AACSB Data and Research Blog

Decision-Making at Business Schools, Part II: Involvement and Influence of Stakeholder Groups

By Colin Nelson

As promised in my last post, part II of this series will explore some of the 2014–15 BSQ Finances Module data that have to do with how decision-making is handled by AACSB members across the world, with regard to determining operating budgets and allocating resources. In the BSQ Finances Module survey, we include nine to 12 stakeholder groups (depending on whether the school is independent or attached to a parent university), and ask respondents to indicate their relative levels of involvement in, and/or influence over, the budgeting and allocation processes. The results for the 380 AACSB members whose surveys were locked at the time of this writing were interesting, to say the least:

Table 1. Stakeholder Involvement in Business School Budgeting Decisions

Note: Respondents were asked to rate only those stakeholder groups that were applicable to their school, hence the varying Ns. The groups marked with an asterisk (*) do not apply to the 15 schools self-identifying as “Type C,” or stand-alone business schools unaffiliated with a parent university/institution.

Table 2. Stakeholder Influence on Business School Budgeting Decisions

Note: Respondents were asked to rate only those stakeholder groups that were applicable to their school, hence the varying Ns. The groups marked with an asterisk (*) do not apply to the 15 schools self-identifying as “Type C,” or stand-alone business schools unaffiliated with a parent university/institution.

I should note here that respondents are not precluded from indicating that multiple stakeholders have the same levels of involvement and influence, as some governance models are more flexible and/or egalitarian than others. Unsurprisingly, business school deans were by far the most likely group to have high levels of involvement in and influence on the resource allocation process (i.e., to be rated at level 4 or 5). However, a strong majority of the respondents that were affiliated with a parent university indicated that their university provost also had such levels of involvement and influence, and at least for influence, the university finance office did as well.

While the data within each table are interesting in and of themselves, what I found particularly striking were the instances in which certain stakeholder groups were reported to have significantly different levels of influence over the budgeting and resource allocation processes than actual involvement in them. This was particularly true of provosts, 56 percent of whom were rated at level 4 or 5 for involvement, while 70 percent were rated at 4 or 5 for influence. Accrediting bodies showed a similar situation, as only 11 percent of respondents gave them a rating of level 4 or 5 for involvement, but for influence, approximately 23 percent of respondents rated them at 4 or 5. Business school deans actually had a slightly lower proportion of the highest ratings for influence than they did for involvement.

Decision-Making at Business Schools, Part I: Aspects of Governance

By Colin Nelson

As we approach the release of the 2014–15 BSQ Finances Module data, the time seemed ripe to explore some of the preliminary data that were reported by our participating schools this year regarding governance structures. In particular, I was interested to see how decision-making is handled for various aspects of business school governance by our AACSB members across the world.

Of the 350 member schools whose data were finalized at the time of this writing, 13 were autonomous, stand-alone (Type C) business schools, unattached to any larger parent university or institution. For the BSQ Finances Module, the remaining 337 schools that were affiliated with a larger university or institution were each asked to indicate whether they themselves, their parent university, or the two jointly make decisions regarding five essential aspects of governance.

Figure 1. Control of Governance Aspects, Type A Schools (n=319)

Note: Type A schools are those that identify as standard academic units, among others, at a parent institution from whom they derive their degree-granting authority.

Figure 2. Control of Governance Aspects, Type B Schools (n=18)

Note: Type B schools are those that identify as semi- or mostly autonomous academic units that nevertheless derive their degree-granting authority from a parent institution.

I was impressed to see the large proportions of schools that reported they had at least a shared level of control with their parent institution over most aspects of their school’s governance, if not outright control. Even among schools self-identifying as Type A, this was the case more often than not.

Clearly, the relationship type (A vs. B) does appear to make a difference in terms of the level of control a school has over each aspect. Indeed, we see what we would expect to see: schools that self-identify Type B reported higher levels of control over each governance aspect, on average, than their Type A counterparts. Still, I find it interesting that so many parent institutions seemingly allow for more substantial levels of control over these aspects of governance, particularly ones such as development and management of overhead expenses, which one might expect to fall more squarely under the aegis of a parent institution than, say, determining teaching loads.

