The Future of the MBA: How Business Schools Are Innovating to Meet Demand

• Following pandemic-driven increases, total applications to MBA programs have declined.
• Students seek more flexible, faster, and cheaper options, including alternative credentials.
• The future of the MBA is bright as business schools revamp their programs around social innovation, environmental awareness, and emerging technologies like AI.

For today's business schools, the news is both good and bad.

On the positive side, international applications are up, corporate demand for graduates remains strong, and alumni satisfaction suggests a strong return on investment.

At the same time, domestic applications have fallen, costs are high, and new educational alternatives are emerging that promise quicker, more flexible, and far cheaper pathways to career advancement.

Long viewed as a golden ticket, the MBA is changing and adapting, responding to student demands for a more socially and environmentally conscious approach to business as well as the integration of new technologies such as artificial intelligence.

This rapidly evolving landscape represents a watershed moment for business schools. What does all this mean for the future of the MBA?

MBA Enrollments Decline Following COVID-19 Bump

Conventional wisdom suggests colleges and universities are relatively immune to economic downturns. When people lose their jobs, they return to higher education to earn credentials that will increase their employability and reduce the likelihood of future layoffs.

This theory was evident during the COVID-19 pandemic, and MBA programs benefitted. According to GMAC research, applications to graduate business programs rose 2.4% in 2020, when the pandemic began. The following year, applications increased by 0.4%.

Now, on the other side of the pandemic, the pendulum has swung in the opposite direction. In 2022, applications declined by 3.4%. Three-quarters of institutions reported fewer applications last year.

The GMAC report attributes this decline to a hot hiring market driven by the Great Resignation, which in turn has caused companies to focus on retaining employees, some of whom might have otherwise opted to pursue business degrees.

This year reflects perhaps the end of the pandemic-disrupted years and offers insight into how the post-pandemic market for graduate management education may take shape, the report concludes.

Still, this dark admissions cloud features one silver lining — international applicants increased by 19%, thanks in part to the pandemic's wane and relaxed travel restrictions. In fact, while 85% of full-time MBA programs saw declines among domestic applicants, 80% reported increases in international applications.

Gains in the U.S. corresponded to losses elsewhere in the business education world. Applications to programs dropped by 5.1% in Europe and by 23% in Canada, while 56% of programs in India reported fewer applications than last year. Bucking this trend was China, which saw 59% of its programs receive a bump in applications.

Students Seek Greater Flexibility, Affordability, and Stackability

The pandemic accelerated numerous trends in higher education, including the growing popularity of flexible, part-time business programs. From 2016-2020, the number of fully online MBA programs in the U.S. grew by 85%.

When the pandemic hit in 2020, 84% of online business programs saw an increase in applications. Notably, during the 2020-2021 academic year, more full-time MBA students were enrolled in online programs than in residential ones.

Now, post-COVID-19, the numbers reflect the opposite. More than three-quarters (76%) of such programs received fewer applicants in 2022 than the year before.

Similarly, in 2020, 72% of domestic part-time MBA programs saw application totals increase, but in 2022, 75% received fewer applications than in 2021.

These declines, however, tell only a partial story. Figures were bound to decrease following the uncommon spikes experienced during the pandemic. But that doesn't mean interest in part-time, online, and hybrid programs has softened.

In fact, while 40% of students want a full-time educational experience, almost as many — 39% — prefer an online or hybrid model, says a report from Carrington Crisp.

The flexibility and mobility caused by hybrid working environments, along with people becoming used to remaining at home during COVID, has led many to look at online learning as an ideal option, the GMAC report noted.

Even highly ranked schools are investing more in online options. The University of California's Haas School of Business now offers a “flex” option, a largely online experience with limited residency requirements, for its top-10 MBA program. Through Coursera, the University of Illinois enables students to pursue its iMBA completely online.

Employers, too, are increasingly accepting online degrees as legitimate. One study, from Northeastern University's Center for the Future of Higher Education and Talent Strategy, revealed that 71% of employers view the quality of online business degrees as equal to or better than that of traditional programs.

As students continue to seek more flexible, cheaper degree options, universities are creating programs to meet that demand.

One example is the “mini MBA,” which features a more concentrated curriculum focused on specialized areas of expertise such as finance, marketing, or operations. These stackable credentials, which can be applied toward traditional programs, can be earned in a few months, and cost far less — under $1,000 at the University at Buffalo, for instance.

Another alternative is the MBA certificate, which can be earned before or after the full MBA.

Pre-MBA certificates enable students to test the waters, relatively cheaply, before fully committing to an MBA program, gaining a stackable credential in the process. Post-MBA certificates allow students to augment their degrees with certifications in accounting, human resources, and Six Sigma, among other areas.

The MBA Makes Room for Social Justice, Sustainability, and Tech Innovations

In response to shifting student desires, business schools are changing not only the delivery format of programs but also their academic focus. Increasingly, the MBA is jettisoning the traditional bottom-line approach of shareholder primacy, which has constituted the degree's essential DNA for some time, notes the University of Vermont's Stuart Hart.

Ten years ago, Hart helped launch Vermont's MBA in sustainable innovation, a one-year program focused on social justice and addressing poverty and inequality through business, he told BestColleges.

Profits are a necessary thing in order to achieve what is the larger goal of the enterprise, Hart said, which should be something having to do with making a positive impact on the world.

Today's students and young professionals are helping to drive that change. A report from Washington State University's Carson College of Business notes that 83% of Gen Z employees embrace this desire to make a positive impact on the world, and 70% want to work for a company whose values align with their own.

If you look at the attitudes of Gen Z, they don't want to work for companies that have a short- term mentality, that are one-dimensional, and that are only interested in driving returns for shareholders to everyone else's loss, Hart said.

Business schools are responding and, in many cases, proactively shaping this agenda, says Stephanie Bryant, executive vice president and global chief accreditation officer at the Association to Advance Collegiate Schools of Business (AACSB International), the accrediting agency for business schools.

She told BestColleges numerous programs have taken the lead in embracing marketplace movements such as environmental, social, and governance (ESG) investing and the United Nations' Sustainable Development Goals.

At the same time, Bryant pointed out the AACSB's new accrediting standards actually require business schools to show progress on this front.

Business schools have to be bringing their business expertise to the table to solve some of these problems, she said.

The market demands it as well. A 2020 poll by IBM and the National Retail Federal showed that nearly 80% of consumers worldwide believe it's important that brands are sustainable and environmentally responsible.

Changing student preferences also have resulted in a greater focus on science, technology, engineering, and mathematics (STEM) and other rapidly emerging technologies, especially artificial intelligence (AI). A CarringtonCrisp survey found that AI is now tied for the top spot among subjects students wish to see in their degree programs.

Bryant said AACSB sees a growing number of MBA programs offering dual-degree options with STEM programs, particularly in engineering and health sciences.

Tulane University, for instance, recently revamped its curriculum to focus more on data-driven decision-making, among other emphases, and its MBA is now a STEM-designated program.

Envisioning the Future of the MBA

What does all this change suggest the MBA will look like in five or 10 years?

Hart hopes to see more programs adopt a socially conscious agenda lest they become irrelevant, perhaps even extinct.

There's a growing incentive on the part of business education leaders to shift the game, he said.

Bryant agrees, adding that if people do not adapt to this new age and to what Gen Z and Gen Alpha are going to want, they'll be left behind.

She predicts MBA programs will retain their value, blending the traditional degree with competency-based microcredentials, experiential learning, and cultural competencies.

I do think we have to adapt with the times, Bryant said, but I think the MBA will continue to be a critical degree.