Final Paper for Research Competition 2.2.16
- 1. 1 Factors Affecting Students Intention to Apply for an MBA Program in Silicon Valley The popularity of business schools is at an all-time high with more than 200,000 MBA degrees offered each year globally, and almost 98% of the MBA graduates land a job (Lorenzi, 2012). Such employment opportunities has exponentially increased the number of MBA applicants. Many factors have shown to affect MBA students’ satisfactions with the MBA program, such as career and developmental advice regarding the type of major, career path, and making decisions for graduate studies. However, the aspirations and expectations to pursue a graduate degree may be dependent on a number of other variables. Our research is designed to understand what factors students are considering when they apply for an MBA degree in Silicon Valley. We focus on the following factors and discuss how they influence students’ intention to apply for an MBA program in Silicon Valley: networking opportunities, entrepreneurial opportunities, employers’ willingness to pay tuition, perceived affordability of tuition, and perceived values of an MBA degree. Findings of this project will help universities and organizations in Silicon Valley design policies around the factors valued most by the students. CONCEPTUAL FRAMEWORK Networking & Entrepreneurial Opportunities: The starting point of any business or advancement in one's career is networking. The network environment is the result of specifically chosen collaborations between entrepreneurs, firms and the institutions driving the innovatio n leading to commercialization. Silicon Valley is known for its networking and startup culture. It provides the perfect blend of innovation and wealth generation that is required by startups. Furthermore, a large pool of venture capitalists is an added advantage for the most promising startups (Kenney, 2000). We therefore hypothesize that: H1: Networking opportunities will positively influence students’ intention to apply for an MBA program in the Silicon Valley. H2: Entrepreneurial opportunities will positively influence students’ intention to apply for an MBA program in the Silicon Valley.
- 2. 2 Organizational Factors: The intrinsically motivated companies, optimistic working environment, the special combination of ideas and resources and the risk-taking culture are the factors that make Silicon Valley unique. To sustain the culture, companies in the Silicon Valley have higher expectations for their employees. They believe that employees with an MBA degree are important assets to their company (Gupta and Bennett, 2014) and are willing to financially support employees for an MBA education. Brewer (2012) found that the ability of the employer to pay for the MBA tuition was the major driving factor for employees to consider applying for an MBA program. This has led to the following hypothesis. H3: Perceived willingness of the companies to pay the MBA tuition for their employees will positively influence the intention to apply for an MBA in the Silicon Valley MBA program factors: Rupert, Smith, Velliquette, Garretson (2004) studied the in-class environment factors and outside class factors included financial assistance, integration with the outside business community, program clarity and career services. They found that students gave major preference to online ranking and reputation of the university, the placement record and tuition cost. In this project, we want to examine to what extend that tuition cost will have similar effects in Silicon Valley. Hence, H4: Tuition cost will negatively affect a students' intention to apply for an MBA program in Silicon Valley. Perceived Value of an MBA: Although the value of an MBA degree is questioned by the industry as well as academia (e.g., Pfeffer& Fong, 2002), recent research has revealed that an MBA degree can positively impact an MBA graduate's salary, promotional ability, and managerial responsibility. This line of research has noted that the actual value of an MBA is only realized when the degree is earned from the best business schools in the country, and the value tends to decrease if the university and program ranking is relatively low and the admission rate is high (Arcidiacono, Cooley and Hussey, 2008). The value of an MBA degree is also evidenced from interviews with MBA degree holders as they rated their MBA experience very positively. Hence, we expect that: H5: Perceived value of an MBA positively affect students’ intention to apply for an MBA program in the Silicon Valley.
