Business School Rankings and Business Relevance, an Overlooked Dimension

EDHEC BUSINESS SCHOOL ECONOMICS RESEARCH CENTRE EVALUATION OF PUBLIC POLICY AND REFORM OF THE STATE

393 promenade des Anglais 06202 Nice Cedex 3 Tel.: +33 (0)4 93 18 32 53 Fax: +33 (0)4 93 18 78 40 E-mail : [email protected] Business school rankings and business relevance, an overlooked dimension

July 2011

Stéphane Gregoir Director of the EDHEC Economics Research Centre, EDHEC Business School Research Director, EDHEC Business School Summary

Newspapers, academic or political key element in a student’s choice. Research institutions regularly promote their own activity is necessary for professors to stay assessment of the relative performances at the edge of their fields and improve their of a particular subgroup of higher teaching, but students are more users and education institutions conveyed through interested in practical implementations of a one-dimensional ranking. This generates new concepts or methodologies. Attending much comment from students, politicians courses delivered by researchers in which and Directors of the ranked institutions. new relevant concepts, new relevant These rankings differ in the surveyed methodologies or simply the current populations, their methodology and their questions in the fields are introduced objectives which are not always thoroughly is a career accelerator for the student. presented. In the nineties, they were Aware of the current debates in their marketing operations to sell special issues fields, graduates can select appropriately of newspapers or simple lists compiled new opportunities. Moreover, on the one by academics to help parents and future hand, such a teaching allows for a swift students make their choice, they now have dissemination of new practices which is gained a political importance as a key piece socially beneficial and on the other hand, of information used by funding agencies, taking into account this dimension in regional and national politicians in their rankings would introduce some forward- designing of new policies as well as heads looking dimension. of higher education institutions in their strategic choices. In such circumstances, We illustrate here the feasibility of such a their legitimacy has been questioned. They business relevance oriented ranking based have come under close scrutiny and are on citations in influential international today the subject of research works. business newspapers and magazine. Such a ranking brings additional information with Academic rankings are relevant and respect to already existing rankings. To informative for comparable institutions help users to make their choice or analyse and foster competition between them. the relative performances of business Nevertheless, they do not seem clearly schools, we encourage the compilation related to teaching quality and do not of new rankings with explicit alternative deal with efficiency issues. Most of these goals and recommend the simultaneously rankings are conservative and have a use of several of them. A Business oriented backward-looking and self-fulfilling bias. citation ranking can be one of these. They today are primarily a measure of reputation which is a slow cumulative process and reinforce it.

We focus here on Business School rankings and illustrate that within the informational content of the available rankings, the key dimension of the business relevance of the research activity and curricula has not been addressed. Nonetheless, the business relevance of the research and curricula is a

2 The work presented herein is a detailed summary of academic research conducted by EDHEC. For more information, please contact Joanne Finlay of the EDHEC Research Department at [email protected] The ideas and opinions expressed in this paper are the sole responsibility of the author. About the Author

Stéphane Gregoir is associate dean for research and head of the Economics Research Centre. His research relates principally to macroeconomics and econometrics, and more specifically to time-series methods. He has also worked on the theoretical analysis of anticipations formation or developed methods for dating the economic cycle. Winner of the Tjalling C. Koopmans Prize, Stéphane Gregoir has been editor, co-editor, and member of the editorial committee of various international academic journals. He has doctorate in applied mathematics (social sciences) from Université de Paris IX.

3 Table of Contents

Summary...... 2

Introduction...... 5

1. Rankings: Contents and Possible Uses...... 6

2. About the Business Relevance of Research ...... 13

Conclusion ...... 16

Appendices...... 17

References...... 23

Position Papers and Publications of the EDHEC Economics Research Centre...... 24

4 Introduction

Rankings of higher education institutions of the research activity and curricula has are regularly disseminated in newspapers not been addressed. Nonetheless, these or on websites throughout the year. Each elements are key ones for students’ month, newspapers and academic or choices. Research activity is necessary for political institutions promote their own professors to stay at the cutting edge of assessment of the relative performances their fields and improve their teaching, but of a particular subgroup of institutions students are primarily users and interested conveyed through a single ranking. This in the practical implementations of new generates much comment from students, concepts or methodologies. Attending public representatives and directors of courses delivered by researchers in which the institutions ranked. The scope of new relevant concepts, new relevant these rankings can be international1 or methodologies or simply the current national2. They differ in the populations questions in the fields are introduced is a surveyed, their methodology and career accelerator for the student. When their objectives, which are not always they are aware of the current debates thoroughly presented. In the nineties, the in their fields, graduates can select new rankings were marketing operations to sell opportunities appropriately. Moreover, for special issues of newspapers or simple lists one, such teaching allows also for swift compiled by academics to help parents and dissemination of new practices, which is future students. They have now gained socially beneficial, and for another, taking political importance as key information this aspect into account in rankings would used by funding agencies, regional and introduce a forward-looking dimension. national public representatives in designing We illustrate here the feasibility of such a new policies, as well as heads of higher business relevance-oriented ranking based education institutions. Their legitimacy on citations in international business has thus been questioned. They have come newspapers and magazines and the fact under close scrutiny and are today the that it brings additional information with subject of research into their role and respect to already existing rankings. To help content. Academic rankings are relevant users to make their choice, we encourage and informative for comparable institutions the compilation of new rankings with and foster competition between them. explicit alternative goals and recommend Nevertheless, they do not seem clearly the simultaneous use of several of them. related to teaching quality and do not A business-oriented citation ranking could deal with efficiency issues outputs with be one of these. respect to inputs. In this regard, most of the rankings available today should be used cautiously by policymakers. Most of these rankings are conservative and have a backward-looking and self-fulfilling bias. Today, they tend to be a measure of reputation, which is a slow, cumulative process, and reinforce the reputation that already exists. We propose here to focus on business school rankings and illustrate that among the various informational content of the available rankings, the key dimension of the business relevance