Look out for my next post, in which I plan to delve more deeply into precisely which groups of stakeholders are involved in, or influence, the governance decisions of their business school!

How Many Business Graduates Are Seeking Employment—And Do They Find It?

By Jessica Brown

Many students seek to earn a degree as part of their overall career path, and AACSB member schools strive to help those students by providing exceptional educational opportunities and support through their degree programs. These schools also tend to have advisors or counselors who are knowledgeable about the available career services areas to help students turn their education into a valuable career. This can include everything from advising on the proper courses to supporting a specific career path to helping students find internships and employment offers. After graduation, students move on to further their career trajectory or seek additional educational opportunities. These graduates can be more difficult to track, but most schools have some sort of alumni survey, exit interview, or other tracking opportunities in place to help them follow the ongoing successes of their students.

As mentioned in an earlier article using preliminary data from the BSQ Employment Module, AACSB International launched a new data collection initiative in December 2014 combining data sections from AACSB and MBA Career Services and Employer Alliance (MBA CSEA) into a single survey to enhance the types of information available about employment outcomes for students receiving degrees in a business or management field. Upon completion of the data analysis, a total of 202 schools had participated in the joint data collection effort. As this was the first year of the survey, schools were given the option to report data for the component fields, total fields, or a combination, as determined by their data availability, so some schools may have reported data for only specific components, such as the MBA degree title, if the data for the more comprehensive categories were unavailable. The data for the charts below are all based on the full list of schools that participated for each item.

Undergraduate

At the undergraduate level, 55.3 percent of graduating students were reported as seeking employment. As of three months after graduation, 75.2 percent of those seeking employment reported acceptance of a job offer, indicating that the majority of students seeking employment were successful in their job search with their undergraduate degrees from AACSB member schools.

Master’s-Generalist/ MBA Equivalent

At the Master's-Generalist/ MBA Equivalent education level, 83.4 percent of students reported as seeking employment accepted a job offer within three months after graduation. In other words, more than four in five job-seeking graduates were successful in finding employment after graduation with a Master’s-Generalist degree.

MBA Degree Title

For the purposes of this survey, degrees that are specifically given the MBA degree title (which can also be included in the Master’s-Generalist category) are also broken out separately to get a better view of the MBA graduates. Unsurprisingly, students earning an MBA and seeking employment were reported as accepting jobs by three months after graduation in 82.6 percent of cases—a similar rate to that across the entire set of Master’s-Generalist degree program graduates reported.

EMBA Degree Title

The EMBA provides an interesting contrast to the other degree levels. As a degree program that is commonly sought by working professionals, the percentage of those seeking employment was much smaller, with only 3.9 percent of graduates reported within these programs listed as seeking employment. However, even with the small percentage of graduates seeking new employment, job acceptance was reported at 86.7 percent by three months after graduation.

Master’s-Specialist

With the Master’s-Specialist education level, the percentage of those seeking employment is back up to 60.9 percent, with 78.0 percent of those seeking reported as accepting employment by three months after graduation. The ongoing rise in enrollments and specialized programs offered means that these programs are likely to continue gaining in popularity and see additional job seekers and graduates looking to enter the job market in future years.

Doctoral

As the highest education level available, it’s probably not a surprise to see that 86.6 percent of graduates are reported as seeking employment. This is the time when we expect the graduates will be searching for just the right position as business school faculty or seeking to use their experience within positions in industries around the world. Based on this survey data, the graduates seem to be met with overwhelming success, with more than 90 percent of doctoral graduates seeking employment reported as accepting a position within three months of graduation.

What Does It All Mean?

While these data are based on only one year of collection and a smaller set of 202 member schools that participated in the pilot year for this survey, it seems clear that AACSB schools are seeing strong success rates in their students’ abilities to find employment after graduation. The data set seems to be a strong indicator that earning a business degree is working for those students seeking new employment—which is good news for current and prospective students looking to pursue a degree in one of the business- and management-related fields.

Note: Additional reports and data from the BSQ Employment Module—AACSB and MBA CSEA Sections will be released over the coming months by both AACSB International and MBA Career Services and Employer Alliance. For more information about reports and data available, please email [email protected] for AACSB International data requests and [email protected] for MBA CSEA data requests.

