The decline in Japanese applications and enrollment in U.S. full-time MBA programs has been going on for many years. According to a survey conducted by a Japanese career consultancy firm, Japanese graduates from top U.S. MBA programs have dropped by nearly 50% since 2009. If anything, signs point to this trend accelerating rather than slowing: Data from GMAC shows the number of Graduate Management Admission Test takers from Japan falling to a new low in 2020.
Kinya Seto, a member of the Dartmouth Tuck School of Business MBA Class of 1996 and CEO of a major manufacturing firm based in Tokyo, worries that the decline will have considerable negative impact on business leadership in Japan, and therefore on the future of business in his home country. So he decided to do something about it. Seto recently made a seven-figure gift to endow a scholarship fund at Tuck for MBA candidates from Japan, hoping to inspire imitators at peer schools and — eventually — reverse the downward trend of Japanese students seeking a U.S. MBA.
“Japanese students might feel comfortable to stay in Japan, but then it might be too late for them to be able to adapt to a changing world,” Seto tells Poets&Quants from Tokyo, where he is CEO of LIXIL Corporation, a manufacturer of building materials. “So I think they have to take a chance.”
FEAR OF COST IS A MAJOR CAUSE OF DROP-OFF IN JAPANESE MBA ENROLLMENT
The decline of corporate sponsorship for Japanese students seeking higher education in the U.S. has been a major factor in the drop-off in MBA enrollment. But it’s not the only reason. In 2015, Harvard Business School Dean Nitin Nohria bemoaned the fact that MBA applicants from Japan — and therefore Japanese students — had dwindled alarmingly, and in an interview in The Wall Street Journal laid the blame on the country becoming more insular.
“One of the anxieties we have is we used to see 30 to 40 Japanese students out of 900 MBA students every year,” he told the Journal. “Now it is down to four to five. Japan is only part of Asia that’s in retreat. They were so engaged in the global economy in the 1980s, now they have become more insular. Japan is the third largest economy in the world, it’s important for us to find a way to reach out.”
Kinya Seto says MBA sponsorships declined for cultural reasons in Japan, and he agrees that there are deeper causes for the drop-off.
“First of all, Japanese job liquidity is very low,” Seto says. “Many people, after graduating from college or university or high school, tend to spend most of their career in one company — which is changing, but it’s still more dominant than in other countries. So that means that most of the people who want to get an MBA on their own will be afraid of that financial cost, because once they leave the company, two years later, there’s no guarantee that they’ll be able to get better compensation.
“So I think that job security issue and that low job liquidity in society is one reason. And a more important reason is perception. I think Japanese students do not have strong confidence in the type of abilities they will be able to gain in U.S. schools. And I think that is coming from a deeper cultural reason: Japan is a homogeneous society. So in this homogeneous society, accumulated experience in a particular company and a particular industry might be perceived as more important than heterogeneous generic knowledge and expertise.”
But that is changing, he adds.
“Japanese companies used to be able to afford sponsorships for students. But they know that once people are exposed to heterogeneous cultures and the generic education, they’ll be able to shine better in that external world. So that means that sponsorship may not to be a good investment for the company.
“Now people change. Global barriers are now disappearing. If you are in a company for five to six years, and you are surrounded by people who are accumulating that same expertise for 20 years, then your perception opens up to the necessity to be exposed to heterogeneous cultures.”
WHAT ABOUT ONLINE MBAs?
Does Seto foresee a decline in the two-year MBA in favor of online MBA or other alternatives?
“To an extent, yes,” he says. “And if the purpose of going to that MBA school is to gain that particular knowledge and particular expertise, it doesn’t have to be an MBA. In a sense, whenever you are trying to learn something, there’s hundreds of different ways right now. But there’s a reason why I’m going to encourage people to go to that U.S. MBA, and particularly the Tuck School, where the environment is more secluded and they can be more concentrated, and also it’s safe.”
In the traditional two-year, residential MBA, he says, “other students can motivate you to become better and they can be inspirational. I think the personal aspect is necessary because in business education, you need lots of patience. If you are really determined and have the confidence to spend 12 hours in front of the screen and learn everything without going to the bars and everything, then we may not have to do that. But you have to inspire yourself every morning — every morning, wake up and say, ‘Okay. I will fight. I will study. I will be great.’ People are not like that, usually. I think that people really need that real buddy who has a similar vision or a similar purpose, and then they can motivate and inspire each other.
“It’s really a difference compared with online. But you can achieve it online. I don’t deny it. But it’s probably better in person.”
THE SPARK THAT REVERSES A LONG-TERM DECLINE?
Seto hopes his move to endow a scholarship for one or two Dartmouth students each year spurs others at peer schools to follow his lead — and that this, in turn, leads to a rejuvenation of interest in the MBA among professionals in Japan.
“First of all, I really would like to encourage my peers from Tuck to invest as much I did,” he says. “I feel that Tuck is a better school, so if you spend $1 million, we should spend $1 million at Tuck. That’s my feeling. But of course, in general, it would be pretty good to have Harvard graduates, Wharton graduates, and Stanford graduates spending and sponsoring, investing the money to return the pay back to the schools as well as the Japanese business community. That would be great.
“I hope many young, talented students will come from Japan to Tuck and both develop the skills to become better business leaders while also gaining valuable exposure to U.S. culture,” he says.
Learn more about the new scholarship at Dartmouth Tuck by clicking here.