BusinessWeek’s 2010 Ranking of Best B-Schools

For the third consecutive time, the University of Chicago’s Booth School of Business ranked first in the most influential of all the MBA rankings by Businessweek released today (Nov. 11, 2010). The 2010 survey, the 12th biennial ranking of full-time MBA programs in the U.S. by the magazine over the past 24 years, ranked Harvard second and Wharton third.

On a separate international list, INSEAD climbed into the number one spot among non-U.S. school, up from its second-place finish in 2008. INSEAD was followed by Queens University, which slipped from its number one perch two years earlier, and IE Business School in Spain was ranked the third best non-U.S. business school in the world. It was the third time that INSEAD won the number one ranking for BusinessWeek’s list of the best international schools. INSEAD won in 2002 and 2000, the first year that BW began ranking non-U.S. schools. There were two newcomers this year to the top ten on the No. 9 York University’s Schulich School of Business and No.10 University of Cambridge’s Judge Business School.

Northwestern’s Kellogg School, which has more number one rankings (five) than any other school in the BusinessWeek U.S. survey, fell one spot this year to fourth, its weakest showing ever. Stanford rounded out the top five schools.

There were four new U.S. schools which made their way into the top 30 list of best U.S. schools (and four schools that fell into the magazine’s second-tier). The top 30 newcomers were No. 20 Michigan State’s Broad School of Business, which had been deemed one of 15 second-tier schools by BusinessWeek, two years ago; No. 28 University of Minnesota’s Carlson School of Business, also a second-tier school in 2008; and two previously unranked schools, No. 29 Rice University’s Jones School of Business and No. 30 Texas A&M University”s Mays School.

The four schools that fell out of the magazine’s top 30 were Washington University’s Olin School of Business, which last time was ranked 28th and had been in the top list in seven previous BW surveys. The Olin School fell to a rank of 40. Also dropping off the list was the University of Maryland, which was ranked 26th two years ago and had been in the BW top 30 for the previous six surveys. It dropped to a rank of 42 this time around. Vanderbilt University’s business school, which was No. 30 on the list in 2008 and had been on the previous four top 30 surveys, fell to 37th. And finally, the University of Washington, which had been ranked 27th last time, dropped to a rank of 31. Instead of falling into an unranked “second tier” as these schools would have in the past, BusinessWeek for the first time has assigned ranks to more schools, increasing the total number of ranked institutions to 75 from 40.

Chicago’s staying power as the number one B-school powerhouse for the third time in a row now makes it the third most successful school in the history of BusinessWeek’s ranking which debuted in 1988. Its emergence is widely attributed to the leadership of a now departed dean, Ted Snyder, who will become dean of Yale’s School of Management next year. The ultimate test of Chicago as the best business school in the U.S. will occur in the next BusinessWeek survey under Sunil Kumar, a newly recruited dean from Stanford University’s faculty. Synder was a master at working the school’s key stakeholders, from students and alumni to corporate recruiters and benefactors. He even located the dean’s office next to a private lounge for visiting corporate recruiters. Wharton has been the number one winner on four occasions since 1988, while Kellogg was won that honor a record five times.

Unlike most other rankings, the BusinessWeek survey is not based on GMAT or GPA scores, selectivity of applicants, or starting compensation of new grads or the number of MBAs who have jobs within three months of graduation. Instead, the BW survey is largely a customer satisfaction poll. BW surveys the latest graduating class from each of the top schools (see analysis of how Virginia’s Darden School came out first on this part of the BW ranking), along with the companies that essentially make the MBA market and recruit the vast majority of graduates. A third component, purporting to measure faculty research, accounts for 10 percent of the methodology (see analysis of BW’s intellectual capital ranking).

BusinessWeek said its response rate for the 2010 MBA survey was 55%, with 9,827 of 17,941 graduates responding, while its response rate on the corporate recruiter survey was 42%, with 215 of 514 companies responding. One trick that BusinessWeek applies to its methodology is to count the 2010 graduate survey for just half of the MBA customer satisfaction weight. It also tosses in the previous two surveys to MBA grads from 2008 and 2006, weighted equally at 25% each, which tends to prevent wild swings in the rankings.

One significant flaw in the way BusinessWeek reports its ranking is that the magazine fails to report overall index numbers for its ranked schools so users are unable to determine whether there are meaningful statistical differences between the rank one school gets over another. In many cases, it’s possible that the differences in the underlying scores are so small that they have no statistical significance. Unlike some surveys, BW does not allow a tie for any ranked schools.

The heavy emphasis on corporate recruiters in the survey tends to disadvantage schools with smaller enrollments, such as Dartmouth’s Tuck School of Business and Stanford’s Graduate School of Business, because recruiters are less likely to be highly satisfied at schools that have few graduates to employ. The result: fewer recruiters go to such schools and those that do often leave empty handed. That’s most likely why the highly regarded Tuck School, ranked fifth by Poets&Quants and second by The Economist, is ranked 14th by BusinessWeek–even below the business schools at such public universities as Michigan, Berkeley, and Virginia. Shockingly, BusinessWeek now ranks Southern Methodist University’s Cox School at No. 12, two places above Tuck. BW also ranks Stanford number five, lower than the Poets&Quants No. 2 ranking for the school (see the entire Poets&Quants ranking), and below rankings by U.S. News, Forbes, and the Financial Times. Only The Economist ranks Stanford lower than BW (see the full BW ranking on the next page and how it compares to other surveys).