European business schools consolidate at home but expand abroad

The past year for European business schools has been a tale of two economies. Economic stagnation at home has resulted in consolidation, while economic growth overseas, especially in Asia, has meant rapid expansion for European business schools into these markets.

For many, the bid to teach in Asia is about more than the business opportunity: it is about the aspiration to become a globally recognised business school and one of the world’s top education players.

A handful of leading institutions, such as London Business School, Insead, Iese and HEC Paris, have already made the leap to global recognition.

“There are now several business schools in Europe with strong programmes, franchises and faculty,” says Peter Tufano, who was appointed dean of Saïd Business School at the University of Oxford in 2011, joining from Harvard Business School. “European business schools have strengthened considerably in the past quarter century.”

But there are some notable regional exceptions: there are no German schools in this global elite, for example. This will change, believes Udo Steffens, president of Frankfurt School of Finance & Management. “In Germany there are a few universities that are moving towards what we feel is an international business school,” he says. “These schools recruit internationally and they place internationally. In five years there will be a world-class business school in Germany.”

Others are less optimistic about European schools. Kai Peters, chief executive of Ashridge Business School in the UK, says that for those in the middle ground the situation “will get uglier”, with few places to hide. “The only safe spaces are local provision and a solid undergraduate programme,” he argues.

This “holed middle” concept, as Insead dean Ilian Mihov calls it, has two causes. The first is the rise of online learning, the second the rise in fees. “Students are saying, ‘if I can’t get an MBA from a top school, why bother?’,” he says.

Culture and language are two of the hurdles for this emerging global model, but perhaps the biggest stumbling block is money, and the funds needed to achieve global reach. The past decade has seen French business schools, which operate outside the traditional university system, adopt a merger strategy to achieve scale and offset risk.

In the UK, the two most prominent standalone business schools have followed suit. Henley merged with the University of Reading in 2008 and earlier this year Ashridge announced its plans to merge with Hult Business School.

But mergers bring their own problems. Prof Peters says the Ashridge-Hult merger has raised questions about how to align UK and US degree-awarding powers, how to deal with accreditations and how to manage professors and programmes. “Who owns the programmes – the business schools or the professors?” he asks. “There is more centralised control in the UK and more faculty trust in the US.”

Even single-country mergers are not easy, says Frank Bostyn, dean of Neoma, the business school created by the merger of two French Grandes Ecoles in Rouen and Reims. “In a merger you always have to take the hard decisions up front,” he says. “You only need one finance director and you have two.”

The adoption of a new name – Neoma – has also created issues around brand recognition. In France, Neoma’s new name is already quite strong, Prof Bostyn says, but “in the rest of the world it is another story – we are not automatically known”.

For those that do make a bid to be global, differentiation is key, believes Dominique Turpin, president of IMD in Switzerland, the executive education specialist. “We are moving towards a commoditisation of products and prices. Business school deans have to be obsessed with differentiation.”

We are moving towards a commoditisation of products and prices. Business school deans have to be obsessed with differentiation

Overseas alliances at degree level are increasingly popular as a way to differentiate the global from the local and regional. This March, IMD announced the launch of an executive MBA with private business school Cheung Kong in Beijing, and in June, London Business School and Fudan University in Shanghai announced they would teach a double-degree masters in management programme.

In October, Spanish business school Esade joined the club. It is launching a dual-degree MBA with Guanghua School of Management at Peking University in September 2015. At around the same time two French business schools, Audencia and ESCP Europe, also announced alliances – Audencia with two Beijing institutions, Tsinghua University and Beijing Institute of Technology, and ESCP with Tongji University in Shanghai.

Frank Vidal, dean of Audencia, believes China is now a secure market for French companies. “We have many alumni working for French companies in China. China now is in the regular course of business.”

The big unanswered question is when Asian business schools will join the cadre of globally recognised players. The biggest obstacle is securing high-quality professors, says Insead’s Prof Mihov. “It is still difficult to attract top faculty to places outside the US and Europe. The attraction is increasing, but it is not a big movement and it takes time to build a vibrant academic culture.”

Twenty-five years from now there will be top Asian business schools, but they will be in addition to US and European schools, not in place of them, believes Saïd’s Prof Tufano. “I would be shocked if there were no top business schools in the UK and Europe,” he says.

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Poll: a degree of protection

How have graduates from European business schools weathered the storm of the global economic downturn?

About 40 per cent of graduates who responded to an FT poll agreed a faltering economy had a negative impact on their careers, writes Wai Kwen Chan. More than 1,560 respondents to the survey completed an MBA, EMBA or masters in management degree in 2010 or 2011, with 70 per cent now based in Europe.

Of those who said they were affected, 67 per cent cited fewer job vacancies, 41 per cent reduced opportunities for promotion and 36 per cent loss of earnings or bonuses. A minority (13 per cent) were made redundant.

Some 77 per cent believed their business school education had helped them deal with the slowdown. They said the skills and knowledge gained from their studies and the job prospects afforded by their degree gave them a competitive edge.

After graduation, nearly 40 per cent said their schools offered them support in the form of ongoing training, access to networking events and advice from the careers service.

Despite challenging times, 72 per cent remain positive about their career prospects in the next year, with half the group expecting their country’s economic outlook to improve.

However, a third of graduates based in Europe would consider a move to another country within a year to further their career. The top destination of choice is the US, named by 53 per cent of the group, followed by the UK and Switzerland.