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«A COMPARISON OF AACSB, ACBSP, AND IACBE ACCREDITED U.S. BUSINESS PROGRAMS: AN INSTITUTIONAL RESOURCE PERSPECTIVE Kyle E. Brink, Western Michigan ...»

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BUSINESS EDUCATION & ACCREDITATION ♦ Volume 4 ♦ Number 2 ♦ 2012

A COMPARISON OF AACSB, ACBSP, AND IACBE

ACCREDITED U.S. BUSINESS PROGRAMS: AN

INSTITUTIONAL RESOURCE PERSPECTIVE

Kyle E. Brink, Western Michigan University

Clair A. Smith, St. John Fisher College

ABSTRACT

Accreditation is a means by which business programs can assure accountability and quality to their stakeholders. However, attaining and maintaining accreditation can be a costly endeavor. The Accreditation Council for Business Schools and Programs (ACBSP), the Association to Advance Collegiate Schools of Business (AACSB), and the International Assembly for Collegiate Business Education (IACBE) differ with respect to the cost of accreditation and the rigidity and rigor of their accreditation guidelines. Therefore, we hypothesize that institutional resources may be a determining factor in the choice of accreditor. Our results provide compelling evidence to support our hypothesis.

Public institutions are more likely to have AACSB-accredited business programs, whereas private institutions are more likely to have ACBSP- or IACBE-accredited business programs. Research institutions are more likely to have AACSB-accredited business programs, whereas master’s and baccalaureate institutions are more likely to have ACBSP- or IACBE-accredited business programs.

Institutions with AACSB-accredited business programs have the most assets and equipment, generate the most revenue overall and from all revenue sources examined except tuition and fees, expend the most on instruction, pay the highest professor salaries (at all ranks), and they have the most personnel (both total staff and instruction/research and public service staff) and students.

JEL: I20; I21 KEYWORDS: Higher Education; Business Education; Accreditation; AACSB; ACBSP; IACBE

INTRODUCTION

B usiness education and higher education in general face criticism on several fronts and are subject to increasing scrutiny. Enrollment and tuition are up, yet the benefits of higher education are suspect. Pringle and Michel (2007) advised that “state legislators, parents, taxpayers, and donors want universities to justify their investments by providing evidence of student learning” (p. 202). This justification seems warranted given Arum and Roksa’s (2011) compelling evidence demonstrating that undergraduate students are learning little, partly because of the lack of rigor at institutions of higher education. In addition, possessing an MBA degree and the mastery of MBA subject matter (i.e., grade point average) are uncorrelated with career success (Pfeffer & Fong, 2002). Business schools are at a crossroads and it is time to seriously rethink or redesign business education (Datar, Garvin, & Cullen, 2010). The Wall Street Journal recently reported that corporate recruiters are questioning the value of the undergraduate business degree and “they’re looking for candidates with a broader academic background” (Korn, 2012).

In light of these criticisms, it would be prudent for business schools to assure their stakeholders of quality and accountability. Accreditation is one method of holding a program or institution accountable and demonstrating that the program/institution meets at least a minimum quality threshold. The Council for Higher Education Accreditation (CHEA) defines accreditation as “a process of external quality review created and used by higher education to scrutinize colleges, universities and programs for quality assurance and quality improvement” (Eaton, 2011, p. 1). Accreditation serves several roles, two of which

K. E. Brink & C. A. Smith | BEA ♦ Vol. 4 ♦ No. 2 ♦ 2012

include “assuring quality” and “engendering private sector confidence” (Eaton, 2011, pp. 2-3). CHEA indicates that “accreditation in the United States is about quality assurance and quality improvement. It is a process to scrutinize higher education institutions and programs” (Eaton, 2011, p. 11).

The goal of CHEA is to assure “that accrediting organizations contribute to maintaining and improving academic quality” (Eaton, 2011, p. 9). CHEA’s role is to review and scrutinize the quality and effectiveness of accreditors and “recognize” them. CHEA does not accredit institutions or programs;

rather, CHEA accredits the accreditors. CHEA recognizes 60 institutional and programmatic accrediting organizations, including three that accredit business programs: the Accreditation Council for Business Schools and Programs (ACBSP), the Association to Advance Collegiate Schools of Business – International (AACSB), and the International Assembly for Collegiate Business Education (IACBE).

