The Sounds of Change for Graduate Management Education

Data from GMAC indicates that students are looking for more choices and more innovation in the classroom.

The Sound of Change

Data from GMAC tells a compelling story about how today’s students are asking for more choices and more innovation in graduate management education. IF YOU’RE LISTENING, you can hear them: the distinct sounds of change emanating from the graduate management education (GME) community. They’re the sounds of disruption, fragmentation, and segmentation, which so often are the precursors to innovation and regrowth. Within this rising noise, you can hear the voices of millions of people in emerging markets seeking the life-changing opportunities offered by management education—and demanding innovation in location, program design, delivery, and technology.

At the Graduate Management Admission Council (GMAC), we publish the Graduate Management Admission Test (GMAT)—but we also listen to the market. We survey potential GME candidates, current students, alumni, and corporate recruiters to compile global statistics on who is pursuing management education and why. Our most recent numbers tell us that management education is both more popular and more fragmented than ever before. We assess that every year up to two million people enter the GME market, defined as postgraduate programs in management, business, commerce, or administration. Currently, candidates can apply to more than 16,500 programs and institutions.

We are finding that the business degrees that students pursue today vary depending on where they are in their own career life stages, what’s happening in the globalized economy, and what changes have occurred in the business cycle. The MBA remains the most sought-after graduate management degree, but it no longer represents the only path to success. GME is no longer “one-size-fits-all.”

We believe this is a sign of revitalization in the GME market. It is an axiom of business that as markets mature, they segment; and as they segment, they niche. Therefore, the market forces a sharper focus on customers and their specific needs, and this is exactly what we are seeing in GME. At GMAC, we have an opportunity to view both student demand and institutional supply at the global level. Through this lens, we see three key points.


    According to our research, reports of the demise of the two-year full-time MBA are greatly exaggerated. It’s true that there are declining application volumes in the U.S. and that some schools have shuttered their MBA programs. These facts lead some people to believe that the traditional MBA has run its course. They say the cost is too high, the ROI is uncertain, and the MBA will be replaced by shorter programs that produce job-ready graduates.

    But we believe this conclusion is a misinterpretation of underlying trends. Globally, demand for the MBA is as strong as ever. A 2017 GMAC survey of 329 MBA programs showed that aggregate application volumes increased by 6 percent over the previous year. A separate study of alumni taken in 2017 showed that eight out of ten graduates rated their MBAs as excellent or outstanding. Furthermore, Net Promoter Scores—which subtract the number of “detractors” from the number of “promoters” of any product or service—were in the 50-point range for MBA programs. On both measures, U.S. schools led their European and Asian counterparts.

    Why then the angst over the MBA? The short answer is that there have been changes in demand and supply.

    "According to our research, reports of the demise of the two-year full-time MBA are greatly exaggerated."

    While global application volumes grew by 6 percent in 2017, applications to U.S. schools—44 percent of the total application volume—declined by 1.4 percent. Furthermore, applications to U.S. schools with class sizes under 200 declined by 11 percent. Those decreases are almost exclusively driven by the choices of international students and an interplay of these forces:

    Increased availability of quality education and jobs in other regions. In 2000, there were no Asian programs ranked in the Financial Times top 40. Last year, there were eight.

    Negative perceptions about the U.S. as a study destination. Multiple surveys taken from the fall of 2016 through the fall of 2017 show that, since the Trump administration took office, four in ten potential students have reconsidered pursuing degrees in the U.S.

    New programs that provide more choices. Recently launched programs in countries such as Germany, Spain, Singapore, and Japan are providing candidates with broader opportunities. Our application trends research shows that MBA application volumes grew by 3 percent in Europe, 6 percent in Canada, and 13 percent in Asia.

    These shifts have driven significant changes in some MBA programs. For instance, in late 2017, the University of Iowa’s Tippie College of Business in Iowa City announced it was closing its full-time two-year MBA program, a story that’s been widely shared. What’s been reported less often has been the growth in international programs. For instance, in 2015, Saïd Business School at the University of Oxford in the U.K. increased its cohort of full-time MBA students by just over 40 percent. Within the past two years, Cambridge Judge Business School in the U.K. has increased its class size by 30 percent. In 2017, the Indian School of Business in Hyderabad admitted its largest class. And Fudan University in Shanghai is building a new campus to accommodate the enrollment of 400 new MBA students within the next two years.

    For every program closing in one part of the world, we routinely see new ones opening or expanding in other regions. At GMAC, our position is that the MBA is far from being in decline. Globally, growing numbers of students are pursuing MBAs. The question to ask is whether the traditional hegemony of U.S. institutions might be in peril.


    Driven by brand, size, and rank, demand for MBA programs in the U.S. is showing great variation by institution. While overall application volume to full-time two-year MBA programs in the U.S. declined last year, applications to large programs with 200 students or more grew by 4 percent on the back of stronger domestic demand. There is a significant correlation between large class size and high rankings, and we conclude that students are signaling the importance they place on brand value. These larger, more recognized programs accounted for two-thirds of the total application volume in our sample.

