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In uncertain economic times business schools often enjoy something of a popularity boom. Managers who have always intended to study for an MBA but have postponed doing so while the economy is buoyant decide that, in a downturn, studying for a qualification is a good investment.

Business schools are already experiencing this counter-cyclical trend, with many reporting an increased number of applications and enquiries for full-time programmes. However, the jury is still out over executive education.

Short courses, the bread and butter of many schools, are often the first to be axed by companies in the face of any economic downturn. And there is also a question mark over recruitment. Just how many jobs will there be for the class of 2009?

Eric Weber, associate dean at Iese Business School in Barcelona, Spain, says that so far the school is not worried about job placements, but he acknowledges that student expectations may not be met.

He suspects that bank offers, which normally account for 20 to 30 per cent of job offers at the school, will be down to about 10 to 15 per cent.

“In the banks there is little hiring and competition is going to be brutal,” he says.

However, there are jobs in industry, he adds, and consultancy remains relatively strong. There is also renewed interest in consumer goods.

“There are opportunities out there,” he says confidently.

Although he accepts that times are tough, Eric Cornuel, director general and chief executive of the European Foundation for Management Development, based in Brussels, is cautiously optimistic. He believes that European schools are less exposed and less sensitive to the economic downturn than US schools.

Prof Cornuel anticipates that many US schools, will have found that their vast endowments have suffered badly due to the financial crisis.

In contrast, he says, many European schools have some degree of state support and few if any endowments, and will not be exposed financially to the same degree.

Howard Thomas, the newly appointed chair of the UK-based Association of Business Schools and dean of Warwick Business School is adopting a cautious approach to the economic downturn when it comes to business education.

“You never know what the effect of the current economic crisis is going to be,” he says. “It is very difficult to predict what is going on.”

While in the short term he is confident that jobs will come through for MBA students, he has another concern – that of the fate of business schools themselves.

He believes the medium – and long-term prospects for some of the smaller business schools are worrying.

If the downturn is long and deep, Prof Thomas anticipates a flight to quality, with the better schools with established brands riding out the economic storm. It is the lesser schools, he says, “that may be scraping to get funding and students”.

Over the past decade there has been a rapid increase in the number of business schools, especially within China, India and eastern Europe, he adds. With the downturn having global repercussions, students may opt to study at their local or regional schools, rather than travelling overseas to the UK or continental Europe.

Moreover, adds Prof Thomas, those overseas students who do opt for European schools will represent a flight to quality and select high-ranked schools, because they can leverage the brand when it comes to their future job search.

Prof Weber also anticipates that there will be some business schools that will suffer during the current economic cycle. The better schools can still place students, he says, and the smaller schools that serve their local markets and are well connected with industry will also be able to hold their own. However, for those schools in the middle, he adds, if they are unable to place their students in jobs “the word will soon get out”.

The MBA market, he says, is a transparent one and any school which is struggling to place its students will find that applications fall.

“I think that these schools will suffer, especially if the cycle is long.”

Undoubtedly the new economic landscape that is now emerging will influence the business school curriculum. Prof Weber believes the current situation provides a great opportunity for the business education world to get its house in order.

“This crisis has taught us a few lessons,” he says. “How do you deal with finance in a crisis? How do you deal with accounting in a crisis? The [business school] industry as a whole will come out with a better understanding of what to teach and preparing better managers for the future – we have not been preparing managers for a crisis,” he adds.

For example, he says inflation accounting has not been a particularly hot topic for MBAs in the past, who seemed to prefer leadership development and coaching . Prof Weber now suspects that this may change.

“It is a wonderful time to get back to basics, to try to understand the business behind business models.”

Arnoud De Meyer, director of the Judge Business School at the University of Cambridge, also foresees changes ahead.

“Yes, we need to prepare our students for more regulation; yes, we need to give them more insights in what the new role of business in society will be and how business has to take the rest of society more into account in its strategies; yes, we need to prepare our students for a world of energy shortage …and, yes, we need to help them understand the role of sustainability,” he says.

Many of these issues call on knowledge that is not available within traditional business schools, adds Prof De Meyer, but which can be found within mathematics, engineering and philosophy – all departments that can be found at a more broadly based university.

But Prof De Meyer adds that an MBA programme is still the best way to respond to these challenges because it offers “a thorough learning experience in the fundamentals of management”.

Although no one can be certain when the current downturn will end, what is certain is that stakeholders will be looking to business schools to provide explanations. Certainly, schools will have plenty of material to draw on.

The current climate might also persuade them to engage in some introspection, adds Prof Weber.

“Now might be the time to ask a general question: are we equipping future leaders with the right knowledge tools and capabilities?”

However, Prof Weber is convinced the current situation will renew conviction in the value of an MBA, not just as an opportunity to pick up knowledge but also as the chance to look at the bigger picture.

“You have to be careful of what is going on, but tremendous opportunities lie ahead,” he says.

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