Attaining and maintaining accreditation may help a business program distinguish itself based on quality.

However, accreditation requires a substantial financial investment. Roberts, Johnson, and Groesbeck (2004) indicated that “the annual incremental cost increases for even a small school…can easily exceed $500,000” (p. 112). Given the sizable financial investment that is required for a business program to become accredited, the support of the broader institution is critical. As Scherer, Javalgi, Bryant and Tukel (2005) explained, “deans cannot achieve the desired objectives without the support of the central administration and adequate resources, which to some degree are governed by the institutions’ central administration. Institutional resources are essential for driving the mission and achieving the goals” (p.





656). Surprisingly, we could not find any research that considers the influence of institutional resources on choosing a business program accreditor. This paper aims to fill that void by analyzing the relationship between institutional resources and choice of accreditor. We will first discuss the direct and indirect costs associated with attaining and maintaining AACSB, ACBSP, and IACBE accreditation. Next, we summarize differences in the guidelines proffered by the three accreditors and how they affect the less visible costs of accreditation. Ultimately, the three accreditors require varying levels of financial commitment. Therefore, we hypothesize that the choice of business program accreditor may depend in large part on the resources of the institution. Statistical analysis provides support for this hypothesis.

BACKGROUND AND LITERATURE REVIEW

All three business program accreditors are international in scope and, not surprisingly, the age of the accreditor is related to the number of programs it accredits. The AACSB is the oldest of the business school accreditors, founded in 1916. The AACSB is also the largest of the accreditors, accrediting 649 programs globally (488 in the U.S.). The AACSB had a monopoly on U.S. business school accreditation until 1988, when the ACBSP was founded. The IACBE is the newest of the accreditors, founded in 1997.

There are 391 programs accredited by the ACBSP globally (322 in the U.S.) and 157 programs accredited by the IACBE globally (133 in the U.S.).The financial cost of attaining accreditation is quite substantial for the business program seeking accreditation as well as the institution to which it belongs. The direct costs for obtaining AACSB accreditation include one-time expenses of $13,000 and an annual $4,500 accreditation fee (AACSB, n.d.a). The direct costs for obtaining ACBSP accreditation include one-time expenses of $7,400 and annual expenses of $2,450 (ACBSP, n.d.a). Finally, the direct costs for obtaining IACBE accreditation include one-time expenses of $7,500 and annual expenses of $2,750 (IACBE, n.d.).

The AACSB requires re-accreditation on a five-year cycle, whereas the ACBSP and IACBE are on a tenyear cycle. After factoring in the review cycle differences, the direct cost of AACSB accreditation is three to four times the direct costs of IACBE or ACBSP accreditation.

The aforementioned direct costs are the bare minimum. Workshops, conference fees, airfares, meals, and consultant fees can exceed $50,000 in a modest effort to achieve AACSB accreditation and approach $100,000 in a more aggressive attempt (Roberts et al., 2004). Furthermore, the direct costs paid to accreditors are only a fraction of the overall financial impact of accreditation. The assessment required

BUSINESS EDUCATION & ACCREDITATION ♦ Volume 4 ♦ Number 2 ♦ 2012

for assurance of learning requires both financial and human resources. The majority of respondents surveyed by Pringle and Michel (2007) estimated that their costs of assessment (e.g., expenses associated with workshops, faculty release time, assessment committee meetings, and software) exceeded $10,000.

Kelley, Tong and Choi (2010) found that many schools have budgets exceeding $15,000 for implementing the assessment program.

There are also less visible costs such as faculty time and salaries (Lowrie & Willmott, 2009) that require additional financial resources. Several researchers have examined faculty resource requirements of AACSB-accredited programs (we found no research with respect to programs accredited by the ACBSP or IACBE). For example, AACSB-accredited schools have more faculty with terminal degrees than do non-AACSB-accredited schools (Yunker, 1998). Faculty salaries are higher at AACSB-accredited programs (Levernier & Miles, 1992). Bell and Joyce (2011) found differences at all ranks (instructor, assistant professor, associate professor, and full professor) in the state of Missouri; faculty at AACSBaccredited schools earned $15,593 more on average. Hedrick, Henson, Krieg, and Wassell (2010) found that faculty at AACSB-accredited schools earn approximately 50% more as measured by basic salary;

regression analyses controlling for selection bias and institutional and regional factors found quantitatively smaller but qualitatively similar results.