    Given this background, it’s not surprising that some schools are changing the mix of their offerings. As administrators realize that they are losing out to competitors with broad national and international audiences, they are focusing instead on those that serve regional or functional constituencies—areas where they have competitive differentiation. This might mean they pour more resources into programs aimed at undergraduates, part-time students, or those interested in pre-experience master’s degrees—which leads to our third point.


    These two GME degrees are not interchangeable, because they serve distinctly different market segments for students in different life stages. A pre-experience degree—also known as a master in management (MiM), an MS in management, or an MA in business—helps launch a career, while an MBA is designed to accelerate a career. GMAC research shows that MiM candidates are distinctly younger and have less work experience by an average of 3.5 years. They also start out at lower places in the corporate hierarchy—55 percent of them are in entry-level positions, while only 13 percent of MBA candidates hold such jobs.

    Most telling is how they differ in long-term earnings. Over a period of 20 years, European MiM graduates earn less than their MBA counterparts by a cumulative €1.1 million (US$1.28 million)—a difference of 48 percent. The gap is only 26 percent in the U.S., where master’s degree programs tend to attract older, more experienced candidates. Our survey data shows that program satisfaction is also much lower for MiM graduates, only half of whom rate their experiences as excellent or outstanding.

    It’s also worth noting that nearly 20 percent of MiM graduates indicate an interest in going back to school at a later date. Globally, one in five candidates for graduate business programs holds a prior master’s degree.

    Taken together, these statistics offer an opportunity for schools to refine their marketing messages and use different tactics to target candidates at different life stages. Schools can promote the benefits of pre-experience MiMs to younger candidates, then approach them a few years later with information about the MBA or EMBA.

    But the data also provide warning signals about the future of MiM programs. Historically, global demand for these programs has been anchored in two different demographics—domestic students in Europe who could attend schools all over the region after the Bologna Accord of 1999, and Chinese students who were interested in studying internationally. Numbers for the first group continue to hold steady, but they’re dropping for the second group as Chinese schools evolve and students choose to study in institutions closer to home. Between 2016 and 2017, applications to the same 160 master’s programs that we surveyed had declined by 8 percent—largely due to softer demand from Chinese students.

    “The MBA remains the appropriate choice for many, but may not be the right format for everyone.”

    We believe this is a harbinger. Over the past five years, the number of master’s programs accepting GMAT scores grew by 24 percent, while the number of candidates sending GMAT scores to such programs declined by 18 percent. These two sets of indicators may be signaling that supply of such programs is exceeding candidate demand for them. This could be a warning sign for schools rushing to introduce new programs.


One longtime observer of the management education market is Dipak Jain, former dean of the Kellogg School of Management at Northwestern University in Evanston, Illinois, and current director of the Sasin Graduate Institute of Business Administration at Chulalongkorn University in Bangkok, Thailand. When Jain spoke at a recent GMAC conference, he discussed historical changes to the business world that have shaped and will continue to shape management education. He described the 19th century as the era of the nation-state and the 20th century as the era of organizations. He then predicted that the 21st century will be the century of the individual and the entrepreneur.

Business schools don’t need to teach every student to be an entrepreneur. But we in the graduate management community need to think like entrepreneurs. We need to stay very close to the market, recognize when and how quickly to adapt curricula, understand the needs of the individual, and continue to evolve program offerings.

Above all, we must be sensitive to market shifts and be prepared to shift with them. U.S. schools, which traditionally have been leaders in GME, currently face some of the most intense challenges as supply follows demand to the East. Many U.S. schools might have to choose between two extremes. They can develop a hyper focus on regional needs in terms of program content, duration, and career services. Or they can become truly global, perhaps by adopting the EMBA model of forging international partnerships where students immerse themselves in other cultures for extended periods. A generic middle ground may be unsustainable.

Schools around the world must continue to evolve. They must meet needs that are both global and local, must launch careers and accelerate them, and must adapt to the life stages of the individual. The MBA remains the appropriate choice for many, but may not be the right format for everyone. At GMAC, we are undertaking research that will help us understand candidates from a longitudinal perspective so that we can speak to them wherever they are in their career journeys. If one size no longer fits all, it behooves those of us in management education to segment offerings by candidates’ life stages, define market positions, differentiate ourselves from the competition, and deliver value. After all, we teach our students to do the same.

We’re listening to the sound of the marketplace talking and the sound of the future calling.

For a recent paper on the role of the master in management in global business education, visit

This article originally appeared in BizEd's March/April 2018 print issue. Please send questions, comments, or letters to the editor to

Sangeet Chowfla is president and CEO of the Graduate Management Admission Council (GMAC), an association of business schools worldwide and owner of the GMAT, NMAT, and Executive Assessment exams. GMAC is headquartered in Reston, Virginia, and has offices in London, New Delhi, and Hong Kong.