1 - For instance Times Higher Education Supplement, Forbes, Financial Times, The Economist, Shanghai Jiao Tong University Institute of Higher Education, Leiden University, Ecole 5 des Mines-ParisTech, CHE – Centre for Higher Education Development (Germany) or the Sherpa Network (European project U-map, U-Multirank). 2 - in France: Le Point, Challenge, L’Étudiant, Le Figaro…, in the U.S.A: U.S. News and World Report, Forbes,..., in the UK: The Guardian, The Times, Sunday Times,… 1. Rankings: Contents and Possible Uses

1.1 Target beneficiaries of authorities, watchdogs, trustees, boards rankings and funding agencies, who have to assess First of all, it is important to stress that the efficient use of resources. the information included in rankings is generally a subset of the information collected by national agencies in charge 1.2 The growing influence of of accreditation (to grant degrees) or by rankings non governmental agencies such as AACSB National and international rankings have or EFMD which rely on in-situ audits. The grown in importance over the last ten large amount of information collected in years. Their success may be due to their these accreditation processes is used to reader-friendliness and the fact that they compose very large classes of institutions filled a gap, but even if they are not able (5-year accreditation, 3-year accreditation, to convey the complexity and variety of no accreditation), which does not favour situations related to their users’ various the story-telling sought by newspapers. objectives, they play an important role and It is included in their reports or their shape the environment in which all the executive summaries, the reading of which stakeholders take their decisions. Rankings may be too demanding for uninformed are binding and structuring. They focus on parents and students in comparison with a set of elements that clearly partake in a reader-friendly ranking, but a simple the institution’s performance: quality of ranking device nevertheless cannot satisfy the faculty, quality and selection process all the needs and may be misleading. of the students, wages and the amount of job offers for those who graduate, etc. They Indeed, there are various points of view allow for rough comparability and foster associated with each stakeholder, from in a certain sense competition between students to funding agencies, which institutions. For instance, the growing are associated with different criteria of interest of North American or Asian business interest. These needs cannot be satisfied schools in Masters in Management degrees with a single one-dimensional ranking. challenges European business schools that Among the various beneficiaries and are used to delivering this kind of degree their respective interests, we can list (i) and favours quality improvement in their students and their parents who are mainly design and content. All in all, rankings interested in the quality of the teaching basically allow for a description of and relevance of the curricula, conveyed relative improvements between competing by alumni employability and job offers, and institutions but through the lens of an in the whole cost (fees and living expenses) easy-to-use synthetic measure of a large with respect to expected wages; (ii) set of dimensions in the higher education professors, who are looking for institutions process. The relevance of this particular with bright students and high-level faculty lens can be questioned as well as the or want to improve their bargaining power consequences of its use in the decision in wage negotiation with their dean when process of students, deans or funding their professional success may have some agencies. Let us first describe the lens. impact on their business school’s ranking; (iii) deans in the ranked institutions, who want to promote their own institution; 1.3 Informational content of (iv) firms, who want to hire well-trained rankings and efficient graduates; (v) regulatory While the general principles that govern 6 1. Rankings: Contents and Possible Uses

the compilation methods are generally processing, student mentoring), (v) return known, the objectives of the measurement on investment (ROI) with assumptions are rarely clearly stated and the detailed on salaries waived, cost of debt, future procedure is not known. Rankings try salaries, etc., (vi) salary or change in to capture various dimensions such as salary of the graduate some years later, efficiency, reputation and influence. (vii) position and size of the graduate’s Therefore to understand the nature of firm, change in comparison with the the information conveyed by a particular professional situation before entering the ranking, users need to know the list of all programme, (vii) percentage of employed the ingredients that are involved and their some months after graduation, (viii) role relative importance in order to make up and efficiency of the alumni network, (ix) their mind. This list is not always presented positions of alumni: CEOs, members of in detail, so assessing the information boards of international firms. conveyed by a ranking cannot be done without a thorough and demanding We can split these categories into three analysis since all sorts of dimension are main classes: inputs relating to the students, covered. From a pragmatic point of view, inputs relating to the educational process, the selection of the measurements must and outcomes; to which we have to add rely on their appropriateness with respect items such as size, turnover, peer opinions, to the objectives. They must be reliable and percentage of female members of faculty feasible. This means that the measurement or the board, percentage of foreign- must be representative of a well-defined born members of the board, equipment, situation for which good quality data is catering, sports facilities, private sector available and must allow for comparisons share of funding, national and specialised amongst countries and organisations. accreditations. This list of additional items Without any indication on the exact illustrates the diversity of possible points of objective associated with each measure, view and the fact that not only outcomes, users must use their own acumen to try to but also inputs and environmental determine why such a measure was taken variables selected on the basis of some into account. preconceptions are taken into account. Each item affects how the ranking is Among the usual pieces of information read. For instance, when size is taken into collected are (i) ex-post assessments by account (e.g., in the ranking compiled by students of teaching and faculty quality Shanghai Jiao Tong University’s Institute or by business school clients in the case of Higher Education), the influence of the of executive education, (ii) academic national administrative organisation and quality of faculty (percentage of PhD the age of the institution are indirectly professors, international awards, highly introduced into the ranking. Regarding the cited researchers, number and quality of role played by preconceptions, the idea academic papers, citations, memberships of that the percentage of female members editorial boards), (iii) international openness of faculty or the board (a percentage that (percentage of foreign-born faculty or changes as time goes by) is an objective students, number of languages taught, part description of a key input into the higher of the programme taught abroad, number education process or the management of joint degrees), (iv) services (career centre of the institution is at the very least not placement, professor/student ratio, budget scientifically grounded. It seems to be share per student, library, database, data more related to political correctness. This 7 1. Rankings: Contents and Possible Uses

