Waikato Management School is Triple Crown accredited, which means that we are accredited by all three of the main international business school accrediting agencies - EQUIS, AACSB, and AMBA. That sounds like a big deal, and it is - only one percent of business schools worldwide hold all three accreditations. Within the New Zealand context, it might not be as big of a deal, because three other business schools (Auckland, Canterbury, and Victoria) also have Triple Crown accreditation.
Does accreditation make a difference? In theory it should, because students face a problem of asymmetric information. Business schools know their own quality (presumably!), but students can't know for sure. Any business school can say they are high quality, but how would a student know for sure? This is an example of an adverse selection problem. It's a problem because maintaining high quality is costly. So, if a student couldn't tell high-quality and low-quality business schools apart, they might simply choose one at random (or based on whichever one is closest to home, or where their friends are going). This is what we refer to as a pooling equilibrium. In that situation, higher-cost business schools would not be able to compete with lower-cost business schools, and may either shut down or lower their quality. The overall quality of business school education declines, and students are made worse off.
Accreditation provides a signal of quality to students. This creates a separating equilibrium, where students can tell the high-quality (accredited) business schools apart from the low-quality (non-accredited) business schools. For a signal to be effective, it needs to meet two conditions:
- It must be costly; and
- It must be costly in such a way that those with low quality attributes would not be willing to attempt the signal.
Gaining (and maintaining) accreditation requires a significant investment in time and resources by a business school, so it is clearly costly. And an application for accreditation is not certain to lead to accreditation - some proportion of business schools that apply for accreditation will not meet the required standard. This is a risk for low-quality business schools, particularly given the expense involved, so they are less likely to apply for accreditation. So, accreditation meets the two conditions to be an effective signal to students of business school quality.
But, do students even pay attention, so that accreditation actually makes a difference to enrolment decisions? This is one question that needs to be answered, and fortunately this recent article by Julien Jacqmin (NEOMA Business School) and Mathieu Lefebvre (Aix-Marseille University), published in the journal Economics of Education Review (ungated earlier version here) uses data from 23 French business schools to answer the question. The French data is somewhat unique, in that:
After applying to a set of schools, students participate in a (partially) common entry examination, after which students who do sufficiently well are ranked by each school. Then, each student ranks the schools that ranked them from their most to their least preferred. As a final step, the SIGEM clearinghouse allocates students to schools using the Gale–Shapley deferred acceptance mechanism, which incentivizes students to truthfully reveal their preferred rank-order list... each year, SIGEM publishes, for each pair of business schools participating in the allocation system, the number of students who could have gone to school A and B and how many decided, through their individual lists, to rank school A higher than school B and vice versa. Based on this information, we compute an indicator that gives us a measure of revealed preferences for one school compared to another, from which we infer the impact of the three international accreditations.
That allows Jacqmin and Lefebvre to explore the ranking decisions of French students (in aggregate), and how those rankings change as French business schools become accredited over time (their data covers the period from 2004 to 2019, where the number of Triple-Crown-accredited schools increases from zero to nine). Their measure of interest is the proportion of students who, when ranking two business schools, prefer School i to School j (their data is dyadic - based on 4505 pairs of year-specific comparisons of business schools). Rather than focusing only on the Triple Crown, Jacqmin and Lefebvre look at the effect of individual accreditations on student preferences. They find that:
Being accredited by AACSB, EQUIS or AMBA appears to be positively and significantly correlated with students choosing to go to the school... Having an AACSB (or EQUIS or AMBA) accreditation increases a school’s matches won by 10.6 percentage points (or 3.7 percentage points or 3.6 percentage points, respectively). Using the coefficient of ranking, we find this is similar to the impact of moving up four spots in the L’étudiant rankings for the AACSB accreditation, or 1.5 spots for EQUIS or AMBA.
They also find that the effect of each accreditation is statistically significant when all three are included as explanatory variables in their model (although the individual coefficients are slightly smaller). Further analysis shows that there is no significant effect of having a single accreditation, but the effects seem to kick in when a school has two (or three) accreditations. They also find that the effects are non-linear in time, and attain their maximum effect some three to six years after initial accreditation, and that international student enrolments are associated with EQUIS (but not AACSB or AMBA) accreditation. This latter result may simply reflect that EQUIS is the European accrediting agency - it would be interesting to know if EQUIS had similar primacy among international students outside of Europe, especially since AACSB (the US accrediting agency) seems to have the largest effect overall.
These results don't definitively demonstrate a causal impact of accreditation on student rankings. They also show no statistically significant effect on actual enrolments, although enrolments are more difficult to model than ranking decisions, as the number of enrolments also reflects any supply side (capacity) constraints of each business school. One interesting supplementary result was that the effect of timing of accreditation matters, with schools being accredited just after students performed the ranking exercise seeing no benefit, in contrast to schools being accredited just before the ranking was undertaken.
Overall, these results do suggest that accreditation has signalling value for students, and that they use the signal to infer the quality of business schools (or, at least, students use the signal to infer how they should rank the business schools in their enrolment decisions). The next questions are, does this hold in countries other than France (and especially in countries such as New Zealand, where half of business schools have Triple Crown accreditation), and given the lack of effect on enrolments and the significant cost involved, does accreditation pass a cost-benefit test?
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