Value Added in Undergraduate Business Education: An Empirical Analysis

Abstract

A substantial body of research since the early fifties has been conducted addressing the economic benefits from higher education. A more limited body of research has further demonstrated that there exist important qualitative differences in the academic returns or academic performances due to college education. It has been established that such qualitative differences occur because of the choice of the major, quality of institution and quality of the students. Although graduates from higher quality institutions generally exhibit higher academic performance, this can explain only a small proportion of the variability of student’s performance. The present study attempts to address the institutional quality issue from a value-added perspective. We investigate how the business school education from an undergraduate institution can affect the academic performance of its students. Data for this study were collected in a four-year college in the northeast region of the United States. The School of Business in that institution offers majors in Accounting, Business Administration (with five specializations), and Economics. All business students must take a common core of required courses including accounting, economics, finance, marketing, management, information technology, and statistics prior to taking their courses in the major discipline. Our sample size contains 415 graduating students over two time periods: 2008 and 2012. Results suggest that undergraduate business school education accounts for about 25% to 35% of the variability of the academic performance for the students.