Will Online Degrees Threaten the Traditional MBA? What Experts Say

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MIT SMR Strategy Forum

The MIT SMR Strategy Forum offers monthly insights from academic experts on pressing strategy issues related to business, management, technology, and public policy.
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The pandemic spurred countless people — potential MBA students included — to reassess their careers and rethink the value of their time and money. Now that specialized and online business education options are more convenient and accessible than ever and generally much less expensive to pursue than traditional, two-year full-time programs, how will the old-school MBA endure?

Business practitioners and publications have periodically questioned the value and future of the MBA degree, but profound pandemic-driven changes in the education industry have made it a relevant question once again. We turned to the MIT Sloan Management Review Strategy Forum panelists for their perspectives on the notion that online education and specialized degrees will supplant the traditional two-year full-time MBA.

Strongly Agree and Agree

A small fraction (16%) of our panelists agreed to some extent that, yes, specialized and online programs will in fact supplant the traditional MBA experience — for some. The traditional MBA does not serve all needs, says Tobias Kretschmer of LMU Munich. “Two-year full-time MBA degrees taken at a specific point in someone’s career are incompatible with the idea and ambition of lifelong learning and careers that do not follow an established linear trajectory,” he asserts.

In terms of career trajectory and resources, the traditional MBA might not suit many people. “Students who are more sensitive to price and opportunity costs, or who are looking to upskill without switching employers, will find these new formats and options attractive,” notes Timothy Simcoe of Boston University. And these alternative programs do indeed bring value, argues Anita McGahan of the University of Toronto: “The vast majority of online and specialized offerings are legitimate substitutes that offer some of the main benefits of the MBA, often for lower tuitions and fees. There is no question that online education and specialized degrees are tripping up many MBA programs.”

However, even those panelists who agreed on this front were clear in specifying that certain MBA programs will remain desirable. “The traditional two-year full-time MBA is likely to survive at elite schools as a loss leader — with generous financial aid to attract top students, burnishing those elite brands and driving scale for their online/specialized offerings,” writes Wharton’s Lori Rosenkopf. “As a result, lower-tier schools can expect increasing financial pressure, suffering in the competition for students as capacity scales.”

Strongly agree


This trend is well underway already, especially outside North America. A growing focus on specific skills and rising demand for flexibility in timing and location will make modularized specialized programs and online education superior options for a more heterogeneous workforce than a fairly standardized product like the traditional MBA.
Timothy Simcoe
Tobias Kretschmer
LMU Munich

Agree


The vast majority of online and specialized offerings are legitimate substitutes that offer some of the main benefits of the MBA, often for lower tuitions and fees.
Timothy Simcoe
Anita McGahan
University of Toronto

Neither Agree nor Disagree

Just one of our panelists was undecided on the impact of alternative programs. The University of North Carolina’s Maryann Feldman writes, “People who are mostly interested in acquiring skills will go online. Those interested in cultivating social networks and connections will go to the more prestigious programs in person.” Still, she raises a significant point from the “disagree” camp: the irreplaceable nature of face-to-face classroom interactions.

Neither agree nor disagree


We are going to see a bifurcation in MBA education. People who are mostly interested in acquiring skills will go online. Those interested in cultivating social networks and connections will go to the more prestigious programs in person.
Timothy Simcoe
Maryann Feldman
University of North Carolina

Disagree and Strongly Disagree

The majority of panelists — a full 80% — disagreed that alternative educational options would supplant the traditional MBA, with many noting the unique value of an in-person degree program. “The death of the MBA has been forecast for years. While it is easy to imagine the knowledge taught going online, the credentials and the cohort effects are another matter,” says Joshua Gans of the University of Toronto.

A flurry of comments similarly noted the “genuine, spontaneous human interactions” of the classroom (Jennifer Brown, University of Utah), the importance of “personal, face-to-face human interactions … to build trust and comfort” (Petra Moser, New York University), and the “networking opportunities that, for people who don’t know each other‚ can only happen in person” (Richard Holden, University of New South Wales). “What online programs will never be able to replicate is the value of connections and the feel of a tight-knit cohort,” echoes the University of California, Berkeley’s Steve Tadelis.

Strongly disagree


In practice, the generalist nature of the traditional MBA serves many people well — particularly those interested in being managers.
Timothy Simcoe
Melissa Schilling
New York University

Disagree


Two-year full-time MBA degrees, for better or worse, have achieved a certain legitimacy as the service provider for future business leaders. In other words, this degree is “the signal” to send to business communities. Changing that is challenging.
Timothy Simcoe
Jin Li
Hong Kong University

Notable, too, is the insistence that the traditional MBA is of current and future value for business in general. Long considered the essential credential, the MBA — especially from an elite school — is valued for a reason. “The general-purpose two-year MBA … is perhaps the single most useful degree for professionals of all stripes and career orientations,” writes Richard Florida of the University of Toronto. Melissa Schilling of New York University similarly notes that “in practice, the generalist nature of the traditional MBA serves many people well — particularly those interested in being managers.” Online alternatives, UCLA’s Olav Sorenson asserts, inevitably come up short: “Online programs simply do not offer effective substitutes for either the certification or community roles of in-person programs. Specialized degrees are interesting for some, but they do not train general managers.”

Clearly, the online experience — at least for now — cannot replicate many invaluable elements of in-classroom MBA programs. Is the MBA dead? No, not at the moment. In fact, notes Andrea Fosfuri of Bocconi University, “After many years of decline, MBA applications worldwide have increased recently.” But as online and specialty options continue to grow, we expect that the question will remain evergreen.

Topics

MIT SMR Strategy Forum

The MIT SMR Strategy Forum offers monthly insights from academic experts on pressing strategy issues related to business, management, technology, and public policy.
More in this series

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