, London Business School (LBS) and Manchester Business School
(MBS). In that study, the reasons most frequently cited by candidates for undertaking the
MBA course were: improved job opportunities, followed by a wish to change career
direction, obtain general business knowledge, experience intellectual stimulation, improve
earnings and increase self-con® dence. Similar possible motivations are cited by Carnall
(1992): MBA degrees are perceived as a `ticket’ to increased salary, enhanced career progress,
advanced knowledge and skills, and sometimes even as a pre-requisite for joining upper
managerial ranks. Luker, Bowers and Powers (1989) have also cited attaining longer-term
career objectives, including opportunities for advancement and remaining competitive in
the labour market, as important motivations.
Increase in salary can be another important motivating element (MacErlean, 1993).
Forrester (1986), in a study of 1,127 LBS graduates, reported substantial increases in salaries
post-MBA, ranging from 24-45 per cent above pre-MBA salaries. More recent surveys, mainly
of managers undertaking part-time MBA programmes, conducted by the UK Association of
MBAs (Scho® eld, 1996) found that within 18 months, half of MBA graduates were promoted
and half of those were promoted more than one step up. Hawksley (1996) reported that the
most cited reason (88 per cent) for undertaking an MBA was improving job opportunities.
HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 69The impact of an MBA on graduate careers
However, it is not clear whether, or to what extent, MBA graduates are actually better
suited for management roles than their counterparts. Studies have looked at the question of
whether an MBA adds value to the graduate, and if so, in what terms. Boyatzis and Renio
(1989) indicate some positive attributes gained from MBA studies, such as adaptive,
analytical and entrepreneurial skills. However, no direct answer has yet been provided as to
the precise dimension or quality of an MBAs performance over others and there have
always been those who question the real value to the organisation of an MBA quali® cation.
Additionally, whereas in the past MBA graduates were few and far between, and in most
cases the relative rarity of the quali® cation meant that having an MBA almost guaranteed
top level jobs, especially if gained from a leading business school, in some industries MBA
quali® cations have now become almost a pre-requisite for managerial positions (Finney,
1996). This is true for both genders. Apart from demographic characteristics (eg age), the
most crucial element included in the typical portrait of a female executive was the
acquisition of an MBA (Crittenden, 1996). Having an MBA can work against gender
discrimination for managerial positions, by causing the graduate to be perceived as a
quali® ed professional (Leeming and Baruch, 1998).
This brings us to the roots of the concept and the aims of the MBA. Historically, the idea
of MBA studies originated in the US at the beginning of this century, as pioneers such as
Alfred Sloan ® rst tried to bring scienti® c inquiry and an increased professionalism to the
practice of management. The UK followed suit only in the second half of the century with
the establishment of LBS and MBS, whereas in some European countries (eg Germany) the
MBA has still not been established as a recognised qualification. However, for North
Americans, many Western Europeans and many in the Far East, an MBA is associated with
the creation of a social identity as a professional manager.
An MBA may also confer greater mobility on its owners. The popular image of MBA
graduates as job hopping opportunists has not been suppported in the research (Dougherty,
Dreher and Whitely, 1993). Still, the potential labour market value of an MBA degree could
be seen as enabling more career moves and this may, for some graduates, be an aim in itself.
In sum, the aims of an MBA education would seem to `add value’ to graduates, giving
them business-related knowledge and managerial skills, improving their employability,
career advancement and remuneration, and providing a professional credential relevant to
both employer and employee. Other `side bene® ts’ include entry into valuable networks of
alumni and associated organisations and, in the case of full-time studies, a career break
during which to re¯ ect on personal goals and paths.
THEORETICAL FRAMEWORKS
Three streams of research have particular relevance for understanding the possible effects of
MBA studies: social identity, performance and competencies. We consider each below,
including a section on the prevalence of the MBA which links the ® rst two streams.
Social identity
Social identity theory was introduced to the behavioural sciences by Turner (1975) and Tajfel
(1981), and may provide a useful context for understanding the role and perception of an
MBA. This theory deals with the issues of social comparisons and social identity, both of
which play an important role in the choice and pursuit of a career. People need recognition
and respect, and professionalism provides both to those who are active in a recognised ® eld.
Partly as a result of a recognised quali® cation and set of standards, medical doctors, lawyers
70 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School
and accountants gain recognition and status from association with their profession. For
management to be perceived as a profession as well, an advanced degree in management,
established at the postgraduate level alongside other professional schools, is necessary, and
MBA programmes may at least in part be seen as ® lling a gap by providing managers with
an enhanced social identity.
Social identity as a concept continues to gain interest and is the subject of much current
research (Turner, 1999). The theory re¯ ects individual social identity both as a person and as
part of a network (White, 1992). Acquiring an MBA has implications at both levels ± the
network in particular can refer to the professional group in general or the speci® c alumni
network, which, in the case of leading schools, can be powerful. This distinction was also
mentioned by Jenkins (1996) when he differentiateed between self-image and public image.
As well as granting professional status to the individual, the MBA provides a parallel
benefit to the organisation. It also provides employers with external prior `vetting’ of
applicants as well as a `guarantee’ of standards in the level and scope of training, though
there is a great deal of variety in terms of academic achievements and curriculum among
MBA programmes. Thus, for an individual, the MBA can be the way to gain needed
knowledge, access the right network and an accepted certi® cate of intellectual credibility.
A question may arise: are there compelling reasons why this standard `professional’
quali® cation should be at the graduate level? Starting with management or business studies,
as an undergraduate, is still not perceived as the best choice. Among the top US universities,
very few offer undergraduate majors in business studies, preferring instead a generalist
academic training. There is also an argument that graduates of business studies are a better ® t
with an `ideal’ career pattern of general arts or science training, followed by a few years work
experience and professional training to prepare for roles in upper management.