In addition to higher salaries, AACSB-accredited programs provide faculty incentives including training, support staff, stipends, and release time from teaching (Kelley et al., 2010). Faculty in AACSBaccredited schools are reallocating their efforts from teaching and students toward research (Roberts et al., 2004). They have lighter teaching loads (Yunker, 1998), teaching one less course per semester/quarter on average and earning about twice as much as faculty at non-AACSB-accredited programs when measured by pay per course taught (Hedrick et al., 2010). Furthermore, Yunker (1998) found that AACSBaccredited programs have more faculty than non-AACSB-accredited programs. Similarly, Jantzen (2000) found that non-candidate programs have far fewer full-time faculty compared to AACSB-candidate

schools. Hedrick et al. (2010) stated that:

because accreditation is costly, requiring the recruiting and retention of more productive (and hence more costly) faculty, universities with more resources are more likely to seek and obtain accreditation. (p. 289) … In deciding whether to obtain or maintain AACSB accreditation, university administrators should consider its full cost – which includes the cost of higher paid instructors teaching fewer courses.

(p. 290) All told, the financial resources required for accreditation can be considerable. Heriot, Franklin, and Austin (2009) collected data from AACSB-accredited programs regarding one-time costs (e.g., use of consultants, mock review, peer-review team, infrastructure upgrades) and increased annual expenditures (e.g., faculty salaries, recruitment, technology, professional development, library holdings and information access, AACSB dues and conference participation). Heriot et al. reported means calculated based on only the schools that incurred the costs. We re-analyzed their results and calculated overall means (including the schools that did not incur costs), and our re-analysis indicates that, on average, the business schools in their sample expended $31,770 on one-time costs, and increased annual expenditures by $359,054. Furthermore, one school in Heriot et al.’s sample reported an annual opportunity cost of $400,000 as a result of program reductions in order to support accreditation efforts. The majority of deans in their sample indicated that they did not fully anticipate the costs that were incurred by the

accreditation process. Scherer et al. (2005) described the grim financial reality of accreditation:

During tough economic times, business schools find it increasingly difficult to fund and sustain programs and attract and retain the highly qualified faculty necessary to meet the expectations of K. E. Brink & C. A. Smith | BEA ♦ Vol. 4 ♦ No. 2 ♦ 2012 accreditation. Business school deans are feeling the pressure to generate outside funds in the form of gifts and endowments to support programmatic needs. Without adequate funds, support for research, teaching, and continuous quality improvement initiatives cannot be satisfactorily implemented. (p. 659) … Second-tier schools are facing pressure to recruit more students for financial reasons…Similarly, these schools do not have the necessary reputation or financial leverage to recruit the best faculty. In preparing for AACSB International accreditation, these factors need to be kept in mind. (p. 664) The less visible direct and indirect costs of accreditation may vary by accreditor depending on the rigor of their respective guidelines. Therefore, it is important for institutions to consider the similarities and differences between the accreditors’ guidelines. The accreditation guidelines provided by all three accreditors are mission-based. The AACSB changed to mission-linked standards in 1991, whereas the ACBSP and IACBE were mission-based since inception. Many scholars have suggested that the emergence of the ACBSP as a competitor may have been partially responsible for AACSB’s change to mission-linked standards (Lowrie & Willmott, 2009; McKenna, Cotton, Van Auken, 1997; Ramey, 1993). The accreditation guidelines proffered by the three accreditors are similar with respect to the overall content and underlying principles. Julian and Ofori-Dankwa (2006) described several similarities in the mission focus of the three accreditors. Furthermore, Ramey (1993) suggested that ACBSP is a clone of AACSB and Lowrie and Willmott (2009) stated that the mission linked approach of AACSB is “emulated by its national competitors, the ACBSP… and IACBE” (p. 412).



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