Economics in the MBA Curriculum

Features and Information In this section, the Journal of Economic Education publishes survey articles, international and institutional comparisons, and analytical studies on the economics curriculum, instructional materials, practices in teaching, and academic economics. W I L L I A M WA L S TA D, Section Editor Economics in the MBA Curriculum: Some Preliminary Survey Results Philip Gregorowicz and Charles E. Hegji Despite the growing popularity of MBA programs and the large number of graduate students who have taken one or more formal courses in economics in such programs, little research has been published on this topic. With almost 700 institutions offering an MBA program, enrollments in excess of 200,000 individuals, and over 90,000 degrees granted (1993–1994), the role of economics in MBA programs should be worthy of study. In this article, we report the results of a survey of administrators of U.S. business schools to obtain information on economics courses in the MBA curriculums. Survey data were collected on (1) the number and type of required economics courses in their core curriculums, (2) the number and type of optional economic courses, (3) trends in the number and type of economics courses, (4) the popularity or lack of popularity of economics courses. In addition, we investigated differences to these responses associated with the perceived focus or strength of the MBA program. The survey was mailed to the 287 member schools of the American Assembly of Collegiate Schools of Business (AACSB) as of 1994. This list was obtained from the 1994–1995 AACSB Directory. The response rate was 39.7 percent (N = 114). Unfortunately, there is no way of knowing how representative this sample was because it was not possible to identify which schools returned the survey. The sample was biased in the sense suggested by Becker (1995), that is, only administrators interested in MBA curriculum development answered the survey. Two modifying factors suggest that our sample was representative: the accreditation standards of the AACSB assures some uniformity across programs and about 50 percent of MBAs are granted by accredited schools. 1 Philip Gregorowicz and Charles E. Hegji are professors in the Department of Economics, Auburn University at Montgomery. The authors would like to thank an anonymous referee for initial comments on this article and William Walstad and William E. Becker for extensive editorial assistance. Winter 1998 81 SURVEY RESULTS The questionnaires were most often completed by an assistant or associate dean of the School of Business or director of the MBA program. (See appendix for a copy of the survey questionnaire.) However, nearly one-fourth of the respondents were chairs of their economics departments.2 The majority of the respondents, 79 percent, listed management as a primary area of strength in their MBA curriculum and finance second at 57 percent (Table 1). The other areas dropped in relative importance after these two until reaching a low or slightly more than 4 percent for production management (operations research) as a strong area. 3 The mean number of required economics courses offered was 1.48; the average number of optional courses offerings was 3.5. Among the required course offerings, managerial economics appeared most often in the curriculum, 60 percent of the time, with macroeconomics second, at 54 percent. Although modal data are not reported in Table 1, a managerial macroeconomics combination was a frequent requirement. A microeconomics course was required at 43 percent of the survey schools. Among optional course offerings, macroeconomics faired the best, at 30 percent. “Other economics courses” was next in importance, cited 23 percent of the time. This other course was often a course in international business. Although two-thirds of respondents reported that the number of economics course offerings stayed the same over the past five years, 21 percent reported contracted economics course offerings, and only 10 percent claimed to have experienced expanded course offerings. These data indicate a net decline in economics course offerings over the past five years. As to popularity, over one-half (54 percent) of the respondents stated that economics was unpopular or very unpopular. About 51 percent responded that economics was popular or very popular. These percentages add up to more than 100 because some respondents reported that economics was both popular and unpopular, depending on who taught the course. The predominant reason for economics’ popularity was the quality of the instruction, with 42 percent of the respondents listing this factor as important. Second in importance was the fact that students felt that knowledge of the economy was important to their education, yielding nearly a 29 percent response rate. On the other hand, the primary reason for economics’ unpopularity was that students felt it was too theoretical a subject, with about 30 percent of the respondents listing this as a factor. Supporting this notion, 23 percent of the respondents stated that economics was unpopular because it was “different” from other subjects, and 21 percent though that economics was unpopular because it was too quantitative. BREAKDOWNS We conducted statistical tests on the mean response rates across categories for various subsamples.4 Because of space limitations, only the distributions across the responses relative to MBA strength characteristics for the various groupings 82 JOURNAL OF ECONOMIC EDUCATION TABLE 1 Summary Statistics for Responses to MBA Questionnaire (N = 114) Mean response/ response rate MBA areas of strength Management