After years of enrolment growth, the number of local and foreign students taking MBAs in Australia has dropped by more than 20 per cent since 2003.
The trend is not unique to Australia. Business schools throughout the West are attracting fewer on-campus MBA students.
Peter Reed, director of MBA programmes at Monash University, described the collapse as "crunch time" for Australian business schools. Professor Reed said that with 50 business schools, university faculties and private providers now offering the degree via 130 different courses, Australia was over-serviced.
"Markets such as India now have outstanding business schools, and China and Malaysia are also gearing towards having their own," he said.
But Mark Rohald, local director of Heriot-Watt Australia, which has applied for permission to offer MBA courses in New South Wales, said the fall in on-campus numbers had not affected online learning. Demand for online MBAs remained strong and, in many cases, had increased, he said.
"People no longer have time to leave work and put their careers on hold for a year or more. The traditional programme has also come under pressure from universities offering specialist masters degrees in finance, accounting and other business fields," he said.
Paul Danos, dean of the Tuck business school at Dartmouth College in the US and a leading commentator on international business education, said that after the US recession started in 2002 applications fell for two years at most schools and then rose again.
"I believe that the better the school, the larger the increase in applications will be," he said.
Hundreds of new schools around the world would fill a demand in many regions, he said, but it would be a long time before the new institutions developed the faculty and infrastructure of established schools.
"Second and third tier schools will feel most of the competitive pressure,"
Professor Danos said.