may be on average a reasonable objective reputation allows it to be selective. This in terms of representativeness of different is an indirect piece of information about approaches and sensitivities but the reputation. On the other hand, this measure quality in a broad sense of a faculty body might be used to capture peer effects. In results in general from a delicate balance the economic literature, size of peer effects between big egos (of both sexes). A very in the class-room on student achievements low percentage figure of women or men is is still debated (inter alios Angrist and Lang questionable, but in general, it cannot be (2004), Burke and Sass (2008), Graham linked to better fulfilment of objectives for (2008)). There might be an externality a given institution. Moreover, a ratio close generated by the quality of the students to 50% will be more easily attained by a that makes the school more appealing, very large faculty than by a small one, so but, first, the influence of peers depends a size criterion is implicitly introduced by on the classroom size and the quality of this item. the professor and, second, to benefit from a peer effect, there must be heterogeneity Rankings cannot only be based on outcomes in the classroom. The average GMAT of the of the training process. At the very least, bottom quartile or the interquartile distance quantity and quality inputs and student’s would then be more appropriate to capture incurred costs have to be taken into account this phenomenon. Finally, this GMAT score if we want to compare institutions of could be an indirect indication that some different sizes and organisation and capture schools have high academic standards, but some efficiency dimensions. Comparing it should be complemented by the dropout institutions with comparable quantitative or success/failure rates, which are never inputs and size would certainly be easier and taken into account. Similarly, in France or more straightforward but the populations in the U.S.A., some magazines’ rankings use might be small. Nevertheless, the role played students’ achievements before entering the by inputs is different from that of outputs. school (for instance, l’Etudiant in France The way extensive measures related to and U.S. News & World Report in the U.S.). inputs enter the ranking, naturally affects Introducing this kind of measurement in the its interpretation. In a standard situation ranking score again provides information and when the focus is on efficiency, in the about the reputation of the school but does case of equal outcomes, the institution not inform on its curricula and teaching. The with the smallest consumption of inputs result may be that heterogeneity amongst should have a better rank. If the one- the graduates in top tier schools is not dimensional synthetic measure increases too large, which is valuable for employers, linearly with some extensive measures of but does not provide information by itself inputs, the ranking is not really appropriate on the relevance of their training. This for comparing institutions in efficiency reputation effect contributes to the value terms but is trying to capture something of a particular degree. This may increase its else, which may sometimes be difficult signalling value on the labour market, but to define. For instance, if the students’ does not necessarily lead to a beneficial average GMAT score is included in the level of investment in human capital. general score (e.g., in The Economist MBA ranking), ceteris paribus, institutions with As indicated above, academic research the brightest students (in GMAT score terms) activities and quality of faculty may be have better ranks. On the one hand, this other kinds of inputs. Some rankings do measurement conveys that the institution’s not take this dimension into account (The 8 1. Rankings: Contents and Possible Uses

Economist for instance disregards this If we first consider the 75 business schools point and limits it to the percentage of that are ranked by both newspapers, their PhD professors, with a weight of 3.5%). rank correlation (Kendall rank correlation Other institutions attribute substantial statistic) is about 0.44, which means that weight to this item in the global score they value the components of business (20% in the Financial Times MBA and school performance differently3. To EMBA rankings, 26% in l’Etudiant for complete this comparison, we can compare instance). Their associated measurements business schools’ rankings regarding are various. They mix the percentage of their research activity measured by the professors with a PhD, the number and number of publications in 24 frequently- quality of scientific publications, and cited academic journals available on the sometimes more practitioner-oriented University of Texas at Dallas (UTD) website4. publications are taken into account. The The rank correlation with this academic rankings provided by The Economist and the ranking is 0.24 for The Economist ranking Financial Times are substantially different. (86 business schools are present in both

