Can Traditional Higher Ed Sustain Its Advantage?

How Network Effects Give Online Education an Edge

Online education has an important advantage that may allow it to overcome traditional higher education in the long term: network effects.

For a firm to remain profitable over time, they must develop a distinct advantage over their peers and have the ability to sustain that advantage over a long period of time.

According to Darden’s Foundations of Business Strategy class, one of the ways a firm creates barriers to imitation to help sustain that advantage is through the value derived from tight combinations.

Tight combinations or network effects increase the value of the product as more people use the product. The most common example is Facebook. The more people that use Facebook, the more valuable Facebook becomes for others on the network.

Traditional higher education limits its potential by not expanding its total enrollment. While they benefit from exclusivity and prestige from a low acceptance rate, they limit their potential for greater network effects.

Some institutions have recognized the opportunity and need to expand, but they are typically slow to move.

On the other hand, the internet enables the ability to scale and offer education to a larger number of people at a low cost. Without the costs of physical infrastructure, online alternatives are better positioned to take advantage of the power of network effects.

At MyMBA, we have created an accessible, low-cost alternative that can be taken by people around the world.

In addition, MyMBA focuses on tapping into existing networks and communities online.

The internet makes meeting and connecting with new people easier than ever. As we say, the internet is your business school happy hour. We work to connect with people on the internet by learning and creating publicly online.