Management education and MBA programmes are now spreading rapidly beyond their
established position in North America. In the Far East ® gures are rising sharply, led by Hong
Kong (six local universities offer an MBA or similar programmes), Singapore (with some 40
MBA programmes), and also Japan (Ishida, 1997). A similar picture is emerging in the UK.
According to Forrester (1986) there were 27 UK business/management schools in 1985, 20 of
which offered an MBA programme, and which produced roughly 1,200 graduates. By 1991,
the Financial Times suggested there were 113 providers of MBA programmes in the UK
(cited in Carnall, 1992), and Hegarty (1996) reported that numbers of graduates were also
growing steadily (from 4,080 graduates in 1990 to 6,714 in 1994). According to the 1998
Association of MBAs survey (AMBA, 1998), the ® gure has risen to 9,117 granted by 116
different MBA programmes in the UK.
How many MBA graduates are needed? As a top-end estimate, if we assume each
managerial post should be ® lled by an MBA graduate, current numbers are far below the
need. Linden (1992) reports some 75,000 MBA graduates are entering the US labour market
each year. Given a US workforce of about 150 million employees, the estimated number for
the managerial workforce is 15 million (some 10 per cent), and assuming for about a three
per cent yearly retirement, we need almost half a million a year just to replace managers
leaving. On top of this ® gure we can add those non-MBA managers who may wish to gain
the quali® cation for various reasons (see below). The gap is clear. The respective ® gures for
the UK (ONS, 1998) depict a similar picture (with 26 million employees, three percent of the
estimated managerial workforce amounts to some 75,000 while the MBA input is less than
10,000 graduates a year). On the other hand, the MBA is usually directed towards a white
collar business environment, and for other sectors different managerial education may be
HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 71The impact of an MBA on graduate careers
more appropriate. There are virtually no MBAs in construction, transportation or mining, for
example, and just a few in the manufacturing industry. Most MBAs operate in ® nancial
institutions, consultancy (eg the Big Five), or other service industries such as marketing, but
not very much, for example, in health services. For other industries or jobs a more speci® c
MA level quali® cation may indeed be the norm, such as is the case in the hotel industry
(MHM), social work (MSW) and health (MD, MPH).
Performance
Given this rapid expansion in business and management schools and MBA graduate
numbers, it is important to understand whether and how graduate management
education makes better managers. Although it is widely agreed and accepted that the
effect of training should be evaluated, this is a complex task which remains largely
unaddressed by the literature. To address it, we need to decide what should be viewed as
`better’. The ® rst aspect should be performance or managerial effectiveness.
If it were possible, a simple measurement of output should be the best way to measure
performance or effectiveness. In practice such direct measurement is never easy and at
the managerial level it is never clear; performance is hard to measure and differences
may be attributed to a variety of factor s. Th e mos t common meas ure used in
organisational settings is performance appraisal (PA). The validity and reliability of such
measures has been questioned and is limited (Weekley and Gier, 1989) but under certain
circumstances formal organisational PA results (self-reported and direct manager PA) can
be useful. Self-appraisal has also been validated in several studies (Lane and Herriot,
1990; Baruch, 1996). Even though self-appraisals may be subject to bias, self-reported
performance indicators have been found to relate to performance outcomes and, in
particular, may serve as a basis for triangulation with other measures (Atwater, Ostroff,
Yammarino and Fleenor, 1998).
While it is desirable to compare MBA and non-MBA managers across a number of
organisational populations, measuring performance is not a straightforward task,
especially when using questionnaires to gather data on a large and diverse sample. It is
extremely difficult to collect accurate information about performance and effectiveness
bearing in mind that managers are engaged in a wide variety of occupations, jobs and
roles. Given this, using a single measure of performance or effectiveness is not feasible.
Rather than look at performance directly, our approach was to examine the self-esteem and
self-ef® cacy of the respondents.
Self-efficacy is a person’ s belief in his or her own capacity to perform a task. The
concept was ® rst articulated by Bandura (1977, 1982, 1986, 1997) and has inspired much
discussion and research. Self-ef® cacy has repeatedly been shown to be an antecedent of
performance in organisational settings (Earley, 1994; Cole and Hopkins, 1995; Eden and
Zuk, 1995; London and Smither, 1995; Kirkpatrick and Locke, 1996; Gardner and Pierce,
1998). Self-efficacy also strongly predicts self-rating (Lane and Herriot, 1990) but, in
general, the literature provides strong evidence of a high degree of correlation between
ef® cacy perceptions and subsequent performance (Gist, 1987). Moreover, enhancing self-
ef® cacy can lead to increases in performance (Gist and Mitchell, 1992).
