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When Luis Cabral starts work in the impressive, six-story Landmark building opposite the Carnegie Hall concert venue in Manhattan this month, it will not be to the sound of audience applause or to the smell of greasepaint. An economist by trade, he will be the first professor to be based in Iese Business School’s New York campus. But Prof Cabral will not be the last: a dozen faculty members from the Spanish business school will move there over the next few years.
This Spanish school is not the only business school pursuing expansionist dreams. Indeed, the argument that recession inhibits global expansion is one that seems lost on business schools, which are pursuing international growth with vigour. Even Harvard Business School – which has always argued that students should go to Harvard, not Harvard to students – has succumbed. For the first time in its 101-year history, HBS will this month open its first teaching facility outside Cambridge, Massachusetts, in Shanghai.
While Iese’s move to the US marks the first time that a top European business school has had the temerity to tread in the backyard of some of the richest and most powerful MBA schools in the world, the past year has seen a whole raft of new business school ventures set up across the Middle East and Asia, as the regions’ corporations, governments and students develop a taste for formalised management training. What is more, they are banging at the door of established business schools to help them in their quest. These aspiring schools have the money and the will, but not the expertise, points out Colin Mayer, dean of the Saïd school at the University of Oxford, which has been approached by several aspiring institutions. Their success will depend on getting the appropriate balance between independence and accountability, he says. “The faculty will flow if they have both the money and the correct governance structure,” he says. “The governance structure is the really complex element.”
Many established schools have been willing to help – MIT Sloan set the trend for these ventures, helping schools in China in the 1990s and, more recently, in Portugal. Oxford’s traditional rival, Cambridge University, has also joined the game. The Judge Business School is helping build academic capacity at fledgling business schools in Ahmedabad, Karachi and Abu Dhabi and has plans to do so in China, too.
Dean Arnoud de Meyer says that this is the second wave of the skills transfer. The first was in the 1950s and 1960s, when Harvard helped to set up business schools in Europe – Iese and Insead were two beneficiaries. Now Europe’s business schools are going from strength to strength – London Business School is the first non-US business school to be ranked in the top spot by the Financial Times in more than a decade of MBA rankings. And it is their turn to help schools in the Middle East and Asia, he says. “As a business school we have the responsibility to help new schools,” says Prof de Meyer. But he acknowledges it is not pure altruism. “For us it is good too. We will make new friends.”
Even in India, which has proven particularly idiosyncratic in its approach to management training, changes in the law have signalled a green light to international business schools to enter the market – Canada’s Schulich school of business has been the first top-ranked school to set up a campus there.
This wanderlust is growing among students, too. Even US students, who have traditionally never looked beyond their home market to study for an MBA, are beginning to develop a roving eye, according to data from the Graduate Management Admissions Council (GMAC), which administers the GMAT, the business school entry test. In the past year, 2 per cent of US test-takers sent their scores to business schools outside the US. Minuscule though the number is, it is a rise on the previous two years (1.87 per cent and 1.57 per cent). Some 60 per cent of those students choose to study in the UK, France and Spain, according to GMAC. London Business School, HEC Paris and the Oxford’s Saïd are just three that report that the largest single nationality group on the MBA programme are Americans. At HEC, Americans account for 21 per cent of the class, says dean Bernard Ramanantsoa.
Meanwhile, a growing number of students see China as the hot place to study. At Ceibs in Shanghai, 38 per cent of this year’s incoming class are non-Chinese, says dean Rolf Cremer. Five years ago, the figure was just 19 per cent.
“They want to orientate their careers with China and the east,” says Prof Cremer, but he is concerned that their expectations are difficult to meet. “Some of them have the idea that this is a short cut to a fast expatriate package. This is not the case. We tell them that if they do not speak Chinese, they are at a competitive disadvantage.
“The foreign students are a more specialised asset. We have to use a different approach when we support foreign students and build on their specialisation.”
What has become clear for the first time in the usually buoyant managerial job market in China is that non-Chinese students take longer to get a job in the country than their Chinese peers. This was not visible until last year, he says, when recruitment was much slower.
In spite of this, the global job market, though bad in 2009, was much better than many feared. Data supplied for the Financial Times 2010 MBA rankings show that in 2009, 79.2 per cent of the students who graduated from the top business schools that participated in the ranking had a job three months after graduation. This compares with 88.7 per cent in 2008 and more than 90 per cent in 2007.
Graduates were particularly badly hit in North America, where employment dropped from just under 90 per cent in 2007 to 77 per cent in 2009. In Asia, the impact was minimal, with more than 92 per cent in jobs three months after graduation last year.
One reason that the figures were not as bad as feared was that management consultancies learnt from the 2002 downturn and continued to hire, says Jackie Wilbur, director of MIT Sloan’s career development office. Perhaps more significantly, those graduates employed on deferred contracts found that the consultancies needed them more quickly than expected, and in August and September, deferrals were rescinded.
“We found that they started to call people early,” says Wilbur. “This is very positive.”
Though recruitment at investment banks was particularly badly hit, predictions are that even there, things will improve dramatically this year. At investment bank Goldman Sachs, the bellwether in the MBA recruitment market, numbers are up both for recruiting second-year MBA students looking for a job in 2010, and first-year students looking for an internship position in the summer, says Edith Hunt, managing director and head of global recruiting.
As the employment market revives, Hunt says she believes the MBA market will “look more the same than it will look different”, in spite of the past two years of turmoil.
Many in business schools will see this as a missed opportunity at best, and a damning indictment of business schools’ inability to innovate at worst. Over the past year, most deans have opined on the need to change both the curriculum and the experience for MBA students, incorporating ethics, social responsibility and social enterprise in programmes, though hard evidence of these changes has often been difficult to find.
At IMD, on the shores of Lake Geneva, John Wells, president of the school, believes that corporations will force business schools to change. “Senior executives really do care about these things,” he says. “It is more talked about now than it used to be and I believe those are enduring concerns.”
At MIT Sloan, dean David Schmittlein notes that students are showing strong interest in such topics.
“It does resonate with them, but why?” he asks. “I’m not confident the financial crisis is the driver of this. In previous times, a challenging job situation has led them to be more thoughtful. When the next good time comes, what will interest look like then?”
Dean, Rotman School of Management, University of Toronto, Canada
“It would be wonderful if business education could shift its focus from analysis of narrowly defined problems to the creative tackling of the broad, messy problems that characterise our world – the solutions to which fuel society’s overall rate of progress.”
Dean, China Europe International Business School, Shanghai, China
“2010 will see the emergence of thought-leading schools in China, India and Russia. The structural and long-term problems now facing business and society are nowhere better understood than in the emerging economies. Business schools in these economies will react quickly and creatively with curriculum changes and new content to address the post-crisis challenges.”
Dean, Insead, Fontainebleau, France and Singapore
“My first wish is that fear begins to be replaced by a growth in confidence. My second wish is that leaders in business and government work together to create a basis for this confidence. My third is that business schools develop MBAs and leaders who have both the confidence and scepticism to help bring the global economy to a better place.”
Dean, Indian School of Business, Hyderabad, India
“Global institutions from emerging markets, with an inherent cost advantage, will become more attractive destinations for management education, as well as a resource pool for management talent. There will also be a growth in demand for research on emerging markets, accompanied by a spurt in collaborations/ partnerships among business schools globally.”
Dean, Stanford Graduate School of Business, Palo Alto, US
“The MBA is at an inflection point. You will see educators bring more critical analytical thinking and leadership skills into curricula as schools grapple with ways to prepare students to consider the broader business and social impacts of their decisions on people and organizations around the world.”
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