Table 15 : Comparison of FT and The Economist MBA rankings (from the FT population) and UTD research ranking Business Schools FT The Economist UTD London Business School 1 19 18 Pennsylvania, University of - Wharton School 1 8 1 Harvard Business School 3 4 2 INSEAD 4 23 11 Stanford Graduate School of Business 4 7 9 Hong Kong University of Science and Technology 6 52 14 Columbia Business School 7 12 13 IE Business School 8 22 218 IESE Business School - University of Navarra 9 5 197 Massachusetts Institute of Technology - Sloan School 9 13 16 Indian Institute of Management – Ahmedabad 11 85 257 Chicago, University of - Booth School of Business 12 1 4 Indian School of Business 13 Not ranked 124 IMD - International Institute for Management Development 14 6 218 New York University - Leonard N Stern School of Business 15 14 3 Yale School of Management 15 24 46 China Europe International Business School (CEIBS) 17 100 210 Dartmouth College - Tuck School of Business 18 2 45 HEC School of Management, Paris 18 9 53 Duke University - Fuqua School of Business 20 28 8 ESADE Business School 21 20 388 Northwestern University - Kellogg School of Management 21 16 6 National University of Singapore - The NUS Business School 23 84 38 University of Michigan - Stephen M. Ross School of Business 24 25 7 University of California at Berkeley - Haas School of Business. 25 3 22 University of Cambridge - Judge Business School 26 30 105 University of Oxford - Said Business School 27 71 93 SDA Bocconi School of Management 28 65 388 Manchester Business School 29 61 159 Source: Financial Times, The Economist, University of Texas at Dallas

3 - A synthetic table of the criteria used by both rankings (and their relative weights) is presented in the Appendix. 9 4 - The list of journals considered by the Financial Times is larger than that used by the University of Texas at Dallas. 5 - FT Global MBA ranking 2011, FT research rank, The Economist’s MBA ranking 2010 and Academic ranking from the School of Management University of Texas at Dallas (2009-2011) 1. Rankings: Contents and Possible Uses

Tableau 2: Comparison of FT and The Economist MBA rankings (from The Economist population) and UTD research ranking Business School The Economist FT UTD Chicago, University of - Booth School of Business 1 12 4 Dartmouth College - Tuck School of Business 2 18 45 University of California at Berkeley - Haas School of Business 3 25 22 Harvard Business School 4 3 2 IESE Business School - University of Navarra 5 9 197 IMD - International Institute for Management Development 6 14 218 Stanford Graduate School of Business 7 4 9 Pennsylvania, University of - Wharton School 8 1 1 HEC School of Management, Paris 9 18 53 York University - Schulich School of Business 10 49 62 University of Virginia - Darden Graduate School of Business 11 41 96 Columbia Business School 12 7 13 Massachusetts Institute of Technology - MIT Sloan School of Business 13 9 16 New York University - Leonard N Stern School of Business 14 15 3 Cranfield School of Management 15 34 n.a.. Northwestern University - Kellogg School of Management 16 21 6 Henley Business School 17 Not ranked n.a. University of Southern California - Marshall School of Business 18 64 10 London Business School 19 1 18 ESADE Business School 20 21 388 Carnegie Mellon University - The Tepper School of Business 21 41 33 IE Business School 22 8 218 INSEAD 23 4 11 Yale School of Management 24 15 46 Michigan, University of - Stephen M. Ross School of Business 25 24 7 Mannheim Business School 26 Not ranked 146 Hult International Business School 27 61 n.a. Duke University - Fuqua School of Business 28 20 8 Bath, University of - School of Management 29 Not ranked 197 Cambridge, University of - Judge Business School 30 26 105 Source: Financial Times, The Economist, University of Texas at Dallas

rankings) and 0.20 for the Financial Times illustrates a positive correlation between ranking (88 business schools are present business school research and their students’ in both rankings). Academic research is earnings after graduation (O’Brian et al. not considered by The Economist. Their (2010)). This means that renowned business ranking is based on career opportunities, schools often have a research reputation educational experience, changes in salary aligned with their global reputation. and potential to network, but it presents comparable links with the research output Both rankings are particularly different captured by the UTD ranking as that of the when considering the leading business Financial Times rankings, which take this schools in each ranking. In Tables 1 and dimension into account (weight of 20%). 2, we present the ranking of the thirty Notice that both rankings allot larger leading MBA programmes according to the weights to changes in salary (cf. Table 5 Financial Times with the ranks obtained in in Appendix). A recent academic paper The Economist for the same programmes 10 1. Rankings: Contents and Possible Uses

and, conversely, the thirty leading MBA focus on this relevance for business of the programmes according to The Economist industry-related activity of business school with the ranks obtained in the Financial faculty (practice-oriented work, patents, Times. Their UTD rank is also introduced industrial partnerships, members of boards in these tables. As they differ in the of international firms, professional use of populations they consider, both points of research outputs, number of registered view can be illustrated. If we first consider cases). We close this first section with some the thirty leading business schools in each comments about the limits and drawbacks ranking, their rank correlation (Kendall rank of rankings. correlation statistic) is about 0.29 when considering the Financial Times population and not significantly different from 0 when 1.4 Limitations and drawbacks of considering The Economist population. They rankings similarly have a different rank correlation First, the presentation of rankings may be with the University of Texas at Dallas misleading. Rankings seem to be the result academic rank. When considering the thirty of an accurate and rigorous approach, but in leading business schools selected by the order to derive them it is necessary to render Financial Times, the rank correlation with comparable very different quantitative the UTD ranking is 0.24 and for the thirty measures that rely on a substantial set of leading business schools selected by The assumptions. For instance, when comparing Economist, the rank correlation with the wages in different countries, not only UTD ranking is not significantly different purchasing power parity but also social from 0. security contributions levied on wages have to be taken into account. They vary largely These tables illustrate, first, that the depending the country and may have a selection of the population of business non-negligible impact. Similarly, when schools is a key element in a ranking. producing a return on investment measure, Second, different choices in the criteria and the salaries waived during the period of their relative weights may lead to similar attendance at training programmes as well correlation with a ranking with a unique as the implied extra cost of living must be objective. This emphasises the difficulty in estimated. Assumptions have to be discussed stating exactly what kind of information or presented in detail, but are not. They is conveyed by these rankings. Third, as require extensive information and technical the Financial Times takes the research skills. On the other hand, information may output into account (number of articles be qualitative or quantitative and must be published in 45 academic and practitioner- made commensurate which gives importance oriented journals), we can compute the rank to convention and data manipulation. The correlation between the Financial Times coding of qualitative variables must be research rank and the UTD rank: it is greater linearly related if a z-score transformation than 0.9. Even if more practitioner-oriented is used in practice to homogenise them. If journals are present in the FT list, the two this is not the case, different codings of rankings are close. This echoes AACSB’s the same qualitative information will lead assessment about the weak incentives given to different contributions to the synthetic to faculty to produce practice-oriented score. The natural consequence is that for research as schools usually take journal subgroups of institutions, ranks are not rankings into account when awarding significantly different (from a statistical tenure. We propose in the second section to point of view) and a fair presentation of 11 1. Rankings: Contents and Possible Uses

