Vishal Thakkar, a commerce graduate from Mumbai’s St Xavier’s College, is in a dilemma. With around 130 business schools across the country reportedly facing closure owing to a shortage of faculty members and lack of students, Thakkar, an MBA aspirant, is unable to decide whether to opt for a standalone B-school or a university.

“The fact that so many B-schools are closing down is really shocking. What if the institute from where I choose to do an MBA shuts after a few months,” asks Thakkar. He is among many B-school aspirants who are worried about the shakeout in management education.

All the 134 business schools that have sought approval for closure from the All India Council for Technical Education (AICTE), the technical education regulator, are private management institutes. India has nearly 4,000 B-schools — more than 95 per cent of them privately run — with a seat capacity of 3.5 lakh. The institutes that have applied for permission to shut from the 2012-2013 session have a combined seat capacity of around 10,000.

Between 2006-2007 and 2011-2012, the number of seats at AICTE-approved B-schools quadrupled to 3.52 lakh. The sudden spurt in the supply of seats led to a decline in average occupancy level in 2011-2012 to 65 per cent for B-schools, according to agency rating firm Crisil.

Rekha Sethi, director general, All India Management Association, New Delhi, offers an explanation for management schools going out of business. “Because of the economic slowdown, the expected growth in the demand for management graduates has not materialised and the newer and weaker B-schools are unable to offer satisfactory placement to students. So in these lean times many of these institutes are just not viable. Moreover, the lack of quality faculty members and below standard infrastructure are the reason for the failure of some B-schools,” she says.

Most of the management institutes that shut shop were standalone B-schools which were created for the sole purpose of profiteering, points out Charanpreet Singh, dean, Praxis Business School, Calcutta. He, however, feels a university MBA programme will not close because a university follows a different funding and revenue model and runs multiple programmes, one of which is a business programme.

Experts suggest that in these uncertain times, unless one were to get into premier standalone B-schools like the IIMs or the Indian School of Business and a few others, students would do well to pursue a management programme from an established university. “Having grown with time, universities host some of the best faculty members. A part of the legacy of the university is the prestigious alumni who serve as examples of quality education and an inspiration to students,” observes Stephen D'Silva, director, Jamanlal Bajaj Institute of Management Studies, Mumbai.

Concurs Partha Chatterjee, assistant professor, Faculty of Management Studies, University of Delhi. “During lean times it makes sense to opt for a management programme offered by a university for the simple reason that it may be the best bet for getting jobs, considering its large alumni base. Some alumni members might have an inclination towards recruiting students from their old school. Also, universities are able to take a more holistic view of the curriculum and design programmes which benefit students in the long term”.

Since MBA is a serious postgraduate degree it should be pursued in a university rather than in a standalone institute, adds A.K. Sar, director, KIIT University, Bhubaneswar,

The biggest advantage of pursuing a university programme is the “credibility” associated with it, says Kaushik Mukherjee, professor, Symbiosis Institute of Business Management, Pune. “The fact that a university has given the seal of approval to the MBA programme is reason enough to believe that there is considerable ‘credibility’ associated with the degree, though the academic standards and pedagogical rigour followed by the university determine the ‘degree of credibility’ of the programme,” he says.

There is another advantage of studying in a university. “Unlike standalone schools which offer diplomas, a university offers a degree in management, which carries more value in the market,” says Debashis Sanyal, dean, Narsee Monjee Institute of Management Studies (NMIMS), Mumbai. In general, university MBA programmes offer quality education and better infrastructure facilities than standalone business schools, notes Subrata K. Sen, director of graduate studies, Yale School of Management, the US.

Also, the opportunity to offer multidisciplinary courses to MBA students is high in the university system. "Different departments such as humanities, social sciences, physical sciences and technology provide the environment in which a multidisciplinary approach to problem solving can be discussed with greater ease in a university MBA class," says Rajan Saxena, vice-chancellor, NMIMS.

However, just because the MBA programme is nestled in the university system is also not a guarantee that there would be a multidisciplinary exposure to students. "To enable this to happen, university departments should encourage students from other disciplines such as management to attend the courses offered by them. This can happen only when the university adopts a choice-based credit structure. This would necessarily involve exam reforms. Currently, university students in India receive a graduate degree only when they have studied and successfully completed their defined course of study," he adds.

Chatterjee of FMS Delhi says though students in India don't take classes from different departments as is the norm in the West, management students still benefit from the externalities of being in a university. "One can, for example, attend a lecture or a seminar related to a completely different field. Then, there are interactions between students and faculty members of different departments which hopefully broadens their horizons."

Singh concedes that though universities have certain advantages such as a multidisciplinary exposure and the availability of a larger pool of faculty members, there are certain disadvantages as well. "One, the programme may not get the attention and support it would have received were it in a standalone B-school. Two, a business programme needs to be very flexible and dynamic, in line with the rapidly changing needs of industry. A university, by the very nature of its structure, may not be agile enough. This is especially true in India where the university structure is complex and rigid – a proposal for change in the syllabus would need to be tabled at various forums and go through several levels of approval before it can be accommodated. Third, the university may adopt standard assessment norms across programmes, while a standalone B-school would have the flexibility to introduce more relevant practices like open-book exams and continual assessment, among others," he says.

Agrees Harivansh Chaturvedi, director, Birla Institute of Management Technology, Greater Noida. "Most university MBA programmes are not under pressure to change, innovate and improve, keeping in view the requirements of the changing business scenario."

But Bala Balachandran, J.L. Kellogg distinguished professor of accounting and information management, Northwestern University, the US, and founder of Great Lakes Institute of Management, Chennai, thinks that both standalone B-schools and university MBA institutes have their merits. "Generally a university has many schools and each one has the opportunity to develop credibility and reputation though scholarly activities of research and teaching. However, except a few standalone schools such as the Indian Institutes of Management or the Indian School of Business, most business schools in India are just teaching machines. When that is the case, management institutes will eventually crumble since these schools are not bothered about knowledge creation. A good business school should be able to create a scholarly atmosphere and nurture it," he observes.