 

[This content is also available in eNEWSLINE, August 2015.]

2013-14 Snapshot of MBA and EMBA Degree Program Disciplines Offered at AACSB-Accredited Schools

By Jessica Brown

MBA and EMBA are two of the many business degree paths that students may choose to enhance their education and careers. While the master’s generalist category includes a number of different degree titles that are considered broadly equivalent in educational focus to the MBA, the most immediately recognized and discussed are probably the MBA and EMBA. These two degree titles are what a lot of people think of first when looking for a business school, but, once students reach out to potential schools, it becomes clear that choosing the degree title is just the first step. Which disciplines are available and how those programs are delivered can be as important to students as the degree title itself. Business schools worldwide differentiate their degree programs in a variety of ways, from student experience and research opportunities to detailed focuses on specific fields and delivering programs in the times and ways that work best for their students’ needs.

On the 2013-14 AACSB Business School Questionnaire (BSQ), 533 AACSB-accredited schools worldwide reported offering at least one MBA degree, while 243 reported offering at least one EMBA degree. The overall numbers show that an average of four MBA programs and one EMBA program are offered at each school, but when the data are broken down by region, the number of MBA programs per school is highest among reporting schools in the Americas. As the data from the Americas represent more than 80 percent of the reporting schools, breaking out the regional data is one way to better understand how the data reported by AACSB-accredited schools from other areas of the world may differ.

2013-14 Programs Reported with MBA or EMBA Degree Titles at AACSB-Accredited Schools

 

* Please note that this region includes a small comparison group of reporting schools.

One way that schools can differentiate their programs is by offering specific field or discipline concentrations for their degrees. Depending on the school, this approach may be in the form of an official discipline for each degree (such as awarding an MBA in accounting) or as a major focus for the degree (such as awarding a MBA degree with a concentration or focus on accounting). On the annual BSQ, schools are asked to provide a focus discipline for each degree program listed. For many MBA programs, the discipline may be listed as General Business to indicate that the program is an overall generalist degree without any additional specialization, but increasingly MBA programs are being reported with different disciplines as schools continue to tailor their MBA programs to meet student and industry needs.

The data charts below illustrate that General Business and Management are still the strong leaders among the disciplines offered for both EMBA and MBA degrees, but other disciplines are also well represented. While General Business and Management were the most commonly reported disciplines for the EMBA degree (86.9 percent of reported EMBA programs), at the MBA degree title, those two disciplines accounted for only 51.4 percent of the reported MBA programs. At the MBA degree title, Finance, Marketing, and Other (a category for disciplines beyond the standard 27 disciplines collected on AACSB surveys) were the next most commonly reported disciplines, with another 28.4 percent of MBA programs reported with one of the remaining 23 disciplines.

2013–14 BSQ: Five Most Common Fields or Disciplines by Percentage of MBA Degree Programs Reported

 

For the EMBA, while other disciplines represented a smaller portion of those reported overall, the disciplines other than General Business and Management that appeared in the five most commonly reported were not the same as those for the MBA. At the EMBA level, International Business and Health Services / Hospital Administration joined the Other category to complete the top five.

2013–14 BSQ: Five Most Common Fields or Disciplines by Percentage of EMBA Degree Programs Reported

 

 

[This content is also available in eNEWSLINE, May 2015.]

 

The Uses of Operating Funds (Part III): Types of Non-Salary Uses

By Colin Nelson

In Part II of this series, I discussed various factors relating to the uses of business school operating funds for salary purposes. In this third part, I will talk about the non-salary expenditures by business schools. As a reminder, I have merged the numerous categories from the BSQ Finances Module as follows, for greater ease of display and analysis:

 

Uses of Funds Categories in BSQ Finances Module	Analysis Categories for Uses of Funds
Degree Program Instructional Activity	Degree Program Instructional Activity
Total Benefits Compensation Research Public Service Non-Degree Executive Education	Other Faculty and Admin Activity
Student Services and Admissions Scholarships	Student Support
Library Technology Auxiliary Enterprises Physical Plant	Infrastructure
Faculty/Staff Recruiting Expenditures Alumni Programs/Services Marketing/Advertising	External-Facing Activity
Other	Other

 

Figure 1. Mean Percentages of Total Uses of Operating Funds for Non-Salary Purposes, by School Size and Usage Category

Note: These data come from the 218 AACSB members who entered data regarding their uses of operating funds by type on the 2013-14 BSQ Finances Module. Small schools have 35 or fewer full-time faculty, Medium schools have 36-74, and Large schools have 75 or more.