- 3. 3 METHODS An online survey was conducted among 70 participants in which 50% of them were 21- 30 years old and 47% were females. Our study strictly focused on those who are currently not in an MBA program. The questionnaire was designed using Qualtrics and the survey link was distributed among participants through email, LinkedIn, Facebook, and intercepts outside of the MLK library on campus. The six major variables, including networking opportunities, entrepreneurial opportunities, willingness to pay tuition by employer, perceived affordability of the tuition, perceived values of MBA degree were measured by 5-point Likert scales ranging from “1” (strongly disagree) to “5” (strongly agree) while the intention to apply for an MBA program was measured by a 5-point semantic differential scale. See Table 1 for the statements and Cronbach’s alphas. Participants’ demographic information was also measured at the end of the survey. RESULTS A multiple linear regression analysis was employed to examine the predictive ability of the five factors on intention to apply for an MBA program. The regression model indicates that 27.4% (Adjusted R2 = 0.274) of the variance in student’s intention to apply for an MBA in Silicon Valley was explained by the following factors: networking opportunities in the Silicon Valley, entrepreneurial opportunities, willingness to pay tuition by employer, perceived values of an MBA degree, and perceived affordability of the tuition. Specifically, networking opportunities in the Silicon Valley was found to significantly predict students’ intention to apply for an MBA in Silicon Valley, β= 0.231, t(5,64) = 2.080, p<0.05. Hence, H1 was supported. Also, perceived values of an MBA was found to significantly predict students’ intention to apply for an MBA in Silicon Valley, β= 0.494, t(5,64) = 3.866, p < 0.001. Hence, H5 was supported also. The other hypotheses were not supported. See Table 2 for statistics and hypothesis testing results. CONCLUSIONS AND DISCUSSION This project is designed to understand the factors that students consider before applying for an MBA program in the Silicon Valley. Our preliminary research found that the both networking opportunities and perceived value of an MBA degree in the Silicon Valley significantly
- 4. 4 influenced students’ intention to apply for an MBA program. However, entrepreneurial opportunities and the two factors related to tuition were found not to influence the intention. Silicon Valley is known for its flamboyant networking opportunities and this is a major factor that attracts many talents to this part of the country. Our results showed that the student respondents strongly recognize the networking opportunities in Silicon Valley, which fosters strong connections with a great diversity of people and possible greater career opportunities. Hence, networking opportunities become one of the important factors that affect their intentions to apply for an MBA program. In addition, consistent with Brewer (2012), perceived value of an MAB degree significantly affects intentions to apply. The values associated with an MBA degree could be that it makes people more marketable and benefits them in the long run. Hence, the importance of an MBA degree in their career enhancement influences their intention to apply for an MBA program. Different from what we hypothesized, entrepreneurial opportunities was not a significant predictor. This is unexpected given that Silicon Valley is the hub of technological advancement. A closer look at the profile of the participants indicated that most of them are 21-30 years who either have a bachelor degree or are currently pursuing their bachelors. Since they have limited professional experience, they may not quite understand entrepreneurial opportunities or deem it as important if they apply for an MBA program. Similarly, the profile of the respondents in the current survey may also explain why the factors with tuition were not strong predicators, either. First, with respect to wiliness to pay tuition by employers, most of our participants have little work experience or have recently been recruited. They may not be aware of employers’ policies on reimbursement of an MBA tuition. Maybe a few years into their career when they feel the need to recharge themselves, they may actively seek out such policy, which will influence their intention to apply for an MBA program. Second, different from Heslop and Nadeau (2012), our study showed that affordability of tuition was not a critical determinant in decisions to study an MBA. As most of our respondents were undergraduate students, they were so focused with their current college education, and might have not evaluated the cost that it would take to complete an MBA degree. Hence, it seems that in spite of an economic meltdown in the country and the criticisms tagged to an MBA degree, potential students still think that an MBA degree is valuable to them and a way to advance their career. Also Silicon Valley stands up to its name of being the
- 5. 5 networking capital and most of the respondents agree that networking opportunities is an important factor. University institution and enterprises need to understand the driving forces behind a student’s intention to apply for an MBA degree, and this research provides the required roadmap. Practical Implications: Given that both networking opportunities and perceived values of an MBA degree positively affect intention to apply, business schools in Silicon Valley can leverage this knowledge to design marketing programs to attract more applicants. They can have their alumni to share their professional experiences after having an MBA degree with a focus on networking opportunities and how it helps their career. The business school should also focus on the value of having an MBA degree and what the school does to enhance such values, e.g., cutting- edge curriculum, qualifications of the faculty members, and interaction between faculty and students. Limitations& Future Research:This project was conducted for a 7-week business class. As such, it should be considered as a preliminary study. We would like to discuss three limitations. First, the small sample size as well as the profile of the respondents (as discussed above) may affect our research findings. Future research should consider having a bigger sample size and include respondents who are seriously thinking about applying for an MBA program in the next 1-2 years. Data from this kind of respondents may provide better insights into what factors affect their intention to apply. Second, the reliability test showed that some constructs have a lower Cronbach’s alpha. Hence, an improved questionnaire is needed in order to increase the reliability of the measurement. Third and lastly, the current model only explained about 30% of the variance in the intention to apply for an MBA program. This suggests that other factors such as employment opportunities should be included in the model to booster the explanatory power of the model. Given the strategic role of Silicon Valley in business development, entrepreneurship and innovation, we call for more research on various factors that affect intention to apply for an MBA program.