the ranking should provide the user with disseminating non-significant differences classes of comparable institutions. If this between institutions, they induce a is not done, robustness checks should be selection of applicants even when the provided. Moreover, most of the time, data ranking is not related to teaching and is partly collected on a voluntary basis, pedagogical dimensions (Bowman and which may imply some bias (particularly Bastedo (2009), Espeland and Sauder if the disseminated ranking can affect the (2009)). Their importance is also reinforced career or salary of the person surveyed). because, first, past rankings are used to reply Checking on the information provided to subjective appraisal questions by peers, by the institutions is costly and cannot students and employers in new surveys be carried out on a regular basis. Finally, (Espeland and Sauder (2009), Bastedo and even if we consider that the set of weights Bowman (2010)) and, second, because they that combine the various measures is are used by employers to set salary levels relevant, the available information on the depending on the institution of origin, compilation method is not detailed enough while salaries are frequently an input of and the complete dataset is not made the rankings. Similarly, as they are used by public in order to allow the rankings to be national offices for students going abroad, reproduced. they contribute to reinforcing the quality of students in well-ranked institutions. Second, by the particular selection of All in all, rankings frequently reflect an general criteria, rankings favour general institution’s reputation, which is the result management programmes and general of slow and progressive process, and are management research themes. Specific, likely to contribute to its reinforcement. high-quality programmes or research in a particular field outside the mainstream are naturally underrepresented. This favours large institutions with a long history and makes the choice to develop a niche strategy costly in terms of visibility. There are incentives for schools to adapt their offer to the criteria used in the rankings to improve their score. Rankings therefore tend to favour uniformity and limit the innovativeness of institutions, possibly at a collective cost.

Third, rankings are mainly backward-looking. They measure the current situation of former students and emphasise dimensions relating to the alumni network’s influence and past resources. The larger they are, the better the ranking will be. This conservative bias is reinforced by a fourth limitation. Rankings are self-fulfilling. They induce a set of incentives which reinforce their importance and can reduce institutions’ incentives towards innovativeness. By 12 2. About the Business Relevance of Research

Research activity is necessary for professors monographs and debated in seminars, the to stay at the leading edge of their fields promotion of these new methodologies and improve their teaching. Nevertheless, and concepts in professional journals, students are users of research and business press or large audience books as interested in practical implementations of well as professional events, and finally the new concepts or methodologies. Attending illustration and pedagogical presentation courses delivered by researchers in which of these new concepts and methodologies new relevant concepts, new relevant in cases and textbooks used in the business methodologies or simply the current school curricula. More precisely, in their questions in the fields are introduced is a Table 1, page 14, the authors list various career accelerator for the student. Since contributions to practice such as they are aware of the current debates • articles in professional or trade journals in their fields, graduates can grasp new or magazines, opportunities more easily. Such teaching • publicly available technical reports for also allows for swift dissemination of organisational projects, new practices, which is socially beneficial. • chapters in professional or trade books, Moreover, taking such a dimension into • significant contributions to trade account in a ranking would introduce journals or magazines authored by others, a forward-looking dimension which is • significant presentations at trade lacking today. meetings, etc. This list could be completed with indirect An AACSB report in 2007 stirred a lot of measures of the influence of faculty on interest. Its objective was to question the industry such as the ones considered place and value of research in business in some rankings: patents, industrial schools. Following extensive criticism (e.g. partnerships, memberships of boards of Jeffrey Pfeffer and Christina Fong (2002) or international firms, professional use of Warren G. Bennis and James O’Toole (2005) research outputs, number of registered inter alios), the AACSB task force delivered cases. If patents are not relevant for several recommendations, among which business schools, industrial partnerships the recommendation that schools should could be proxied by the percentage of be required to demonstrate the value resources coming from private firms of their faculty’s research by listing its when they can clearly be related to joint citations in journals as well as measuring research projects (research chairs with “the impact of scholarship of all types” the industry) and do not correspond to (“to inform teaching and learning, advance donations from alumni. Fiscal incentives knowledge of theory, keep faculty aware are nonetheless different from one country and involved in issues of current interest, to another and this may blur the signal. and improve aspects of management The number of alumni members of boards practice”) “on various audiences important or in a CEO position is used in rankings to business schools.” such as the one provided by the “Ecole des Mines-Paristech” engineering school. The AACSB report (2007) lists three main This approach is nevertheless backward- channels through which research in looking and dependent on the economic business schools can have an impact: the institutions. On the one hand, CEOs are rigorous development of new concepts usually professionals who received their and methods in articles that are published degree at least twenty years sooner and have in academic peer-reviewed journals and several degrees from various institutions 13 2. About the Business Relevance of Research

