How Can MBA Programs Encourage Entrepreneurship? Refund Their Tuition
Entrepreneurship is increasingly viewed by governments, corporations and individuals as essential to ensuring continuous economic growth and prosperity — so naturally MBA programs are jumping onto the bandwagon. Numerous MBA programs are attempting to modify their programs to address entrepreneurial needs. From offering courses on the entrepreneurial mindset to developing incubators, every MBA program is attempting to encourage entrepreneurship their students.
While MBA programs are attempting to educate students on how entrepreneurship is relevant in their future corporate careers, there is a large elephant in the room when it comes to entrepreneurship programs offered by MBA schools. That large white elephant in the room is the question of whether MBA programs actually help entrepreneurship or hinder it by imposing ridiculously high opportunity costs.
What are those opportunity costs? There are many, but some of the major ones include:
- High Financial Costs: The first thing that most prospective MBA candidates look at when researching MBA programs is the cost. If one thinks about it, a MBA in many respects is similar to purchasing either a very expensive car or inheriting a mortgage. The financial ramifications continue well after the MBA program is completed if one has to significantly borrow to attend.
While many would argue that the benefits of an MBA in terms of future job opportunities outweigh the short term costs, that argument is increasingly on thin ice. The financial fundamentals concerning the value of an MBA program are shifting dramatically. Rightly or wrongly, MBA graduates are viewed as overly expensive and sometimes of questionable quality thanks to the unchecked global proliferation of MBA programs.
The other major factor that is undermining the relevance of an MBA is the virtual explosion in MBA programs on a global basis. With the staggering number of graduates that MBA programs admit on an annual basis considering full-time, part-time and specialized programs, it is questionable whether or not MBA schools can maintain the high caliber of individuals participating in MBA alumni networks.
Indeed, corporations are increasingly turning to relevant real-world experience as the deciding factor as to whether to interview a MBA graduate. The MBA is merely the first very expensive gate into the corporate world that no longer guarantees anything including an interview.
- High Financial Penalties: Today’s knowledge economy increasingly no longer provides a steady and progressive career ladder upward for individuals. Indeed, it is increasingly up to individuals to plot their own career paths and, as such, these career ladders may not be as linear or straightforward as they were in the past. The non-linearity of today’s career path means that an individual with significant debt load will have a harder time pivoting their careers as required to respond to dynamic business conditions.
Indeed, many MBA graduates have to put their entrepreneurial ideas on hold due to the financial necessity of having to find any position in order to repay their burdensome student loans. Not only do they either miss out on their opportunity to pursue their entrepreneurial dreams but they also may end up pursuing positions which many not fully leverage their talents and take them down a career path that may end up demotivating them in them long term.
Not only do the high financial penalties of a MBA prevent graduates from either pursuing their entrepreneurial goals or a corporate career that truly leverages their innate talents, MBA graduates may face career limiting prospects down the road due to their hesitation on pursuing additional education or experience in fields that are newly emerging thanks to their pre-existing debt. Indeed, with the definition of career changing on a daily basis, all individuals need the financial and non-financial flexibility to response to changing work demands or risk becoming obsolete.
- Questionable Relevance: While the MBA was relevant in the era where the linear career ladder existed, its relevance is questionable in today’s economy. The two foundational elements of an MBA are (1) providing the basic business knowledge to manage a business and (2) a strong alumni network. Both foundational elements are under attack in today’s networked economy.
Most of the general knowledge provided by an MBA can either be found on the Internet via Massive Open Online Courses (MOOCs). In today’s complex global economy, such general knowledge is extremely limited in value when it comes to solving the business problems of modern organizations. Increasingly, organizations are looking less for generalists and more for specialists to help them not only navigate the complex business environment but to enable their organization to have the resilience to thrive no matter what “black swans” emerge in the future.
With all these opportunity costs going against the MBA how are MBA programs supposed to encourage entrepreneurship? Entrepreneurship is about risk taking and risk taking is aided when individuals feel they can take risk when they are able to recover quickly from potential failures. As such, the expensive, long term drain that MBA programs put on their candidates is antithetical to entrepreneurship. MBA programs need to refund their tuition to reasonable levels if they wish to encourage entrepreneurship.
Many MBA programs will state that their high tuition is justified due to the superior access that their programs offer to high caliber alumni and teaching resources. That may well be true, but it is true of perhaps the top 10 schools on a global basis. For the remaining MBA programs that aren’t in the top 10, though, it is questionable whether what they provide can actually return any positive return on investment once all costs are factored in. Increasingly, in today’s online world, the supposed knowledge offered by the MBA can be found virtually free online while today’s corporations are realizing that theory can’t keep up with the changes in the global environment and they must look for candidates with relevant practical experience.
Not only does refunding tuition free up financial resources but it encourages MBA candidates into more risk tolerant behaviors, something that is desperately needed in today’s dynamic economy. With the number of positions for MBA candidates such as investment banking and consulting declining due to shifting client demands, technology and unpredictable disruption, it is imperative that MBA candidates create their own entrepreneurial opportunities to prevent themselves from entering a long term financial sinkhole.