HOW SECOND-TIER AND REGIONAL
B-SCHOOLS COMPETE WITH THE “TOP 10”
By Dominic Basulto

Applicants often devote too much focus to the elite “Top 10” B-schools, believing that only these MBA programs can grant them a noticeable edge in recruitment, opportunities for senior management positions, and a cutting-edge business education. However, it is not the case that the education at a “second-tier” (and sometimes even “third-tier”) business school is any less rigorous or challenging. These can be viable options for many good students, as these second tier schools may be more willing to provide scholarship money to attract top candidates. The problem faced by less-recognizable MBA programs is more one of “brand differentiation”- the need to create a unique competitive advantage in a market saturated with over 700 U.S. B-schools and over 300 European B-schools.

More often than not, lower-ranked B-school programs are either located in less-visible regional markets or have not developed the brand presence of a better-known program. In order to compete with the heavyweights of the B-school world, there are two competitive advantages which second-tier and regional B-schools seek to develop: (1) enhanced exposure and access to local recruiters and (2) a more dynamic curriculum which integrates niche and specialized programs.

ACCESS TO LOCAL RECRUITERS

In order to compensate for a lower ranking, many B-schools do not try to be “all things to all people,” but rather, attempt to focus on recruiting efforts within a regional market. These MBA programs recognize that they can provide a competitive advantage to firms within a specific industry - such as the current high-growth Silicon Valley region in California. Stanford, U.California-Berkeley, and UCLA are the most recognized players within California; however, a number of more regional B-schools, such as California Polytechnic State University, California State University, San Francisco State University, and U. San Francisco have reorganized their curriculum to appeal to local recruiters by emphasizing e-commerce and entrepreneurship. These are exactly the two disciplines most in demand by high-tech start-ups. Simply stated, these California B-schools have developed a conduit to careers in the high-tech industry, even stimulating elite programs such as Harvard Business School to develop a separate Silicon Valley presence. The ability of local, regional players to adapt their curriculum to the need of local corporations is not rare- witness the example of the Texas oil industry, which draws from Texas B-schools (U. Houston, Rice, U.Texas-Austin, Texas A&M, SMU) with access to strong chemical and petrochemical engineering programs.

Similarly, B-schools with a “regional” focus attempt to solidify their links with recruiters from corporations headquartered in the immediate area. Consider the case of Chevron, a vertically-integrated petroleum company (similar to LUKOil) which hires MBAs in both finance and marketing for its headquarters in San Francisco. In the most recent recruiting season, though, Chevron did not recruit at Harvard Business School and did not hire a single HBS grad- despite hiring “local” California candidates from second-, third- and fourth-tier B-schools. In a vivid example of how close the inter-relationships can be between business schools and corporations, Emory’s Goizueta business school is named for the former Chairman of Coca-Cola, part of an ongoing strong recruiting relationship between Emory and Coca-Cola (both of which are located in Atlanta). In Europe, this “bias” is more clear- it is obvious that a less-visible Spanish business school such as ESADE would have much stronger recruiting relationship with Spanish-domiciled companies - something that London Business School may not have. Thus, applicants desiring to work in Spain might consider a lower-ranked Spanish business school.

DYNAMIC CURRICULUM INTEGRATING SPECIALIZED PROGRAMS

MBA programs have developed since the days of only offering a general management education. Now, even second-tier programs offer a staggering variety of electives, concentrations, and cross-disciplinary programs. For example, Babson and Michigan State (both “Top 30” programs) offer over 70 electives and have a full-time faculty of over 125 professors. Other programs attempt to compete by offering highly-specialized tracks within a certain field. At Rochester Simon, students can now receive a customized “brand management” MBA rather than a plain vanilla “marketing” MBA. The natural result of B-schools attempting to distinguish their offerings in a competitive market has been the attempt to “cash in” on current trends in the business world. For instance, after Carnegie-Mellon received over 900 requests for information about a proposed new 12-month e-commerce degree within a period of three weeks, it decided to join the rising number of B-schools offering a separate program in e-commerce.