As you can see, for each size category, non-salary expenditures tend to be much more evenly distributed among the various usage categories than salary expenditures. In particular, Degree Program Instructional Activity accounts for strong majorities of salary expenditures at all size categories, yet it averages only a third of all non-salary expenditures by small schools, and only a quarter by medium-sized and larger schools, on average. Non-salary expenditures in this category include things such as audio-visual services, ancillary support, and course and curriculum development.

Several usage categories also display interesting differences by the size category of the reporting school. On average, Student Support (and to a lesser degree, External-Facing Activity) account for progressively larger percentages of non-salary expenditures as the school’s faculty size category increases, which is just as they do for salary expenditures. This is a clear indication that larger schools require more resources for the purposes of recruiting students and faculty, as well as maintaining good relations with alumni and other external stakeholders, which makes intuitive sense.

However, there are a couple of usage categories that demonstrate more counterintuitive results by size category, e.g., Infrastructure and Other Faculty and Admin Activity. While no clear progression exists as it does for other usage categories, I found it both interesting and surprising that in both cases, larger schools spent less on average than their medium-sized counterparts, and in the case of Other Faculty and Admin Activity, less than the set of smaller schools as well. Quite the opposite is true in the case of salary expenditures in these areas, so it may be that school size is correlated with differing balances of salary vs. non-salary expenditures for these types of uses.

 

Figure 2. Mean Percentages of Total Uses of Operating Funds for Non-Salary Purposes, by AACSB Accreditation and Usage Category

Note: These data come from the 218 AACSB members who entered data regarding their uses of operating funds by type on the 2013-14 BSQ Finances Module.

As with size categories, when looking at AACSB accreditation status, we can see that the average proportions of non-salary expenditure types are much more evenly distributed than salary expenditure types, but there are still some categorical commonalities. Just as with salary uses, Degree Program Instructional Activity claims the largest portion of non-salary expenditures for both accredited and non-accredited respondents (though just barely in the case of accredited schools). Also as with salary expenditures, this category shows the largest average difference in usage of funds between accredited and non-accredited schools, though in this case the difference is even larger. Non-accredited schools spend 14.5 percent more of their non-salary expenditures on this category than accredited schools do, on average.

Unlike for salary uses, accreditation status seems to make relatively little difference to average non-salary expenditures in other defined usage categories. Although accredited schools still devote higher percentages of their resources to almost every category besides Degree Program Instructional Activity, none of the usage categories differ by more than 2-3 percent, on average, aside from the non-defined “Other” category.

Regional Focus: Europe

By Jessica Brown

Aggregates and Averages—A Look at Changes in the Per-School Averages for European Schools Based on data reported in 2009-10, 2011-12, and 2013-14.

When we look at the data reported on the annual AACSB surveys, we often examine it as a whole with aggregate sums across all of the participating schools based on specific characteristics or by looking at each individual school’s data separately. Taking a regional view is another way to drill down and examine the data that AACSB collects. Yet another interesting way to view this data is to take a look at the per-school averages based on those aggregate numbers to get a general idea of what the aggregate numbers could mean for individual schools. Of course, there will always be a range of responses, so an average cannot give the complete picture, but it does offer schools another benchmarking point to determine whether their school’s reported numbers are above or below the mean.

All of the averages used in this article are based on the aggregate data from the following table collected from participating member schools in Europe on the annual Business School Questionnaire.

For each of the education levels listed below, the graph shows the average number of applications, offers of admissions, entrants, enrolled students, and degrees conferred per school based on a controlled set of 44 European schools that participated in the annual Business School Questionnaire in all three years listed. Please note that not all schools that participated provided all data points for each year. The data table above displays the number of participating schools that provided each of these data points in each year listed.

