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I agree with the opinion that joining a PhD program with the intention to "transfer up" should not be recommended. Not only you run the risk of "pissing off" faculty members (if you are to carry out such an intention in a public manner, which, I would argue, isn't wise to begin with), the chance for success, even with concealed intention, is probably not going to be high. I think most of my opinions have been presented by macroeconomicus, but I would like to add that academia is a much smaller and much more closed community than most expect it to be. Never run the risk of pissing off a prominent scholar in a particular field. You might think by transferring away, you'd run away from the problem, but don't be surprised that a simple phone call from the pissed off faculty will kill any chance to transfer to begin with. Or even if the faculty were decent enough to just let you transfer away, your future publication, and subsequent placement, are all open for sabotage. I am not suggesting that academia is like mafia, but the reality is that it is probably more mafia-like than most people who have this idealistic, respectful image of academia would expect. My best advice is to conduct yourself as scholarly as possible, so others in the field would have to treat you as such. Opportunistic behavior is generally not well respected.
On the more constructive note, if you ask me to give advice on how to improve your odds to get into top programs given some deficiency in records, I think going for LSE and other European master's programs is a great advice. But I would like to add that having publication is probably the best way to improve your odds. Of course, it is hard to publish at top journals even for those already in top programs, so if you can demonstrate that you have the potential by publishing at a B journal, then your chance will be greatly improved. Now I can't think of any terminal master's programs in US that might help you publish at B/B+ journals. MBA programs won't help at all. Going for a master's in economics at a teaching oriented school probably come closer, but the focus is so fundamentally different, you probably will not be able to publish anyways. Perhaps an MA in sociology or political science in teaching oriented school can give you opportunity to do some applied research that can be positioned as business research. Do not expect to go for a prestigious schools for those degrees just to transfer into business though. Those programs might be equally hard to get into. But, in fact, many great business scholars initially were sociologist (Jay Barney, for example). So that might be one way to improve your odds. But keep in mind that if you don't succeed, you might find yourself with an MA degree that you don't quite know how to leverage for your career.
Another point I want to make is that even if you can conceal your intention to "transfer up," and successfully pull it off, you might actually hurt yourself more in the process than it's worth. Transferring is a big deal. Loss of credit, different departmental policies and conventions, repositioning of research directions, are all very costly and introduce great uncertainty. Certainly, transferring is possible, and people have done it. But I think for those cases, a genuine realization that his/her research interests are better aligned with other departments is probably the reason why it was successful, not the intention to "transfer up."
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