Wall Street Journal Asks: “What’s Wrong With Wharton?”

Last Updated Oct 1, 2013 by Staff Writer

The MBA community was whipped into a frenzy on Friday by a Wall Street Journal article that posed the question: “What’s Wrong With Wharton?”

The query was prompted by a 12% decline in the number of MBA applications for positions at University of Pennsylvania’s Wharton School over the past four years. This year, Wharton received fewer applications overall than Stanford, which has half as many spaces in its class as Wharton. The article also comes after major business news sources reported that 52% of business schools reported an increase in the number of applications they received this year. Why is Wharton, the nation’s first collegiate school of business and one of its most prestigious, lagging behind?

The Journal suggests that the decline was caused by a shift in the interests of potential MBA students. In recent decades, Wharton–now ensconced in the plush Huntsman Hall in the University City district of West Philadelphia–has established a reputation as a gilded path to Wall Street. But the financial crisis has dulled the allure of finance careers for MBA students, who have instead increasingly pursued fields like entrepreneurship and technology.

As Wharton professor Adam Grant pointed out in a rejoinder in the Huffington Post, Wharton really does have a strong entrepreneurship program–boasting alumni like red hot internet eyewear startup Warby Parker, among many others. In the past six years, the number of Wharton MBA students who launch a startup after graduation has increased from 1.5% to 7.7%, greater than the 5% average for most business schools and the 7% of graduates who launch businesses out of Harvard. Professor Grant’s piece observes that 11% of recent Wharton graduates went into the tech industry, while only 13% went into investment banking, and that Wharton students consistently land offers at Google and Facebook, along with startups like SoFi, Etsy, and ZocDoc.

Nevertheless, the school’s entrepreneurial brand just doesn’t seem to be on par with Harvard Business School and Stanford GSB, the schools it competes with directly as a legacy member of the MBA “big three.”

Indeed, Wharton’s claim to this title is growing tenuous. From 1994 to 2000, Businessweek ranked Wharton the top business school in the country, ahead of HBS and Stanford. Since then, it has been edged out of the top three by both the University of Chicago’s Booth School of Business and Northwestern University’s Kellogg School of Management.

Harvard Business School experienced a 3.9% application bump this year. Stanford GSB reported a 5.8% increase. And Chicago Booth and Kellogg both posted double digit gains. Even Columbia Business School, which experienced a shocking 19% drop in applications last year–evidence used to support the conclusion that finance-oriented schools have suffered most in the wake of the financial crisis–rebounded by increasing them 7% this year. In contrast, Wharton’s applications fell 5.8%.

Wharton’s admissions office doesn’t agree with the conclusions drawn by the Wall Street Journal. They believe in the saying “quantity does not equal quality.” The average GMAT score for applicants to Wharton rose to an unprecedented high of 725 this year, and the yield of accepted applicants who actually decide to enroll at Wharton has risen dramatically.

Ankur Kumar, Wharton’s director of MBA admissions, claims that “[Wharton’s admissions’] focus is on the quality of our applicant population, and that remains as high as ever.” Admissions representatives also observe that the decline in applications may be a result of the group discussion component added to the MBA admissions process in recent years, which may intimidate potential applicants who speak English as a second language.

Even with the decrease in applications, Wharton is still one of the best business programs in the world and provides a top notch education to MBA students. Poets and Quants, an MBA news site, suggests that, like an out of favor stock, the Wharton brand may be temporarily undervalued, and that demand for a Wharton degree will correct the decline in applications in the long term.

Of course, if it were easy to distinguish an undervalued stock from a bad one we’d all be Warren Buffett. The immediate fact is that Wharton has experienced a major dip in application volume as other top programs experience a surge. Whether or not it’s a good indicator of Wharton’s perceived strength in entrepreneurship and technology–or the quality of the students actually admitted–the drop in application volume is potentially damaging because of this disparity.

For some, “What’s Wrong With Wharton?” will naturally raise another question: what will be done to right the ship?

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