The Undergraduate Level

At this level, while the average number of applications has risen in each year, the averages for offers of admission, entrants, enrollments, and degrees conferred have all stayed relatively stable with small variations up or down. This could be caused by a number of factors, including the potential that some schools are seeing increased demand based on the number of applications received, but are already at capacity and haven’t increased the conversion of those applications to enrollments or that, despite receiving additional applications, the number of qualified applicants has remained largely the same.

Figure 1: Undergraduate Averages Per School For European Comparison Group 

The Master's-Generalist (MBA Equivalent) Level

When looking at the aggregate data for this comparison group and time period, 31 schools reported a total of 67,378 applications at the master’s-generalist level in 2009–10, and 40 schools reported a total of 107,375 applicants in 2013–14. By looking at this on a per-school basis, you can see that the number of students applying at the master’s-generalist level has been on the rise, with a 27.0 percent increase in the average number of applications reported per school from 2009–10 to 2013–14 for this group of survey participants.

A very interesting point on this figure is the close match between the number of new entrants and degrees conferred – showing that the average number of incoming and outgoing students per school tends to be similar. As both offers of admission and enrollments show an upward movement in 2013-14, the entrants and degrees conferred numbers may also begin to show growth in future years as these students continue through their programs.

Figure 2: Masters-Generalist Averages Per School For European Comparison Group 

The Master's-Specialist Level

For master’s-specialist programs, the average number of applications has also increased, but, unlike the at master’s-generalist level, the average number of entrants is somewhat higher than the average number of degrees conferred. Especially when seen in conjunction with the continued increases in offers of admission and enrollments, this could indicate that schools are adding more capacity to their specialized master’s degree programs, which may lead to continued increased growth in these programs.

[This content is also available in eNEWSLINE, April 2015.] 

The Uses of Operating Funds (Part II): Types of Salary Uses

By Colin Nelson

In the annual BSQ Finances Module, as noted in my last post, we ask participating schools to break down their uses of operating funds into amounts used for salary versus non-salary purposes. Additionally, each of these types is further broken down by a large number of different categories, in order to understand how these funds are used by our members. In this second part of my series on the factors relating to the uses of business school operating funds, I will concentrate on the usage types for salary purposes, and I will cover non-salary uses by type in Part III.[i] Because we have many different usage categories, I have merged them as follows, for greater ease of display and analysis:

 

Uses of Funds Categories in BSQ Finances Module	Analysis Categories for Uses of Funds
Degree Program Instructional Activity	Degree Program Instructional Activity
Total Benefits Compensation Research Public Service Non-Degree Executive Education	Other Faculty and Admin Activity
Student Services and Admissions Scholarships	Student Support
Library Technology Auxiliary Enterprises Physical Plant	Infrastructure
Faculty/Staff Recruiting Expenditures Alumni Programs/Services Marketing/Advertising	External-Facing Activity
Other	Other

 

Figure 1. Mean Percentages of Total Uses of Operating Funds for Salary Purposes, by School Size and Usage Category

Note: These data come from the 218 AACSB members who entered data regarding their uses of operating funds by type on the 2013-14 BSQ Finances Module. Small schools have 35 or fewer full-time faculty, Medium schools have 36-74, and Large schools have 75 or more.

As you can see, no matter what the size category of the school, Degree Program Instructional Activity constitutes the majority of the average uses of operating funds. This is understandable, given that this category includes all faculty salary expenditures for teaching purposes (faculty salary expenditures for other purposes are included in the relevant categories, e.g., research, public service, executive education, etc.).

That said, size most definitely matters when it comes to the proportion of salary operating funds used, appearing as it does to be inversely correlated for Degree Program Instructional Activity, and directly correlated for every other usage category. This makes sense, given that smaller schools have less staff with time and resources to pursue activities other than instruction towards degree programs (which is arguably the most important activity type for business schools), but the size of the differences is impressive.

 

Figure 2. Mean Percentages of Total Uses of Operating Funds for Salary Purposes, by AACSB Accreditation and Usage Category

Note: These data come from the 218 AACSB members who entered data regarding their uses of operating funds by type on the 2013-14 BSQ Finances Module.