- 6. 6 SELECTEDREFERENCES Arcidiacono, P.,Cooley, J.,and Hussey, A. (2008). The economic returns to an MBA. International Economic Review,49(3), 873-899. A, V. (2007). MBAs confront a savage job market. Business Week Online, 7. Brewer, K.,and Brewer,P. (2012). Influencing Variables And Perceptions Regarding MBA Degree Programs. Academy of Educational Leadership Journal, 16 (4). 27-38. B, C. (2008). Facing a murky job market. Business Week Online,,28. Dailey, L., Anderson, M., Ingenito, C. et al. (2006). Understanding MBA consumer needs and the development of marketing strategy. Journal of Marketing for Higher Education, 16(1),143– 158. Goldgehn, L., & Kane, K. (1997). Repositioning the MBA: Issues and Implications. Journal Of Marketing For Higher Education, 8(1), 15-24. Graduate Management Admissions Council. (2011). Graduate Management News. Gupta, A., & E. Bennett, S. (2014). An empirical analysis of the effect of MBA programs on organizational success. Intl JnlOf Educational Mgt,28(4),451-460. Johnson, J., Thomas, V.,& Peck,J. (2010). Do specialized MBA programs cultivate alumni relationships and donations?. Journal Of Marketing For Higher Education, 20(1),119-134. J, P. (2005). MBA brings benefits to employer and employee. Finance Week,27. Kenney, M. (2000). Understanding Silicon Valley. Stanford,Calif.: Stanford University Press. Lorenzi, P. (2012). Business Schools: Capitalism’s Last Stand. Soc,49(3),230-239. Pfeffer,J.,& Fong, C. (2002). The End of Business Schools? Less Success Than Meets the Eye. Academy Of Management Learning & Education,1(1),78-95. Rapert,M., Smith, S., Velliquette, A.,& Garretson, J. (2004). The Meaning of Quality: Expectations of Students in Pursuit of an MBA. Journal Of Education For Business, 80(1),17- 24. Schlegelmilch, B., and Thomas, H. (2011). The MBA in 2020: will there still be one?.Journal Of Mgmt Development,30(5),474-482. Simmering, M., and Wilcox, I, B. (1995). Career exploration and identity formation in MBA Students. Journal of Education forBusiness, 70(4), 233-237. Subramaniam, I, D., Yusoff, Wan.,and Arumugam, T. (2014). Need Analysis Survey of MBA Students: A Case Study. International Journal of Business and Management,9 (6). 77-87.
- 7. 7 Table 1: Variables and their sample statements Variables Sample statements Networking Opportunities (Cronbach's α = .642) 1. Silicon Valley offers the best networking opportunities in the country. 2. Networking with occupationally diverse people is best found in Silicon Valley. Entrepreneurial Opportunities (Cronbach's α = .686) 1. MBA from a university in silicon valley helps me fulfill my entrepreneurial desires. 2. A large number of startups are found in the Silicon Valley. 3. Higher concentrations of the venture capitalist attract me to the valley. Willingness to pay tuition by employer (Cronbach's α = .605) 1. If my employer encourages me to pursue an MBA, I would expect financial assistance from my organization. 2. My loyalty towards the organization I work in, increases if my employer pays for my tuition. 3. My employer feels my skills are better utilized in a managerial position. Affordability of Tuition (Cronbach's α = .646) 1. The long term benefit of an MBA outweigh the cost. 2. I cannot afford anything more than my current tuition fee. 3. I prefer a state university over an ivy league, because of its low tuition. Perceived Value of an MBA (Cronbach's α = .850) 1. I believe an MBA degree will make me more marketable when I am looking for a job. 2. I believe my MBA education will benefit me in the long term run.
- 8. 8 Please indicate the extent to which you are interested in applying for an MBA program. 1 2 3 4 5 Unlikely: Likely (1) ❍ ❍ ❍ ❍ ❍ Impossible: Possible (2) ❍ ❍ ❍ ❍ ❍ Low Likelihood: High Likelihood (3) ❍ ❍ ❍ ❍ ❍ I will definitely not consider: I will definitely consider (4) ❍ ❍ ❍ ❍ ❍ Table 2:Hypothesis Testing Results Hypothesis Path Beta Values Level of Significance Support H1 Networking Opportunities Intention to apply for MBA 0.231* 0.042 S H2 Entrepreneurial Opportunities Intention to apply for MBA -0.068 0.595 NS H3 Willingness to Pay Tuition by Employer Intention to apply for MBA 0.033 0.788 NS H4 Perceived Affordability of the Tuition Intention to apply for MBA -0.041 0.729 NS H5 Perceived Values of MBA Degree Intention to apply for MBA 0.494** 0.0001 S *p<0.05 **p<0.001 Notes: S = supported NS = not supported