whose relative influence on their career this impact by compiling the number can be disentangled with difficulty. On the of citations of research or professors in other hand, this also may be affected by a the influential business media as well home bias. In a centralised country with an as articles written by faculty published influential administration with close links in these very media. The idea is that to large companies, members of powerful space in newspapers is expensive and, administrative bodies who graduated from due to competition, journalists want the same schools can occupy high-ranked to provide appropriate information to positions. their readers. Five international business newspapers have been selected; some of Measuring the impact of research is not an them are involved in the compilation easy task as time is needed to disseminate and dissemination of a business school new ideas and convince busy people of ranking. We carried out a census of all their usefulness. We propose here to proxy the articles written by and quotations of

Table 3: International Business School Citation ranking and Financial Times ranking Business School FT rank (2010) Citation rank London School of Economics and Political Science 26 1 City University: Cass 12 3 London Business School 2 3 University of Oxford: Saïd 11 4 Imperial College Business School 18 5 University of Cambridge: Judge 42 7 Cranfield School of Management 15 8 Insead 3 9 IMD 4 10 Lancaster University Management School 35 10 Nottingham University Business School 62 11 University of Strathclyde Business School 20 11 EDHEC Business School 25 12 Warwick Business School 21 14 TiasNimbas Business School, Tilburg University 24 16 Universität St.Gallen 16 16 University of Edinburgh Business School 62 19 Ashridge 34 20 SDA Bocconi 17 20 University College Dublin: Smurfit 30 20 Iese Business School 9 21 Manchester Business School 53 21 Henley Business School 58 22 Rotterdam School of Management, Erasmus University 6 22 Copenhagen Business School 23 24 Stockholm School of Economics 19 24 HEC Paris 1 25 University of Cologne, Faculty of Management 60 25 Esade Business School 8 26 Bradford University School of Management 33 29 Compilation by EDHEC Business School from Dow Jones Factiva database and EBSCOHost Database. 14 2. About the Business Relevance of Research

professors from a list of business schools, ranking, 58 business schools are ranked published in 2010 in Business Week, The and the correlation is not significantly Economist, the Financial Times, the Wall different from 0. It amounts to 0.39 for the Street Journal, the Wall Street Journal full-time MBA ranking. This new ranking Asia. Two rankings were compiled: the illustrates a dimension of performance first based on the number of citations, the that was not taken into account up to now. second on the number of articles written We can as evoked above compile such by faculty. A linear combination of both a ranking for particular fields. In Table rankings was then computed with equal 4, we present with the same approach weights. This survey was carried out for all the ranking we obtain when limiting the European business schools ranked in our interest to economics and finance. the Financial Times using the Dow Jones The citation ranking is modified slightly, Factiva Database and EBSCOHost Database. illustrating the domains of expertise of the Such a ranking can be compiled by theme different schools. (finance, economics, etc.) and extended to professional or trade journals or magazines. This first attempt aims at illustrating its feasibility and properties (reproducibility and informational content). Table 3 below presents the ranking obtained for the thirty leading European Business Schools.

The ranking we obtain is clearly different from the one produced by a publication that belongs to our set of international publications used to proxy the business relevance of the research carried out by faculty. This means that its informational content is clearly different. This can be illustrated with some figures such as rank correlations. The Kendall rank correlation of both rankings over the population of 75 business schools is 0.34. When we consider the Master in Management

Table 4: Citation ranking (2010) in Economics and Finance Citation ranking Business Schools FT ranking 1 London School of Economics and Political Science 26 2 City University: Cass 12 2 London Business School 2 4 EDHEC Business School 25 5 University of Oxford: Saïd 11 6 Cranfield School of Management 15 7 Imperial College Business School 18 8 Insead 3 8 Lancaster University Management School 35 10 IMD 4 Compilation by EDHEC Business School from Dow Jones Factiva database and EBSCOHost Database. 15 Conclusion

Rankings of higher education institutions are becoming increasingly influential. Nevertheless, a unique ranking cannot satisfy all needs: from those of students to those of policymakers. They are relevant and informative for comparable institutions and foster competition between them. Nevertheless, they are not clearly related to teaching quality and do not deal with efficiency issues. Most of these rankings are conservative and have a backward- looking and self-fulfilling bias. Today, they are a measure of reputation (which is a slow cumulative process) and reinforce the reputation that already exists.

Introducing a forward-looking dimension into these rankings and fostering competition between business schools in relation to the relevance of their research and the contents of their curricula seems to be a socially beneficial objective. We illustrate here the feasibility of such a ranking based on citations in a selection of international business publications and magazines. Such a ranking seems to bring additional information, not present in the diverse existing rankings. To help users to make their choice, we encourage the compilation of new rankings with explicit alternative goals and recommend the simultaneous use of several of them. A business-oriented citation ranking could be one of these.