AACSB Accreditation is another factor that, somewhat unsurprisingly, corresponds to a greater spread of the average proportion of operating funds used for salary purposes across usage categories. The most noticeable difference is that, on average, the proportion of salary operating funds accredited schools devoted to Degree Program Instructional Activity was 8.5 percent less than their non-accredited counterparts, while they devote more to every other usage category.

AACSB accreditation standards emphasize the importance of research, public service, and other such impactful activities, with the philosophy that faculty engaging in these activities in turn provide better quality instruction. Given that fact, this difference is also understandable.

Be sure to join me next time to see what differences exist in the categorical proportions of non-salary expenditures!

 

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[i] I should note here that the way we collect salary expenditures on the BSQ Finances Module does not require respondents to categorize the salaries of individuals. Rather, they are asked to break down the total amount spent by the school on salaries into the various categories.

A B-School Dean Lingua Franca?

By Elliot Davis

In 2011, my colleague Juliane Iannarelli shared that in years past, the language of instruction at many business schools may have been taken for granted, but that in today’s global higher education and business environment, it has become a strategic dimension of program design and delivery.

In AACSB’s 2013-2014 Business School Questionnaire, 85.6 percent of 750 participating schools reported that the primary language of instruction at their institution was English. When excluding several English-speaking countries, including the United States, the United Kingdom, Australia, and Canada, that percentage drops considerably to 37.8 percent. However, 57.9 percent of these schools do offer instruction in a secondary language, and in 81 percent of the schools offering a second language, English is the language spoken.

It is clear that English is spoken widely at business schools around the world. If not used as the primary language for instruction, it is often spoken as a secondary language. But what of the leaders of these business schools? What languages do they speak, and do their languages align closely with the primary language of instruction at the business schools themselves?

The results of AACSB’s 2014-2015 Deans Survey are in, and AACSB staff have been taking a closer look at the overall profile of the business school dean in recent weeks. The 2014-2015 Deans Survey, conducted triennially with the cooperation and assistance of AACSB member institutions and their staff, received participation from 650 business school deans and interim deans, with 64 nationalities represented.

As could be expected based on the overall profile of the business schools themselves, the most common fluently spoken language of the responding deans was English, with 90.2 percent of deans reporting fluency. Interestingly, though, 48 percent of the responding deans did report speaking more than one language fluently.

Table 1. Number of Languages Spoken Fluently By Deans

Number of Languages	Percent (n=357)
One	52.4%
Two	35.3%
Three	10.4%
Four	1.4%
Five or more	0.6%

Source: AACSB 2014-2015 Deans Survey

The below visual shows a breakdown of the commonality of English fluency of business school deans.

Learn About Tableau

 

You can access the display on its own page for ease of viewing by clicking here.

As evidenced by the world region breakdown provided on the display, English is spoken frequently in all regions. This result aligns closely with the usage of English as a primary or secondary language of instruction for the business schools themselves. 

While English is certainly commonly spoken by business school deans, other languages that were identified as commonly spoken among the responding deans include French (8.7 percent), Spanish (7.7 percent), Hindi (5.3 percent), and Mandarin Chinese (5.0 percent).

If you found this data interesting and would like to learn more about business school deans or issues related to management education, you can follow along with BizEd’s special coverage of the AACSB 2015 Deans Conference currently unfolding in San Diego.

Where Do B-School Budgets Go? A Snapshot of 2013-14 B-School Financial Data

By Jessica Brown

Finances are always a hot topic, especially when schools are working on their annual budgets and long-term financial strategies. As part of the annual Business School Questionnaire (BSQ) and BSQ Finances Module collected beginning in February each year, AACSB International collects data from member schools about budgets, endowments, school structure, and both the uses and sources of operating funds. It is common for school administrators to use this kind of data in both planning and benchmarking needs.

How Much of a B-school’s Uses of Funds Goes to Salaries?

