Eastern Europe comes into its own with home-grown business schools

The fall of the Berlin Wall almost three decades ago brought sweeping political and economic change to central and eastern European countries. The collapse of communism also lifted the fortunes of the region’s business schools, which have grown in reputation, quality and number.

The Central and East European Management Development Association (Ceeman), a global management development group, has 99 business school members in central and eastern European (CEE) countries. That is up from 13 members — CEE schools and companies — when the association was established in 1993.

The number of the region’s schools that are accredited by the AMBA, AACSB and EFMD’s Equis awarding bodies has increased by 150 per cent over the past decade, from 14 to 35. Six are included in the FT’s European Business School Ranking 2018, up from two in 2008.

Danica Purg is dean of Slovenia’s IEDC Bled School of Management, which she founded in 1986 when the country was part of former Yugoslavia. Also the president of Ceeman, she says improvements in the quality of education have come from faculty. Teaching talent was previously scarce because academics brought up in the former eastern bloc were often unfamiliar with western business terms, markets and English, the language in which all of Bled’s programmes are taught.

“In the beginning we [CEE schools] borrowed visiting professors from abroad. Now we’re developing our own,” Prof Purg says. Some 600 academics have graduated from a Ceeman development programme established in 2000 to improve teaching quality across the region, for example.

Prof Purg adds that exchange programmes with western schools, enabled by the EU’s Erasmus+ student and faculty exchange programme and access to top case studies have also driven improvements in quality.

“We are much more interconnected with schools abroad,” she says. “But while we were once copying the west, now we are sharing knowledge with it.”

The growing number of global companies in CEE countries has helped to raise demand

She cites Ceeman’s case study writing competition, which promotes the development of cases about companies in emerging economies. Meanwhile, the growing number of global companies in CEE countries has helped to raise demand for higher-quality management training. Companies such as Amazon, BMW and JPMorgan have set up hubs or development centres.

Alojzy Nowak, dean of the Faculty of Management at the University of Warsaw, says about 60 per cent of full-time MBA students today are employer-funded, a 20-25 per cent increase on a decade ago. “[Polish companies] want global employees who can take their products and services overseas, as their wealth, exports and foreign direct investment grows,” he says.

Yet most prospective business school students study abroad. More than half of eastern Europeans who sat the Graduate Management Admission Test (GMAT) last year, for instance, sent their scores to US and UK schools. The pool of domestic students is also shrinking as populations in many eastern European countries fall.

Deborah Somers, regional director for Europe at the Graduate Management Admission Council, which administers the GMAT, says the full-time MBA is not woven into the fabric of eastern European business as it is in the west. There is more of a tradition of part-time and executive programmes.

A reason could be concerns about time away from work and forgoing earnings that can be lower than in western Europe. The average annual MBA salary last year in eastern Europe and central Asia was $57,000, a third less than the western Europe average of $85,500, according to education marketing company Quacquarelli Symonds.

The Moscow School of Management Skolkovo in 2014 changed the format of its MBA programme from full- to part-time because of waning student demand amid economic uncertainty. About 3,000 people applied for a place this year, up from about 90 when the part-time format launched.

Andrei Sharonov, dean of the school, says the growth was largely driven by the introduction of scholarships three years ago. The availability of scholarships is an important consideration for Russian students because depreciation of the rouble has made overseas courses more expensive. About half of the part-time MBA cohort each year receive them, with the majority getting €20,000.

Shahin Lauritzen, a 52-year-old Dane, was lured to IEDC Bled by course fees that are cheaper than at top western schools. With wages rising and unemployment falling, he was also attracted by the region’s career opportunities.

He spent about €50,000 on tuition, travel and living expenses for the two-year, part-time executive MBA. On graduation in 2008, he co-founded the Skandia Consulting Group, which operated primarily across CEE countries, and he now runs a technology start-up in Switzerland.

“My success in the past 10 years is very much a result of my time at Bled,” Lauritzen says. He relates the example of developing leadership through music and art — in one task the EMBA cohort conducted a choir. “That helped me understand how to motivate, manage and incentivise people,” he adds.

The challenge for CEE business schools is surmounting the uncertainties sparked by rising political tensions and economic nationalism in countries where business education is strongest, such as in Poland and Russia.

Eric Cornuel, chief executive of the European Foundation for Management Development (EFMD), says that international applications could be hit by political turbulence. But he adds that the region’s economic growth, which outstrips that of many other emerging markets as well as western Europe, will continue to attract businesses, jobs and students. “For a long time management in this region was dormant,” he says. “Now it is flourishing.”