Are These MBAs Best For Entrepreneurs?

For the third consecutive time in three rankings of the best MBA programs for would-be entrepreneurs, Stanford’s Graduate School of Business came out on top, according to the new Financial Times’ 2017 list. But the results of this ranking–doubled to 50 schools from last year’s 25–is all over the place.

Of the 25 schools that made a return to the ranking this year, a dozen soared or plummeted by 10 or more places in a single year. Georgetown University’s McDonough School of Business lost 28 places to finish 44th this year, down from 16th a year earlier. UCLA’s Anderson Graduate School of Management dropped 22 spots to finish 27th, from a lofty rank of fifth last year. Hong Kong University of Science & Technology plunged 25 places to rank 48th from 23rd in 2016.

The FT cautioned readers not to compare this year’s ranking results with previous years due to a change in the methodology. The newspaper said it now includes MBA programs with more than 10 entrepreneurs among survey respondents to its global MBA opinion survey, down from 15 the previous year. “While this allowed the FT to double the number of schools ranked, it also means comparisons in ranked places over the period is not possible,” according to the FT. While a change of only five respondents should hardly cause major changes in a ranking, the warning confirms that sample size has an outsized impact on the results–not a circumstance that lends much support to the credibility of the list.

HOW REASONABLE IS IT THAT UCLA WENT FROM FIFTH PLACE TO 27TH IN 12 MONTHS?

Of course, as any long-term observer of business rankings can attest, big swings in year-over-year rankings are not new. They just confirm what everyone knows: Rankings are highly flawed, often intellectually dishonest attempts to measure the quality of an MBA program. On the face of it, readers will find plenty to disagree with here, even behind dramatic declines or increases. Is it even reasonable to believe that UCLA could fall 22 places from fifth place to 27th in 12 months?

Or what about the fact that Harvard Business School, whose MBAs are neck and neck with Stanford for gaining the most private funding for their startups, could rank 16th, down three places. That rank actually puts Harvard behind No. 7 City University’s Cass School of Business in London, No. 12 Yale School of Management, and No. 14 Imperial College Business School in London.

The reason for such contrarian results derive from a methodology that ranks schools on the basis of a sample size per school that is as spare as 11 respondents. It’s also a function of the metrics the Financial Times is using to rack and stack the programs. Among the 12 metrics used from its survey of alumni respondents for the FT’s annual global MBA ranking, the most weight–20%–is given to the percentage of MBA graduates from the class of 2013 who started a company in the three years since graduation.

U.S. BUSINESS SCHOOLS DOMINATE THE LIST

Another 50% of the weight comes from five metrics, each accounting for 10% of the ranking, that tracks the percentage of entrepreneurs who raised at least a third of equity via private
investors; the percentage of startups still operating at the end of 2016; the extent to which the skills gained during the MBA encouraged the entrepreneurs to start a company, and the extent to which the business school and the alumni network helped secure financing for a new venture.

Alumni giving their schools the best reviews for help in starting their companies include on a ten-point scale with ten being the best score: Stanford (9.3), Cambridge Judge (9.3), Harvard Business School (9.1), Yale School of Management (9.0), Edhec in France (9.0), Dartmouth Tuck (8.9), Cornell Johnson (8.9), and Columbia Business School (8.8).

And when it came to which school’s alumni were most helpful in securing financing for a startup, Yale topped the list (9.9), followed by Dartmouth Tuck (9.8), Stanford (9.5), Cambridge Judge (9.5), Virginia Darden (9.3), Wharton (8.9), Harvard (8.8), Chicago Booth (8.7), MIT Sloan (8.6) and Michigan Ross (8.6).

The Financial Times said that the enlarged ranking includes schools from 13 countries, up from eight in 2016. It is dominated by U.S. schools, which account for nearly half of all ranked schools. Among the U.S. business schools that made this year’s list but were shockingly missing from last year’s version are Northwestern University’s Kellogg School of Management and Rice University’s Jones School of Business. This year the number of U.K. schools also increased to ten from three in 2016.

(The following pages include tables of the new ranking and how it compares to the previous year)

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