The concept of a self-ful® lling prophecy effect was ® rst introduced into behavioural and
management studies literature by Merton (1949, 1968). It could be, and in many studies has
been, the effect of an initially false definition of the situation evoking a new behaviour
which makes the original (false) conception come true (Merton, 1968). A more managerially
relevant concept is the Pygmalion effect (Eden, 1984) which is the enhanced performance
72 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School displayed by subordinates of whom supervisors expect more, although this is less the case for women (Dvir, Eden and Banjo, 1995). This effect may also apply to self-evaluation. The design of the present study did not allow exploration of whether a self-ful® lling prophecy might have an effect on MBA performance and career outcomes. It might be expected that if individuals perceived themselves as being `better ’, or their managers expected them to perform better, this would result in better performance (Eden, 1990). From our viewpoint, even if some ® ndings could be explained as a Pygmalion effect or the result of a self-fulfilling prophecy, what matters is the presence of a positive effect. Although this would prove an interesting topic for further analysis ± if MBAs outperform their colleagues whatever the mechanism, organisations can reap the bene® ts. Competencies When hiring, and increasingly when determining promotions, organisations usually look at a combination of candidates’ skills, abilities, qualities and competencies. Some competencies are considered more important than others, notably interpersona l and communication skills, and initiative (Down and Liedtka, 1994). On the other hand, formal qualifications are also perceived as important ± employers are looking for valid indications of a potential employee’ s competencies. With EEO regulations and legal issues penetrating the selection process (eg the employer might find he/she needs to prove that the selection processes are not discriminatory), the importance of an MBA as one of the few formal qualifications in management is likely to continue. More broadly, Kane (1993) has pointed out that the impact of an MBA qualification in recruitment decisions is increasing. Boyatzis (1982) integrated former research findings to suggest a general framework of competencies. Boyatzis and Renio (1989) were among the first to acknowledge the importance of competencies, and to study them in an MBA context, although with limited success ± the competencies they identified had only marginal impact on outcomes. Burgoyne (1993) addressed what he saw as an oversimplification inherent in the compentence movement and proposed a three dimensional theoretical framework, including a practical/theoretical dimension, which we incorporate below, for mapping the competencies debate. Studies on man ag erial competen cies sh ow that there are certain cognitive, interpersonal, personal and motivational competencies which under certain conditions differentiate the more effective from the less effective managers (Cockerill, Hunt and Schroder, 1995). Athey and Orth (1999: 216) define competencies as ’a set of observable performance dimensions, including knowledge, skills, attitudes and behaviours, as well as collective team, process and organisational capabilities, that are linked to high performance and provide the organisation with sustainable competitive advantage’ . This takes the framework of competencies from the individual level to the team and organisational level. Originated by McClelland (1973), the competency framework focused on what people can do to be succesful and effective in their roles. McClelland also posited that competencies could be learned and developed. Thus, we can ask whether, and to what extent, MBA training can influence this development. Fortunately, there is substantial agreement among both practitioners and academics (Boyatzis, 1982; Kotter, 1988; Schroder, 1989; Cockerill, Hunt and Schroeder, 1995; Davis et al, 1996; Vicere, 1998) regarding the competencies that senior managers should develop, and the hypothesis of this article is based in part on this consensus. HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 73
The impact of an MBA on graduate careers
Hypotheses
Given the above discussion, we propose one overall hypothesis: namely that the MBA will
have a positive effect in achieving its intended aims. Speci® cally, gaining an MBA will:
· provide graduates with business-related knowledge and managerial skills
· enhance performance as a manager
· improve employability, ie enhance one’s ability to ® nd and keep a job
· promote career advancement
· lead to increased remuneration, either directly or through access to a fast-track promotion
path
· enable graduates to make career changes, eg from functional specialty to general
management
METHODOLOGY
To test the above hypotheses we compared MBA graduates with non-MBA graduates,
using matched samples in several organisations. The study took the form of a survey
questionnaire, sent to managers employed in four firms. These were the UK branch of a
large multinational accountancy firm (one of the Big Five), two well-known financial
institutions, one operating in the city of London, the other a multinational insurance
company with headquarters outside London, and a large retail chain with large-scale
operations in the UK (as well as European subsidiaries, although the participating
managers were all based in the London headquarters). This sample of organisations
enabled us to compare several successful blue chip companies, in both business to
business and consumer industries. These industries represent fields of work in which an
MBA may be perceived as releva nt to performance, unlike, for example, certain
traditional areas such as medicine, law or education.
In each company the HR manager was asked to distribute the questionnaires to
employees in two populations ± managers with an MBA and other managers, working
in similar positions, who did not have an MBA qualification. Th e second group
comprised a random stratified sample: for each questionnaire sent to an MBA manager,
two questionnaires were sent to managers randomly sampled from the population in
similar positions. The questionnaires were anonymous to the researchers, but included
a code number. For ea ch code number, the H R manager w as asked to provide
information on the performance, salary, position, age and gender of the respondents.
Elements of performance appraisal such as commitment and job involvement were also
uncovered in the questionnaire.
The procedure describ ed above generated a unique opportunity to answer some
questions by allowing for a general evaluation of MBA graduates versus others. Table 1
gives information about the two matched samples in the study. The questionnaire was
designed to explore the perceptions, the careers and educational background, and in
particular the competencies, of individuals in the two groups. Work attitudes were also
studied. One hundred and eighty six managers responded; this shows a 62 per cent
response rate, which is considered relatively high (Baruch, 1999). Fifty seven of the
respondendents (30 per cent) had an MBA. Seventy seven per cent of those who answered
the questionnaire were male, re¯ ecting participation in MBA programmes in general. The
average age of respondents to the questionnaire was 35.2 years (SD=5.6).