16 Appendices

Table 5: Criteria used in the compilation of the FT and The Economist rankings Indicator The Economist (Full MBA) FT (Full MBA) Inputs relating to the Students Student achievement 8.8% 0% Student diversity 5.8% 6% Inputs relating to the Education Fulfilled goals 17.4% 3% process (student assessment) Academic research 3.5% 20% Industrial relevance 0% 0% International openness 4,4% 8% Process 12.7% 2% Outcomes Salary, employment 37.5% 54% Alumni network 10% 0% Other 0% 7% Compilation by EDHEC Business School from Dow Jones Factiva database.

We consider five newspapers or magazine For each school ranked by the Financial that are part of the ten most read business Times, we searched for occurrences of publications in the world, namely its name in articles published by the five • The Financial Times newspapers or magazine we selected. Every • The Economist article in which one occurrence appears • The Wall Street Journal was read to define if it was a research • The Wall Street Journal Asia citation, a research article or a corporate • Business Week (Bloomberg) quotation.

To analyse their content and count the articles related to each Business School ranked by the Financial Times, we used the Factiva Dow Jones and the EBSCOHost databases to find all the citations and articles written by their professors.

Factiva Dow Jones is one of the leading providers of global business news and information with content from 31,000 sources, “from Factiva” is a business information and research tool owned by Dow Jones & Company.

EBSCOhost databases and discovery technologies are the most-used, premium online information resources for tens of thousands of institutions worldwide, representing millions of end-users. More precisely, the contents of the Financial Times, the Wall Street Journal, the Economist and the Wall Street Journal Asia were searched in Factiva Dow Jones database and that of Business Week in EBSCOHost database. 17 Appendices

Financial Times rankings of European Business Schools in 2010 Information about these rankings can be found on: http://rankings.ft.com/businessschoolrankings/rankings

18 Appendices

Source Financial Times

19 Appendices

By way of illustration of the international audience of these journals we provide the reader with some pieces of information. We first consider the international audience as given by Worldwide Professional Investment Community Study 2009/10 (PIC) which deals with the world’s most senior Professional Investors.

Overall, PIC provides insights of the composition of the professional investment community worldwide as well as measuring media consumption of this audience. The Erdos & Morgan Worldwide Professional Investment Community study has been conducted biennially since 1987.

The eleventh in the series, the survey targets a universe of individuals from the buy-side in companies with a minimum of US$100 million under management serving one of the following five functions: (Analyst - Chief Investment Officer - Director of Research - Head of Trading - Portfolio Manager)

Global Reach - Print Air

The Wall Street Journal (WWW) 59% The Economist 40% Financial Times 35% Bloomberg Markets 34% Institutional Investor 34% Business Week 30% Barron’s 28% Forbes 24% The New York Times 24% Fortune 23% Financial Analysts Journal 22% Pensions & Investments 16% Investo’s Business Daily 12% Time 12%

The WSJ, The Economist, the FT hold the 3 first positions on the ranking. Business Week holds the 6th position.

Source: PIC 2009/10 [Universe 41,386 – Sample 3,956]

20 Appendices

Websites (visited yesterday) wsj.com (WW) 33% bloomberg.com 29% finance.yahoo.com 26% ft.com 17% nytimes.com 16% cnbc.com 16% google.com/finance 10% online.barrons.com 8% reuters.com 7% seekingalpha.com 6% morningstar.com 5% economist.com 4% CNNMoney.com 4% marketwatch.com 4% europe.wsj.com 3%

wsj.com, Bloomberg.com (for business Week) and ft.com hold the 4 first positions on the ranking.

Source: PIC 2009/10 [Universe 41,386 – Sample 3,956]

We then turn to the European audience measured by a survey from Business Europe Elite entitled ”Europe media consumption”. The survey represents the 453,000 top executives in Europe, in charge of €3,000 billion corporate budgets. (http://www.ipsos.com/mediact/sites/ipsos.com.mediact/files/pdf/Ipsos_MediaCT-WP- ReachingTheBusinessElite.pdf)

BE: Europe - Print and Web coverage

Ft + ft.com 23.2% Economist + economist.com 16.7% Harvus Bus Rev + harvardbusinessonline.org 12% National Geographic + nationalgeographic.com 12% Bloomberg Markets Mag + bloomberg.com 9.5% BusWeek + busweek.com 9.4% Time + time.com 9.1% Newsweek + newsweek.com 8.4% WSJE + wsj.com 5.5% IHT + iht.com 5.5% Forbes + forbes.com 4.4%

% coverage

Source: Business Elite Europe 2010 (Ipsos Mori) - AIR and dotcom monthly reach

21 Appendices

Reviews

The Financial The Wall Street The Economist Business Week Times Journal Date of 1888 8 juillet 1889 September 1843 1929 founding Founders Harry Marks Charles Dow, James Wilson Edward Jones and Charles Bergstresser Country United Kingdom United States United Kingdom United States

