Riding out the storm

“Portugal – Europe’s West Coast.”

This government advertising slogan for tourism and investment is meant to evoke comparisons with California – not just surfing and sunny beaches, but also entrepreneurship and innovation. A potential drawback is that it also highlights the country’s distance from the centre of the continent.

Already on the edge of Europe geographically, Portugal has recently had to grow used to being described as a “peripheral” member of the eurozone after it followed Greece and Ireland in seeking an international bailout. Business schools working to build an international reputation are keenly aware of this perception of Portugal as being on the fringe.

“I can understand how, for example, a Swedish or German parent whose son or daughter says, ‘I want to go and study in Portugal’, might ask if that is really a good idea,” says Francisco Veloso, dean of the Católica Lisbon School of Business and Economics.

But such a prospective student, he says, would be able to give his family a fully reasoned justification. To begin with, they could check the rapidly improving positions of the country’s main business schools in international rankings.

In 2011, Católica and the Nova School of Business and Economics, also based in Lisbon, both moved up more than 30 places from the previous year in the Financial Times ranking of European business schools, reaching 33rd and 39th positions respectively. (In 2012 Católica is up again to 32 and Nova to 29.) The Porto Business School (PBS) also entered the 2012 ranking for the first time at joint 55th, having broken into the 2011 FT ranking for customised executive education at 64.

Nova and Católica have both gained “triple crown” accreditation by the AACSB, Equis and Amba. Porto is accredited by Amba and Epas. Nova is also in the global alliance of 27 business schools that provide the Cems masters in management degree, being selected as Cems school of the year in both 2010 and 2011.

“These are important criteria for building an international reputation, particularly when the euro crisis means Portugal is not always seen in the most favourable light,” says Prof Veloso.

In spite of the European downturn and a deep recession affecting Portugal, Católica is enjoying “phenomenal” growth, he says, with international applications for the school’s pre-experience degree courses up 40 per cent on last year.

Demand for undergraduate courses, mainly from Portuguese students, is holding up well. Applications have also increased for the country’s other main business schools.

José Ferreira Machado, dean of the Nova school, says increasing global competition between business schools has motivated Portuguese institutions to strive for improvement in recent years as they seek to gain critical mass and establish strong brands. The effect of the Bologna Process, designed to standardise European university education, is being felt especially strongly in the area of masters programmes.

“From our perspective, what’s happening in Europe is excellent,” says Prof Veloso. “The designers of Bologna are really getting what they planned: a European-wide market for second-cycle higher education.”

As well as building core quality credentials, Portuguese schools have developed specialised areas that they see as distinctive. All three leading schools have developed ties of varying degrees with the fast-growing Portuguese-speaking economies of Angola, Brazil and Mozambique. Nova, for example, runs several exchange and dual-degree programmes with Brazilian universities and founded its Angola Business School in 2010, establishing what Prof Ferreira Machado calls a “South Atlantic triangle”.

Other focus areas include the development of “soft” personal skills. Católica, for instance, operates a “leadership lab” and plans to set up a mock supermarket to study customer behaviour and personal interactions. Nurturing entrepreneurship and innovation is another important dimension for business schools.

In tough economic times, Portuguese schools also see their relatively low tuition fees as a competitive advantage. Prof Ferreira Machado recalls how one prospective student from the US, when recently quoted the fee for a three-semester masters programme asked: “That’s per semester, right?” Fees for a three-semester masters degree course at Nova or Católica are typically between €7,000 and €9,000. Tuition fees are about €33,000 for the one-year Lisbon MBA, provided jointly by Católica and Nova, and €20,000 for the Magellan MBA at PBS.

If Portuguese schools are charging lower fees than many competing schools elsewhere, can they afford to offer faculty members competitive pay packages? Nova has seen three professors leave for UK universities recently after austerity measures led to Portuguese state employees suffering salary cuts of about 30 per cent over two years. Big tax increases are also planned for 2013.

“The job market for professors is truly global and we have to offer competitive salaries to get the faculty we want,” says Prof Veloso. As the only wholly private business school in Portugal, Católica is not affected by public sector pay cuts, while tax exemptions for some highly qualified foreign researchers benefit all schools.

But the uncertainty created by the debt crisis is a concern, often affecting spouses of potential faculty members, who may question what job opportunities recession-hit Portugal can offer.

“In nominal terms, the salaries we offer may not be as high as in other European centres, but living in Lisbon does not cost the same as living in Paris or London,” says Prof Veloso. PBS, for example, says the cost of living in Porto is one of the lowest in western Europe, estimating monthly living costs at about €450-€600 a month. Schools also believe the pleasures of living in Portugal are as big an attraction as the cost. “Lisbon is a gorgeous, friendly city close to the sea where people feel snug and comfortable,” says Prof Ferreira Machado.

“Porto is one of Europe’s coolest, most affordable and safest cities,” according to PBS. “The education students get [at Católica] is as good as anywhere else in Europe,” says Prof Veloso. “And if you like to surf at weekends, it’s even better.”