74 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School
TABLE 1 The participants and matching the samples
Company 1 (Big 5) 2 (City) 3 (Ins.) 4 (Retail)
MBA Non MBA Non MBA Non MBA Non
Number of 24 28 12 13 8 23 15 67
participants
Age 35.4 38.0 34.1 33.8 35.3 32.8 na na
Salary (in £000 56.3 68.5 *61.7 56.5 33.9 20.0* na na
per annum) (20.9) (15.6) (31.9) (26.1) (7.6) (5.7)
PA (1-5 scale) 2.38 2.00 2.3 2.3 na na na na
DMPA (1-7 scale) 4.7 4.3 na na 4.9 5.0 5.2 4.9
Devel (1-7 scale) 5.2 5.7* 4.4 4.5 1.5 3.4* 7.8 7.3
OC1 (1-7 scale) 4.1 4.4 4.1 5.3* 4.5 3.3 4.4 5.0
OC2 (1-7 scale) 2.2 2.4 3.5 2.6 3.4 3.7 2.8 3.6*
JI (1-7 scale) 4.5 4.4 4.8 4.9 4.7 3.8* 4.8 4.7
JS (1-7 scale) 5.1 5.1 5.1 5.8* 4.9 4.4 5.4 5.2
OS (1-7 scale) 4.3 4.1 4.3 5.0 4.0 2.9* 4.0 4.1
TL (1-7scale) 2.7 2.7 2.9 2.3 2.3 4.0 3.2 2.6*
*signi® cant difference (a < .05) between MBAs and others in each company.
na ± not provided/unavailable
PA ± performance appraisal
DMPA ± direct manager performance appraisal
OC ± organisational commitment
JI ± job involvement
JS ± job satisfaction
OS ± organisational satisfaction
TL ± tendency to leave
In the questionnaire the participants were asked questions relating to their formal
education, without any direct indication that the study was designed to measure the
impact of an MBA. They were asked about their formal studies, their perception of
how well these provided them with a relevant preparation for working life and how
well they were progressing in their careers. In order to do this, the questionnaire
included a list of 18 competencies and skills which may be affected by MBA studies.
This was drawn from the literature (Table 2) and further developed through several
focus groups with MBA graduates and a brainstorming session with a number of
colleagues with relevant industrial experience. The final list includes, among others,
skills such as time management, research and accountancy skills, working in teams,
decision-making, self-confidence, interpersona l skills and managing others. The full
list of all 18 skills appears in Table 3. The participants were asked to evaluate their
competence in these skills and the extent to which the studies contributed to their
pers onal development by improving these skills. Elsew here in the question naire
participants were asked whether they were considering studying for an MBA, or, if
they had already enrolled in or completed an MBA, for their perceptions of the impact
the programme had on their career.
HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 75The impact of an MBA on graduate careers
The results are based on self-reporting. These may not be ideal measures, but the use of
questionnaire research in the behavioural sciences is already well established. With careful
preparation one can successfully triangulate between self-assessment and other sources of
evaluation (Bernardin, Kane, Ross, Spina and Johnson, 1995; Baruch, 1996; Atwater et al,
1998). The reliability of variables in this study have been examined in past studies and
found to be comprehensive for the measures used (see Appendix). Measures used were:
· job involvement (Buchanan, 1974),
· job and organisational satisfaction (Hackman and Oldham, 1975), and
· career future perception (Smith, 1976) ;
· affective commitment and continuance commitment (Allen and Meyer, 1990) and
· tendency to Leave (Kirschenbaum and Weisberg, 1990).
Table 2 presents the results of a comparative analysis exploring the differences between
MBA graduates and other managers on the various dimensions and work attitudes studied.
TABLE 2 T-Test comparisons between the MBAs and other managers
Variable MBAs Others P value
Age 35.00 35.16 ns
Salary 53.90 49.08 ns
Direct manager PA 4.91 4.83 ns
Self PA 4.12 3.94 ns
Organisation evaluation 2.33 2.13 ns
Highest level anticipated 5.13 6.04 **
Affective commitment OC1 4.24 4.65 *
Continuance commitment OC2 2.78 3.25 **
Job involvement 4.65 4.53 ns
Job satisfaction 5.17 5.12 ns
Organisational satisfaction 4.19 4.0 ns
Tendency to leave 2.81 2.83 ns
Future career perception 3.75 3.55 ns
ns ± non-signi® cant difference
*a < .1
**a < .05
***a < .001
Note: OC1 and OC2 are based on Allen and Meyer (1990).
Three groups of variables were identified and the results clustered as follows:
· organisational variables, including formal performance evaluations, salary and more
general evaluations from HR managers, where no significant differences were found
between the two populations.
· attitudes about the future, with statistically significant differences; MBAs anticipated
attaining less senior final positions in their organisation and showed lower levels of
commitment, both affective and continuance, although they showed a slightly higher
(ns) evaluation for their future career potential.
· work and career attitudes, with no signif icant differences on dimension s of job
involvement, job satisfaction and tendency to leave.
76 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School
TABLE 3 Differences in competencies
Perceived compencies Perceived contribution
of studies
MBAs (+) Others Sig MBAs Others Sig
1. Effective reading 5.32 (5.22) 4.93 ** 4.93 4.45 **
2. Oral presentations 5.21 (5.18) 4.83 ** 4.04 2.68 ***
3. Written presentations 5.54 (5.52) 5.04 *** 5.25 4.19 ***
4. Time management 5.05 (4.83) 4.4 *** 3.91 2.78 ***
5. Interviewing 4.75 (4.69) 4.56 ns 3.14 2.07 ***
6. Financial skills 4.89 4.35 *** 4.64 3.00 ***
7. Managing change 5.25 4.89 ** 4.25 2.52 ***
8. Stress management 4.54 (4.72) 4.36 ns 3.28 2.55 ***
9. Career management 4.52 (4.72) 4.03 ** 3.18 2.26 ***
10. Research skills 5.07 (4.94) 4.49 *** 5.05 4.15 ***
11. Accountancy skills 4.02 3.27 *** 4.02 2.69 ***
12. Working in teams 5.40 5.14 ns 4.02 3.50 *
13. Negotiating skills 4.75 (4.71) 4.55 ns 3.35 2.39 ***
14. Self con® dence 5.33 5.01 * 4.39 3.38 **
15. Decision making 5.51 5.28 ** 4.21 3.38 ***
16. Interpersonal skills 5.18 5.09 ns 3.91 3.55 ns
17. Abstract thinking 4.91 4.58 ns 4.68 3.75 ***
18. Managing others 5.12 5.02 ns 3.49 2.61 ***
Mean all (CMPT) 5.03 4.66 ***
ns ± non-signi® cant difference
*a < .1 ,
**a < .05
***a < .001
Note: In another study (Baruch, 1996), a list comprising some of these competencies was given to
MBA alumni from another leading business school. Their results, presented in the (+), are very much
similar to the present study. This indicates that our sample of MBAs share the level of perception of
own competencies with the wider MBAs population.