By far, the two leading new concentrations within the increasingly diverse business school curriculum are “e-commerce” and “entrepreneurship.” There are now over 71 B-schools which offer an Entrepreneurship concentration, over 30 B-schools with a healthcare concentration, and 15 B-schools which offer an e-commerce concentration. While it can be expected that tech-savvy heavyweights such as MIT Sloan would embrace these disciplines, by far the greatest action has occurred at lower-ranked (and even unranked) B-schools seeking to differentiate themselves from the traditional “vanilla” MBA programs. Within the burgeoning Boston high-tech sector, candidates eschewing Harvard and MIT can select entrepreneurship programs at Babson, Boston University, Boston College, and Bentley College. In fact, Business Week now ranks the entrepreneurship program at Babson as one of the “Top 5” in the USA.

In addition to these “specialized” programs, a number of B-schools have sought to leverage all the resources within the university as a whole in order to assemble an “overall package” equal to that of a “Top 10” B-school. A leading role model has been Yale, which offers a joint degree with one of eight professional schools (including the top-ranked medical, law, drama, divinity, forestry, and architecture schools) as well as four joint degrees within the graduate school of arts and sciences. Lesser-ranked MBA programs may not possess the depth or breadth of a Yale, Harvard, or Stanford, but strong state university systems offer extraordinary scope. Leading public (state-sponsored) B-schools such as Wisconsin, Illinois, Maryland, Michigan State, Ohio State, and Indiana are usually ranked among the Top 30 in the USA and provide a wealth of electives. At Illinois, students can choose from one of twelve joint degree programs (including a multi-disciplinary custom-designed program) in order to combine business acumen with professional expertise. Moreover, small private B-schools often attempt to partner with other area programs in order to provide more academic options.

Additionally, second-tier MBA programs with geographical access to a major metropolitan area can often entice real-world practitioners from industry to accept adjunct faculty or guest lecturer positions in order to bolster a perceived weakness in the program or introduce real world cases into the curriculum. While the leading theoreticians and Nobel laureates typically migrate to “big-name” business schools, the real world experience offered by adjunct faculty members can be just as valuable for applicants desiring less theory in the curriculum. Within New York City, Columbia & NYU Stern are easily recognized as the leading business schools with the best access to Wall Street recruiters. B-schools in close proximity to Wall Street, such as Fordham, Hofstra, St. John’s, Pace, and CUNY compete by inviting Wall Street players to teach both core and elective courses. At Fordham, financial professionals from Chase Manhattan Bank, Standard Chartered Bank, and Salomon Brothers are adjunct faculty members in the finance track, while individuals from Price Waterhouse Coopers and Deloitte & Touche bolster the accounting and taxation faculty.

CONCLUSION

The intense competition within the business school industry should only be beneficial for all applicants. More competition means more course offerings, more attempts to provide value to the end-consumer (both applicants and recruiters), and more “real world” elements introduced into the curriculum. It also means more choices for students whose academic records or finances might not be sufficient for the top ranked schools. Remember, though, that business schools are a business. Courses and programs are merely products that are offered under a brand name, so caveat emptor. Any MBA should retain value over the period of your career, not grow obsolete. This is especially important to keep in mind during the current worldwide high-tech boom. Attempts to create a separate discipline in e-commerce are sometimes viewed as “intellectually dishonest” by those who assume that B-schools are just trying to leverage a fad and make a quick buck. Efforts to create degrees in “management consulting” or “investment banking” have also been silenced by the academics. This is as it should be.

Dominic Basulto is a 1998 graduate of Yale School of Management and currently works as a consultant for Pericles ABLE (American Business & Legal Education) in Moscow. Pericles offers a full MBA advising program. For contact information, please call: 292-5188/6463.