Topic Economy Economy and Economy and international Economy Finance affairs Worldwide 381 658 2 000 000 1.473.939 923,457 print circulation (July-December 2010 ABC) Periodicity Daily Daily Weekly Weekly Website www.ft.com www.wsj.com http://www.economist.com www.businessweek.com Audience http://fttoolkit. http://sales. http://www. co.uk/2011mediakit/ marketwatch.com/ economistgroupmedia. survey_results.html newspaper/about/ com/research/audience- audience profile/ Source: 1- http://www.courrierinternational.com/sources_overview 2 - http://www.btobonline.com/apps/pbcs.dll/article?AID=/20110502/MEDIAPOWER/305029990#seenit

22 References

• Angrist J and K. Lang (2004), “Does School integration generate peer effects? Evidence from Boston’s Metco Program”, American Economic Review, vol.94 (5), 1613-1634. • Bastedo, M. N., and Bowman, N. A. (2010), “The U.S. News and World Report college rankings: Modeling institutional effects on organizational reputation”, American Journal of Education, vol 116, 163-183. • Bennis, W. G. and J. O’Toole (2005), “How Business Schools Lost Their Way”, Harvard Business Review, May. • Bowman, N. A., and Bastedo, M. N. (2009), “Getting on the front page: Organizational reputation, status signals, and the impact of U.S. News and World Report on student decisions”, Research in Higher Education, 50, 415-436. • Burke M. A. and T. R. Sass (2008) “Classroom Peer Effects and Student Achievement”, National Center for Analysis of Longitudinal data in Education Research, working paper n°18. • Graham B. S. (2008), “Identifying Social Interactions Through Conditional Variance Restrictions”, Econometrica, 73 (3), 643-660. • O'Brien J. P., P. L. Drnevich, T. R. Crook, and C. E. Armstrong (2010) “Does Business School Research Add Economic Value for Students?” Academy of Management, Learning and Education, 9(4), 638-650. • Pfeffer, J. and Fong C.T. (2002) “The end of business schools? Less success than meets the eye”, Academy of Management Learning and Education, 1(1), 78-95.

23 Position Papers and Publications of the EDHEC Economics Research Centre (2008-2011)

Position Papers 2011 • Courtioux, P., S. Gregoir. L’investissement public dans l’enseignement supérieur remet-il en cause l’équité fiscale ? (February 2011). • Chéron, A. L’évolution de la formation professionnelle continue : une perspective internationale (January).

Position Papers 2010 • Palomino, F. Peut-on rendre les stock options versées aux dirigeants plus efficaces ? (October). • Courtioux, P., and S. Gregoir. Les propositions de l’EDHEC pour réformer l’enseignement supérieur : les contrats de formation supérieure (September). • Amenc, N., Chéron, A., Gregoir. S., Martellini, L. Il faut préserver le Fonds de Réserve pour les Retraites (July). • Chéron, A. Réformer la protection de l’emploi des seniors pour accompagner l’augmentation de l’âge de départ à la retraite : Que peut-on attendre d’une baisse du coût de licenciement d’un senior ? (May). • Gregoir, S., M. Hutin, T.-P. Maury, and G. Prandi. Quels sont les rendements de l'immobilier en Ile-de-France ? (May). • Chéron, A. Faut-il plus protéger les emplois à bas salaires ? (January). • Courtioux, P. L’effet du système socio-fiscal sur les rendements privés de l’enseignement supérieur (January).

Position Papers 2009 • Palomino, F. La parité homme-femme est elle soluble dans les concours ? (June). • Chéron, A. Réformer l'indemnisation des chômeurs : plus de redistribution et moins d'assurance (June). • Chéron, A. Quelle protection de l’emploi pour les seniors ? (January). • Courtioux, P. Peut-on financer l’éducation du supérieur de manière plus équitable ? (January). • Gregoir, S. L’incertitude liée à la contraction du marché immobilier pèse sur l’évolution des prix (January).

Position Papers 2008 • Gregoir, S. Les prêts étudiants peuvent-ils être un outil de progrès social ? (October). • Chéron, A. Que peut-on attendre d'une augmentation de l'âge de départ en retraite ? (June). • Chéron, A. De l'optimalité des allégements de charges sur les bas salaires (February). • Chéron, A., and S. Gregoir. Mais où est passé le contrat unique à droits progressifs ? (February).

24 Notes

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25 Notes

The mission of EDHEC is to form students Since February 2006, EDHEC has had a research and managers to undertake projects and lead centre in economics devoted to the evaluation people in a multicultural context. EDHEC offers of public policy and government reform. The a wide range of educational programmes meant aim of the centre is to do innovative and to meet all of the needs of businesses. Its applied research that will make EDHEC a source wide range of degree-granting courses draws of academically recognised expertise on themes students from all over the world. Nearly 5,400 critical to the French economy. students and 5,500 professionals are enrolled in degree programmes or attending seminars Currently, the EDHEC Economics Research and executive-education courses at EDHEC’s Centre has a team of ten full-time and affiliated locations in Lille, Nice, Paris, London, and researchers and professors working on themes Singapore. centred along two axesone, the themes at the intersection of financial and economic issues, As part of its international strategy, EDHEC and the other linked to the French welfare has put in place an innovative policy of doing state, in particular to the labour market and to research for business and set up six research education. centres. EDHEC, regularly ranked among the top European business schools, has AACSB, AMBA, Copyright © 2011 EDHEC and EQUIS accreditations.

For more information see: www.edhec.com

EDHEC BUSINESS SCHOOL ECONOMICS RESEARCH CENTRE EVALUATION OF PUBLIC POLICY AND REFORM OF THE STATE

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