One of the big challenges always concerns the balance of properly compensating faculty for the best possible educational experience for students versus paying for the many other needs of a successful business school. The balance needed can vary based on a lot of different factors, including the financial structure of the school, its institutional control, and its overall faculty size. The chart below compares mean and median percentages for salary and non-salary uses of funds based on school size and on full-time faculty count (35 or fewer = small, 36 to 74 = medium, 75 or more = large). It is clear from these percentage averages that faculty salaries make up the bulk of the uses of funds for b-schools regardless of size.

Mean/Median Percentages of the Uses of Operating Funds 
Source: AACSB International Business School Finances Module (2013-14)

How Much Money Do B-Schools Report for Their Operating Budgets?

If salaries are the biggest answer to where the b-school funds are being used, the next question is a question of just how much money business schools have available to try to meet the needs of their students, faculty, and communities. The chart below shows the average (mean) operating budget, as reported by AACSB member schools in different geographic regions.

Average Operating Budgets in Millions of U.S. Dollars  
Source: AACSB International Business School Finances Module (2013-14)

 

[This content is also available in eNEWSLINE, February 2015.] 

The Uses of Operating Funds (Part I): Relationship with Parent Institution and School Size

By Colin Nelson

With the greater detail afforded by the new BSQ Finances Module, we can now analyze different ways in which business schools are using their operating budgets. In the first part of this series of posts, I explore how school size and relationships with their parent university/institution (if any) interact with the way that operating funds are channeled by AACSB member business schools.

For those who are not already familiar with the data elements, I defined both the faculty size categories and the different types of relationships that business schools self-report with their parent in my first post on governance models. From the data below, we can clearly see that both dimensions correlate to different ways in which business schools split their operating funds between salary versus non-salary uses.

Figure 1. Mean Percentages of Uses of Operating Funds, by Relationship Type

Note: These data come from the 342 AACSB members who entered data regarding their uses of operating funds on the 2013-14 BSQ Finances Module.

In the case of relationship types, we see a clear progression. On average, half of all reported uses of operating funds by Type C schools (fully independent business schools with no parent institution) were used for non-salary purposes, while Type B schools (semi-autonomous academic units of a parent institution) devoted slightly less than a third of their reported uses of operating funds for non-salary purposes, and Type A schools (standard academic units at a parent institution) reported that only about one-sixth of their total uses of operating funds went to non-salary purposes.

This progression makes sense, given that schools that are more fully embedded within the structure of a parent university (i.e., Type A schools) would be able to rely more on their parent to cover operating costs that do not involve personnel, whereas at the other end of the spectrum, fully independent (Type C) schools must cover the costs of all such functions themselves, without the ability to spread it out among other academic units.

 

Figure 2. Mean Percentages of Uses of Operating Funds, by Faculty Size

Note: These data come from the 342 AACSB members who entered data regarding their uses of operating funds on the 2013-14 BSQ Finances Module.

In the case of faculty size, we see a somewhat more counterintuitive pattern emerge. Larger schools apparently tend to devote a greater proportion of their operating funds to non-salary uses than their smaller counterparts. At first glance, this seems paradoxical; more faculty means more people who need salaries, right? When we look at actual amounts of operating funds budgeted and used, larger schools do tend to have larger budgets and larger total uses of funds. However, larger schools also tend to have more research centers, infrastructure, and other types of non-salary-based functions that require funds to operate (which I’ll cover to some degree in Part II of this series), and that helps to explain the paradox.

 

Figure 3. Mean Percentages of Uses of Operating Funds, by Relationship Type and Faculty Size

Note: These data come from the 342 AACSB members who entered data regarding their uses of operating funds on the 2013-14 BSQ Finances Module.

When we take both factors operating together, the interplay between them makes things more interesting. Within each size category, the correlation of greater autonomy with a greater proportion of funds used for non-salary purposes holds true. However, looking between the size categories, it seems that fully autonomous business schools with no parent institution (i.e., Type C schools) break the pattern. While I’m sure that the small sample size for the Type C schools may have something to do with that, the sample size for Type B schools is no larger, and for them the pattern does hold. It may be that Type C schools tend to work with larger absolute amounts of funds. Indeed, six of the top 10 and four of the top five reporting schools in terms of total uses of operating funds were Type C schools.

Look out for Part II of this series, in which I discuss different types of uses of funds!