Marketing International business Finance Production management Management of information systems Other Number of required econ courses Number optional econ courses Required economics courses Microeconomics Macroeconomics Managerial economics Financial economics Other economics courses Optional economics courses Microeconomics Macroeconomics Managerial economics Financial economics Other economics courses Economics course offerings have Expanded Contracted Stayed the same Economics is Very popular Popular Unpopular Very unpopular Economics popular because Faculty good teachers Faculty good researchers Economics important Provides quantitative skills Other reasons Economics unpopular because Faculty poor teachers Economics too theoretical Economics too quantitative Economics different Other reasons Mean response/ response rate 79% 44% 18% 57% 4% 18% 12% 1.48 3.35 45% 54% 60% 3% 10% 19% 30% 19% 19% 23% 10% 21% 67% 10% 41% 48% 6% 42% 11% 29% 17% 6% 13% 30% 21% 23% 21% Note: The percentages across the various response categories do not add up to 100 percent because each respondent could list up to three primary areas of strength. are reported in Table 2. First, the sample was divided into respondents that stated economics was popular or very popular versus those that stated economics was unpopular. Respondents answering both ways were excluded from the analysis. Those responding that economics was popular were more likely to list international business as a strength in their MBA program. Those responding that economics was unpopular were more likely to list management of information systems as a strength. Although not reported in Table 2, further tests revealed that among those listing economics as popular there was significantly greater likelihood (10 percent) Winter 1998 83 TABLE 2 Perceived Strengths of MBA, by Characteristics Characteristic % % Popularity of economics Unpopular 81 51 16 49 2 26*** 12 Popular Management Marketing International business Finance Production management Management of information Others 78 45 29* 62 7 5 9 Optional economics courses 5 or more Less than 5 Management Marketing International business Finance Production management Management of information Others 69 38 15 77** 4 38** 12 82 45 19 52 4 13 12 Position of respondent Economics chairs Deans and others and faculty Management Marketing International business Finance Production management Management of information Others 78 48* 21 54 4 20 11 83 31 10 66 3 14 14 *Difference is significant at .10 level. **Difference is significant at .05 level. ***Difference is significant at .01 level. that microeconomics would be a required offering and a significantly smaller likelihood that managerial economics would be used as the micro component of the MBA requirement. As expected, when economics was listed as popular, there was a greater likelihood that the list of economics course offerings expanded over the past five years. As a second breakdown, the sample was divided into two groups, those MBA programs providing five or more optional economics courses and those providing f ewer than five. The logic of this split was that a large number of optional course offerings would be a proxy for economics being taught by a free-standing economics department with its own program, possibly at the master’s or Ph.D. level. Among respondents who listed finance and management of information as program strengths, a significantly greater proportion reported five or more optional economics course offerings. That correlation may be attributed to pro84 JOURNAL OF ECONOMIC EDUCATION gram size, with less traditional MBA programs being housed primarily in larger schools. As expected, a large number of course offerings was found to correlate highly with an expanding economics program over the past five years. For the subsample of schools offering five or more optional economics courses, a significantly smaller proportion of respondents answered that economics was very unpopular. If our proxy is correct, this response seems to suggest that free-standing economics departments do in fact cater to MBA programs by offering what are perceived as popular courses. Of course, the correlation between popularity and course offerings could be caused by reporting bias, depending on whether the questionnaire was answered by an economics department chair or other administrator. The third breakdown divided the sample according to the position of the respondent answering the questionnaire. The 85 deans, assistant deans, and those reported as others (directors of MBA programs, etc.) comprised one subsample, and the 26 economics department chairs and 3 economics faculty members were placed in the second subsample. The expectation was that these two groups might have different views concerning the purpose of economics relative to the various business disciplines and concerning how well economics was being taught. In the majority of cases, no significant difference was apparent in listing the strengths between the two categories of respondents, with one exception (Table 2). Significantly fewer economics department chairs and faculty members listed marketing as a strength of the MBA program in which they taught. Although not a strong result, it suggests that some economists may view marketing as a less-defined discipline and thus may not view it as a strength area in an MBA program. The responses to the questions relating directly to teaching effectiveness were more revealing (Table 3). In many instances, no significant difference existed between the two categories of respondents, with three exceptions. Significantly fewer of the economics department chairs and faculty (1) classified economics as very unpopular (.05 level of significance), (2) classified economics faculty as poor teachers (.01 level of significance), and (3) considered economics as too theoretical (.10 level of significance). These findings suggest a significant difference in opinion on the part of economics department and other administrators on the contribution of economics to the MBA curriculum and possibly on how it should be taught. CONCLUSIONS These survey results suggest that economics is a misunderstood component of many MBA programs, included only because it is believed to be important for business decisionmaking. This inference is in part supported by the difference found in the opinion between economics departments and other administrators concerning the popularity of economics and whether it is taught too theoretically. The downward trend in the average number of economics course offerings experienced by the reporting institutions over the past five years suggests that one possible outcome of this misunderstanding is the elimination of economics courses from MBA programs. Winter 1998 85 TABLE 3 Summary Statistics on Teaching Effectiveness, by Positions of Respondent (in Percentages) Deans and others Economics is Very popular Popular Unpopular Very unpopular Economics is popular because Faculty good teachers Faculty good researchers Economics important Provides quantitative skills Other reasons Economics is unpopular because Faculty poor teachers Economics too theoretical Economics too quantitative Economics different Other reasons Economics chairs and faculty 8 40 47 8** 40 9 28 14 5 17*** 34 20 24 22 17 41 48 0 48 14 31 24 7 0 17 24 21 17 *Difference is significant at .10 level. **Difference is significant at .05 level. ***Difference is significant at .01 level. When economics is viewed in a more favorable light, it is probably because faculty are good teachers. The importance of good teaching as a means of maintaining faculty positions at the undergraduate level has been emphasized by Becker and Watts (1995, 1996). Our study suggests that good teaching may be one way of maintaining positions in economics departments servicing MBA programs. These overall impressions are influenced by the type of MBA program offered. Economics seems to fair well when it supports the areas of finance and international business and possibly the traditional areas of management and marketing. Economics appears to be unpopular in the perhaps newer MBA programs that emphasize the management of technology and information systems. APPENDIX Survey Questionnnaire 1. Rank top three strength areas of your MBA based on number of graduates. General management Marketing International business Finance Production management Management of information systems Other 2. Currently, how many economics courses are required in your MBA? 3. Currently, how many economics courses are offered as optional in your MBA? 4. Please list required economics courses. Microeconomics Macroeconomics Managerial economics Financial economics Others (please list) (Continued on next page) 86 JOURNAL OF ECONOMIC EDUCATION APPENDIX—continued 5. Please list optional economics courses. Microeconomics Macroeconomics Managerial economics Financial economics Others (please list) 6. In the past five years, the number of economics course offerings in the MBA has Expanded Contracted Stayed the same 7. How popular are economics course offerings in your MBA? Very popular Popular Unpopular Quality of faculty as teachers Very unpopular Other (please specify) a. Why is economics considered so popular? Quality of Students think Students faculty as knowledge of desire researchers functioning of quantative economy is skills important b. Why is economics considered so unpopular? Economics Economics Economics too too different theoretical quantitative compared to other Business School courses Economics faculty poor teachers Other (please specify) 8. What is the central role of economics in the MBA? 9. What is your position? Dean, School Assistant or of Business Associate Dean, School of Business Chair or Head, Department of Economics Faculty, Department of Economics Other 10. List address if you desire copy of the completed study. NOTES 1. Information on percentages of degrees granted by accredited schools was obtained directly from the AACSB. One source of this type of information is the AACSB Web site http://www.aacsb.edu. 2. The exact breakdown was as follows:dean,15 percent of respondents; assistant or associate dean, 34 percent; chair, Department of Economics, 22 percent; economics faculty member, 4 percent.; other position (director of MBA program, etc.), 27 percent. 3. The percentages across the various response categories do not add up to 100 percent because each respondent was given the option of listing up to three primary areas of strength. The same applies to responses to other questions, such as the popularity or unpopularity of economics, which allowed the respondent to give up to three reasons. 4. Where data were reported as response rates, significance tests were performed by constructing a z statistic for the difference between sample proportions. In the case of the number of required and optional economics courses, a t test for the difference between sample means was used. REFERENCES Becker, W. E. 1995. Statistics for business and economics. Cincinnati: South-Western. Becker, W. E., and M. Watts. 1995. Teaching tools: Teaching methods in undergraduate economics. Economic Inquiry 33 (October): 692–700. ———. 1996. Chalk and talk: A national survey on teaching undergraduate economics. American Economic Review 86 (May):448–53. Winter 1998 87