The findings presented in Table 3 are unique in the sense that they provide strong
support for the notion that MBA studies fulfil the aim of improving gr aduates’
competencies. This may occur through the increase of self-efficacy or self-esteem,
through other mediators or directly from the studies. Although the present study
cannot provide a way to measure how the impact was gained, it certainly indicates
meaningful differences, which are also positive for all, and statistically significant for
most, of the competencies under study. Some of these competencies are concerned with
specific `hard’ skills (eg financial, research and accounting) whereas others are more
related to genera l managerial qualities (eg presentation skills, career management,
working in teams and decision making). These competencies ± qualities, skills and
abilities ± are sought by managers and appear to be crucial antecedents for success in
managerial careers.
HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 77The impact of an MBA on graduate careers
To test whether the original list of 18 competencies was comprehensive we asked the
respondents to add any competencies they believed to be relevant, which had not been
shown on the list. Table 4 indicates that apart from a few exceptions, the original list
indeed covered the most relevant items. As for the others nominated, some could be
perceived as merely slogans (eg `not giving up’ , `value for money’ or `maturity of
judgement’ ) and others were covered in the list under a different title (eg managing
change or managing others).
TABLE 4 Competencies not on the list, added by the respondents
Competencies/skills mentioned more than once Number of times
mentioned
Breadth of vision, long term plans, strategic planning 9
Marketing/selling 7
Coaching skills/counselling/facilitating 4
Business awareness/industry knowledge 4
IT skills 3
In¯ uencing skills/implementing change 2
Personal development/self-understanding 2
Organisational development/understand other organisations 2
Innovation and creativity 2
Political sensitivity/awareness 2
Maturity of judgement 2
Analytical ability 2
Empowerment; Delegation; Flexibility; Understanding others; once
Listening skills; Psychology; Tolerance; Independent skills; each
Project management; Training design; Cross-functional management;
Conceptual thinking; Dress sense; Not giving up; Motivation;
Quantitative analysis; Setting objectives; Delivering quality;
Value for money; Organising teams; Leadership
Correlation among the variables under study
Two indications emerge from the correlations presented in Table 5. The first is the
similarity of our findings to those of former studies which focused on work attitudes
and related measures (eg positive association between job satisfaction, organisational
satisfaction, job involvement and organisational commitment, and negative between
these and the tendency to leave (Cohen, 1992; Weisberg and Kirshenbaum, 1993; Lynn,
Cao and Horn, 1996). Such replication of findings provides additional support for the
validity of the present study. The second element is the positive association between
the aggregate measure of competencies on the one hand and various work attitudes,
salary and perform ance appra isal on the other. It appears that the managerial
competencies under study here are strongly associated with variables which are of
extreme importance for managerial career success. The presence of an MBA signals a
s ig n if ic an t an d m ean ing ful d ifferen ce bet w een th e p o p ulatio ns a lon g th es e
competencies, and this suggests at lea st on e w ay in w h ich M BA s tud ies may
contribute to the success of graduates.
78 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School
TABLE 5 Correlation among the research variables
DMPA OC JI JS OS TL Age CMPT
Salary -.14 .26* .39** .21* .24 -.26* .37** .35**
DMPA .18* .13 .23* .17* -.13 -.11 .17*
OC .49** .52** .56** -.50** .09 .24**
JI .26** .33** -.22** .14 .15*
JS .75** -.62** .04 .17*
OS -.60** -.07 .18**
TL .03 -.11
Age .23*
DMPA ± direct manager performance appraisal
OC ± organisational commitment
JI ± job involvement
JS ± job satisfaction
OS ± organisational satisfaction
TL ± tendency to leave
CMPT ± mean value of the competencies set
Studying for an MBA
A question of interest to business schools is whether a practicing manager without an
MBA might consider pursuing the degree. The reasons such managers give for doing or
not doing so should be seriously considered by the educational sector. To explore this
issue, participants were asked: ’if you have not studied for an MBA, do you plan to have
an MBA in the future?’ This was followed by an open ended question about the reasons
for the subjects’ choice.
We expected 130 replies, but in the end had 135, thus five MBA graduates, or possibly
near graduates, replied too. Of these 135, a total of 109 graduates said no, they would
not consider studying for a degree. Seventeen said yes, and nine said maybe (of which
five indicated a `positive’ maybe and four a `negative’ maybe). This volume of data
enabled us to use a content analysis, conducted by hand, according to the principles
identified by Glazer and Strauss (1967), Kirppendorff (1989) and Bryman (1989). Those
answering yes were asked: `please specify your aims and expectations from having an
MBA.’ The 22 who resp onded positively (17 yes and five `positive’ maybe) were
examined and categorised by response. This produced the three following categories,
with some subjects appearing in more than one category:
· promotability, improve career prospects ± nine responses
· improve managerial competencies ± eight responses
· self-development ± seven responses
Those answering no were asked to indicate their reasons. One hundred and thirteen
people (109 no plus 4 `negative’ maybe) provided no less than 184 reasons. These were
content analysed and divided into categories such as lack of time, or lack of relevance to
work or career, having had enough of studying in the past or valuing work experience
over studying. The results are presented in Table 6.
HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 79Article title in hereThe impact of an MBA on graduate careers
TABLE 6 Reasons provided for `no’ answer
Reason Number of responses
Time 45
No relevance to work/career 21
Too old/retiring 17: 12-age*
2: retiring
3: `career stage’
No added value 15
Need other studies 13
Family 12
Had too much studies 11
No interest or other interests 11
Experience is what need 8
Cost 6
Cost-effectiveness 5
Other: 7: just says `no’
3: company attitudes
10: single reasons, eg health, not
graduate, working mother...
*of those mentioning age: 36, 40, 44, 50. The rest just said age or too late.
TABLE 7 Reasons for or against getting an MBA in future:
Plan to study for an MBA Do not plan to study for an MBA
Develop a wider perspective of the business The costs far outweigh the bene® ts; not
world; improve my management skills;. encouraged by the ® rm ± focus not on career
Broaden knowledge of business; development; little increased return in terms of
(get) rounded business awareness; rewards; can’t see the value; questionable value;
enhanced career prospects; increase job I do not believe it would in¯ uence my career
mobility, improve promotion chances value prospects. I believe the standing of sponsored
within present ® rm; enhanced career MBAs are questionable outside of...
progression (external to as well as internal);
external contacts; expand management Experience makes up for not studying; not
potential. as valuable as my experience; what would I need
an MBA for (young partner in a Big Five
Intellectual stimulus/satisfaction. company)? I do not believe that it adds value to
Keep the brain `in gear’. the experience already gained.
Fed up with sudying! Lack of desire. Other
interests; cannot afford the commitment in time
Other family priorities; At the age of 37 I have no
inclination for further study. I am 40,
happily married with teenage children. I want to
spend more time with my family.
80 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School
DISCUSSION
The question that stimulated the present study was whether an MBA quali® cation adds
value to individuals, leading to the MBA being valued by organisations. The answer to this
question is important as more and more organisations work in a competitive environment,
trying to maximise their effectiveness. It is not merely a cliché that people are the most
important assets of organisations and that organisations must invest in people. Should MBA
graduates be the target for managerial recruitment? Should organisations sponsor MBA
studies for promising managers? Or is the MBA no more than a piece of paper, which cannot
indicate managerial competence? The research on MBA studies has led to the common
notion that MBAs acquire certain qualities during studies but the research design in most
previous studies has been similar, characterised by lack of comparative analysis, with no
control group to represent non-MBA managers (eg O’Reilly and Chatman, 1994). Further,
several studies were conducted using alumni of top business schools only, which cannot be
used to generalise the full population of MBAs.
The MBA graduates in the pres en t study came from a variety of busines s and
management schools and held a variety of managerial posts in four business organisations.
The MBA graduates were found to have a higher level of self-ef® cacy than their non-MBA
counterparts, which, according to the literature, leads to better performance (Bandura, 1986;
Gist, 1987; London and Smither, 1995; Cole and Hopkins, 1995; Kirkpatric and Locke, 1996).
They were not found, however, to be different in most work attitudes, performance
evaluation or salary, perhaps due to internal organisational rules; for instance there was
similarity in payment for certain managerial levels. Therefore, the results demonstrate, but
only in part, that the acquisition of an MBA is a preferred choice for managers, and sending
promising managers for MBA studies could result in positive outcomes for organisations.
Looking closely at our set of hypotheses, the study strongly supports the notion that the
MBA does contribute to the graduate’s competencies, though no direct support was found
for higher levels of remuneration. The MBAs perceived themselves to be better on the set of
18 managerial competencies than the non-MBAs. Such differences indicate a higher level of
self-ef® cacy among the MBAs.
Both MBAs and control subjects had attained similar levels in the organisational
hierarchy The commonly held belief is that MBA graduates will ® nd their way on to the
fast track. This has been supported by several studies which looked exclusively at MBA
graduates. Our sample was drawn a priori at the same hierarchical level, and thus the
only indication of faster development would be if the MBAs had `gotten there’ earlier, ie
at a younger age. The age however was similar for the two groups. This does not support
the `fast track’ perception, but on the other hand, even the similarity suggests that a
career gap of one or two years off the track to complete MBA studies does not result in a
loss of career momentum. This gap was also closed in a relatively short time ± the
average age of the sample was 35.
MBAs showed a lower expected level of ® nal position within the organisation There
could be at least two possible explanations for this. First, MBA graduates may have a
more realistic perception of their future career prospects. Another possibility is that MBA
graduates have a different career model, do not intend to stay as long in their present
organisation, and thus do not see themselves getting as far up the ladder. The second
explanation is somewhat supported by the lower level of continuance commitment
shown by the MBAs.
HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 81The impact of an MBA on graduate careers Both groups had similar salaries Some similarity in salaries might have been expected, as the paired samples design meant that differences in salaries were to a degree masked by the fact that the two groups were largely in the same position. Th is was further complicated by the fact that the retail ® rm would not report salary information. However, there were salary differences in the other ® rms, which give rise to differing interpretations. In the two ® nancial ® rms, MBAs did earn higher salaries but in the accounting ® rm they earned lower salaries, perhaps due to the similarly high status in such firms of those holding accounting degrees. Without additional data it would be impossible to resolve this question; still, salaries were related to competencies (see below) and competencies were higher for the MBAs than the non-MBAs. There was no difference between the groups on tendency to leave Although in this study there was no difference between the two groups on this dimension, the MBAs’ affective and continuance commitment were lower than those of the others. A widely held belief concerning MBA graduates is that they change jobs frequently (De Pasquale and Lange, 1971). Recent evidence indicates this is not necessarily the case (Dougherty, Dreher and Whitely, 1993). Thus the tendency to leave might be affected more by perceptions of the external labour market and less by having an MBA. One repeated criticism levelled at MBA graduates is their lack of organisational loyalty. The lack of a difference between the groups with a tendency to leave may indicate an interesting wider shift; it may be that with the disappearance of the `job-for-life’ and the consequent job insecurity, the `Protean Career’ model (Hall, 1976, 1996) has spread beyond the domain of the MBA to affect managers generally. Some evidence was found for a `top schools’ effect on income and mobility In the course of the study we began to ® nd that subjects were divided clearly between MBAs from the so- called `elite’ schools and others. There is a large differential in the economic value of an MBA from a `top’ business school, and a great deal of attention is paid to `league tables’ by schools, prospective students and recruiting firms. With very few in this sample (n=9) coming from universities ranked at the top of these tables (eg London Business School, Wharton, INSEAD), comparisons did not show signi® cant differences, apart from higher salaries (£74,000, sd 38,000 v £51,000, sd 21,000) and higher tendency to leave (3.4, sd 2.3 v 2.,7 sd 1.4) for the graduates of the top business schools (based on a recent research assessment exercise in the UK and on the Business Week list for overseas business schools). The Impact of an MBA On all elements the MBAs’ perceived competency levels were higher than those of the others. This difference was statistically signi® cant for 11 of the 18 items in Table 3. As for the contribution of individuals’ studies to the competencies, the picture was similar but much stronger. MBAs perceived a much higher level of contribution and in only one case was the difference non-signi® cant. The relationship of average competency with salary, satisfactions and performance appraisal (Table 5) suggests that the impact of an MBA may go much further than we have directly shown. There are, however, other possible explanations. It is possible, for example, that MBAs get more attention than non-MBAs when appraisals and rewards are decided. It may be that those who evaluate and reward managers with MBAs are more likely to ensure that their performance is rewarded, perhaps because of a fear that, otherwise, they would be faster than others to leave. If so, then this would indicate a kind of `reputation effect’ of an MBA on career outcomes. 82 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2
Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School
In addition to the results reported above, MBA graduates were asked to indicate their
aims in pursuing an MBA and the extent to which these aims had been fulfilled. This
measure was positively correlated with several work attitude outcomes such as job
involvement, job satisfaction and organisational satisfaction.
MBAs’ overall future career expectations were somewhat higher that those of non-MBAs.
The interesting ® nding of a lower level of `career prospects for highest position expected’
among the MBAs in their current organisations may be explained, given their lower level of
commitment, by the idea that these managers do not see their future with their present
employer. Subsequently they do not expect to get into top positions in that specific
organisation but this does not mean that they do not expect to be high ¯ yers elsewhere.
The MBA, as an advanced academic degree in management, is perceived by many to be a
passport to the managerial ranks in or across companies, or as the means to accomplish a
career move, either internal or external. It increases employability and looks good on a CV,
as long as one is looking for a managerial career. Otherwise it may make its holder appear
overquali® ed, in particular for non-managerial positions which are sometimes a necessary
stage in organisations which draw their managerial cadre from internal labour markets.
The MBA was found, by those in our sample who held the degree, to be an exceptionally
positive learning exercise, comprised of several aspects such as intellectual stimulation,
knowledge gains, exposure to a wide variety of business situations and cultural exchange.
As a side effect, MBA studies, especially in a reputable institution, can serve as a vehicle for
the creation and maintenance of a valuable network. Finally, if acquired from an elite
business school, the MBA quali® cation may also have a positive effect on remuneration.
Our data suggests that MBAs go through a powerful process of self-development.
Having an MBA was shown to correlate with higher self-con® dence, self-esteem and self-
efficacy ± all demonstrated antecedents to performance and career success (Gist and
Mitchell, 1992). Of course, we cannot prove that these things were caused by the MBA rather
than by other characteristics of the individuals themselves , nor can we exclude the
possibility of a `self-ful® lling prophecy’ effect.
Still, those undertaking MBA studies should have realistic expectations. Although the
advantages of an MBA are tangible, the degree may not always live up to its reputation,
especially in terms of its ® nancial return on investment. The MBA may increase managerial
competencies and enhance self-esteem, but in this study at least there was no compelling
evidence of higher compensation or even recovery of one’s investment. There was, however,
a signi® cant relationship between the overall average of (self-reported) competencies and
such career outcomes as salary level, satisfaction and supervisor ’s performance appraisal.
An MBA may help a graduate to get the job, but once there it is entirely up to the individual
to perform to expectations, which will likely be higher on the basis of the advanced
quali® cation. Still, in this study, individuals who rated themselves high on the overall set of
competencies did perform well and could expect to be recognised for it.
Employing MBAs can serve organisations well. Graduates perceive themselves to be
better equipped to deal with management challenges and may be more ready to take
responsibility without explicit direction, although there may also be risks in them doing so
if their knowledge and experience are not adequate to the task. They tend to have a variety
of experience, although they are not necessarily job hoppers. However, for ® rms that wish to
invest in high potential employees, beware. Although an MBA may be an excellent incentive
for the individual, and a good investment for the ® rm, graduates expect more than non-
MBAs, and if not recognised in ways they deem appropriate, they may well leave.
HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2 83The impact of an MBA on graduate careers
Although the performance ratings of those holding an MBA were not statistically far
higher than those of others in our sample, there was nonetheless a signi® cant relationship
between the presence of an MBA and the level of competencies, on the one hand, and
between the level of competencies and performance rating on the other. This suggests that
organisations may obtain real value by employing MBA graduates, although the case might
be better made with a wider sample.
Organisations may acquire MBA quali® ed managers in two ways: hiring MBA graduates
or sending promising managers to study for an MBA, often part-time. The ® rst option will
® t organisations which rely on external labour markets whereas the latter will be employed
by those who count almost entirely on internal labour markets (Sonnenfeld and Peiperl,
1988). Both employees and employers considering investment in MBAs should bear in mind
that this also necessitates a considerable investment on the individual side, in time and
effort, which must come at the expense of family, leisure or working time.
Of course, the MBA is only one stage in a company’s career development strategy for its
high ¯ yers. Sending people to study for an MBA is a sign of investing in people, getting the
best out of them, and in the process creating professional managers. However, once MBA
graduates work as managers, they want substantial recognition and appreciation for their
qualities, including further opportunities to grow rapidly.
The MBA degree does have an impact. MBA graduates are better, at least in their self-
perception, on a number of measures, and such high self-ef® cacy may well lead to better
performance. Organisations should recognise that, although the impact of training and
development may be largely intangible, they nonetheless contribute directly to performance.
The MBA, as the `ultimate’ managerial quali® cation, may be regarded, then, as an asset not
only for individuals but also for the organisations employing them.
Our results provide partial support for the claims of business schools of the advantages of
having an MBA. To increase its ef® cacy, programme design should be regularly reviewed to
ensure skills and competencies sought by businesses are addressed. Graduates should also
be provided with realistic expectations of their degree to prevent them becoming
disillusioned later. In particular, this means publishing statistics of job placements, income
differentials and career patterns over the longer term.
MBA education may yet prove to be an under-exploited market, given the 22 per cent of
the managerial workforce in our sample seriously considering further study for an MBA, a
working population of some 15 million managers and administrators in the UK, and many
others elsewhere in the EU, Far East and other places where the MBA is fast becoming the
`managerial certificate’. Additional data of the type produced in this study would shed
further light on this question.
At the national level, it should be recognised that management is a profession and an
MBA is a credible qualification for it. The need for managers is on the increase. At the
present level, business schools do not provide the needed stream of MBAs even to replace
retiring managers. Though not all sectors rely on MBAs, the advantages justify an increase
in numbers and variety of programmes.
It is important to continue developing measures of the effects of training, generally, and
of MBA programmes, in particular. Programmes that have a positive impact on the careers
of individuals and the performance of ® rms should be supported. Our ® ndings suggest that
MBA programmes fall into this category and provide insights into how this impact is
achieved. However more in-depth research is required to determine the full extent, as well
as the limitations, of their effects.
84 HUMAN RESOURCE MANAGEMENT JOURNAL ± VOL 10 NO 2Yehuda Baruch,University of East Anglia and Maury Peiperl, London Business School
The present study suffers from some limitations, which may be recti® ed in future studies.
First is the survey size ± the number of companies and subsequently participants was
relatively small. There were only four companies participating in the present study, with less
than 200 participants altogether. Secondly, the MBA sample was low on graduates from top
schools; it would be worth investigating further the `top school’ effects. Thirdly, it was not
possible to evaluate any impact of recency of quali® cation on the results. That is, it may be
that the MBAs in the study had completed their quali® cations more recently than the others
(although some of the others also had second degrees) and this could account for some of
the difference in self-reports. Fourthly, the respondent population was predominantly male,
and although this re¯ ected both MBA and managerial populations generally, it is not clear
whether the results of this study could be applied equally to both women and men.
Examining all sorts of MBA programmes would also enable researchers to examine
differences between a variety of programme models: part-time, full-time, distance learning,
formal teaching, specialised or general learning, in-house or university led, consortium
versus open models and, as mentioned above, top business versus `second/third tier ’
programme models. This would require a much larger sample, and a well-matched sample
for each group would allow for conclusive ® ndings.
Finally, all the companies in this study were in the UK, and thus most of the graduates
came from UK business schools. Thus the ® ndings are limited to a single, though arguably
representative, western culture. Replication should be encouraged, using a larger number of
participating companies. This should be conducted in an international context to enable
cross-national comparisons. It would be useful to examine how strong the impact of an MBA
is in different sectors and cultures.
CONCLUSION
The intrinsic value of training has become one of the central beliefs of managers and
academics (Vicere, 1998), whether the development is narrowly defined as specific
training or broadly perceived as formal education. The latter may take the form of
formal academic studies. The impact of such management training and education and,
in particular, of the `crown’ of management studies ± the MBA ± needs to be rigorously
examined, since the belief in the value of this investment will determine the future
resources directed into these programmes. The present article goes some way toward
addressing this need.
Multiple theoretical approaches help to provide a comprehensive view. From the
sociological viewpoint we examined `social identity’ theory and its relevance to the
MBA. From the psychological perspective we considered the role of self-efficacy among
MBAs and non-MBAs, and finally, at the level of management theory, we addressed the
concept of competencies.
Past works on social identity explored a variety of groups and professions, and found
an effect of professional membership on the creation and development of social identity.
Specific social identities corresponded to certain professions, for instance medicine and
law (Jenkins 1996). The `profession’ of management is still in its infancy. Judging by our
results, MBA studies help to `professionalise’ managers and help give them a better
position in the workplace so that others with whom they interact will see them as
professionals. In terms of recognition and respect, the MBA seems to provide a tangible
asset for its holders.
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