the competitive (dis)advantages of european business schools

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The Competitive(Dis)Advantages of EuropeanBusiness Schools

Don Antunes and Howard Thomas

Although the US business school model has come to dominate the business school

landscape, European schools have developed their own identities, styles and approaches

to management education. In particular, they focus on reflective, integrative and action-

based learning, public sector management and public policy issues and offer a greater

sensitivity to international relations. This paper explains the evolution of business schoolson both sides of the Atlantic and using evidence from rankings published annually by the

Financial Times, addresses the key features of European business schools. It then maps

the competitive characteristics and the relative strengths and advantages of European

schools over their US counterparts.

2007 Elsevier Ltd. All rights reserved.

IntroductionOver the past 30 years, business schools and, particularly, MBA programmes have been among thefastest-growing segments in higher education.1 They have also attracted widespread debate andcritique about their value and role in society in general and to the profession of management inparticular. Corporate scandals such as Enron have suggested to some commentators that businessschools do not promote and enforce high ethical and professional standards. They have, therefore,questioned whether management as a profession can be compared to law and medicine. In short,business schools are facing an identity and image crisis.

US business schools dominate the business school landscape, particularly for the MBA degree. AsPfeffer and Fong note, this fact has caused business schools in other countries to imitate USschools as a model for business education and has resulted in the globalisation of managementeducation being US-led.2

Using sources drawn from the research literature on the history and development of businessschools, and from statistical analysis of the global rankings of business schools published by theFinancial Times, this paper argues that there are distinct differences between European and USmodels of business education. It refutes the idea of a single, globalised model of managementeducation, as the evidence suggests that a distinctive set of national business school role models

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have emerged over time in Europe. It examines how these alternative management educationmodels have developed in Europe and uses a theoretical model based on a social constructionistapproach, together with other evidence to highlight the key elements of differentiation betweenEuropean and US business schools. It also discusses the implications of these differences formanagers and for the future competitive strategies of European management schools.

The paper begins with a discussion of the studys research and evidence approach, followed by

a brief literature review of the history and background of business schools. It then presents thesocial construction model and maps the landscape and competitive characteristics, strengths andadvantages of the European schools. Finally, it summarises the findings and draws a number ofconclusions.

Research approach and methodology

At the outset, it is important to be clear about the nature of the research approach that justifiesthe papers conclusions. The paper relies on two main methods of research to present its evidenceabout the evolution and current positioning of European business schools. First, it analyses andreviews literature on management and higher education to explore the history and development

of business schools. This provides the context for the study and is the background which moti-vates the proposition that business education is a social construction and leads to the formulationof a social construction model to explain the business school industrys evolution.3 Second,evidence from a wide range of literatureeacademic, website, media, school brochures, etc.eisused to understand the competitive strengths and weaknesses of European business education.This secondary data is reinforced by specific analysis of seven years of data (1999e2005) drawnfrom one of the most comprehensive and well-regarded rankings of business schools, namely, theannual rankings of global full-time MBA programmes in the Financial Times (FT). [Appendix 1provides details of the criteria and weightings used by the FT in its ranking process.] Statisticalanalysis of this database shows that six factors in the criteriaesalary, salary increase, placement

success, alumni recommended, faculty with doctorates and FT research ratinge

correlate stronglywith a schools final ranking.4 However, in this paper, we analyse the stability in the rankingsover time to identify elite schools (as a surrogate measure of strong reputation or brand), usingthe seven-year average rank as a simple measure (see Table 4). We also analyse the comparativeperformance of US and European schools over the same period. This latter analysis shows clearly(see Table 5) the areaseinternational dimensions, value for money and career progressewhereEuropean schools are stronger than US schools, providing quantitative support for identifyingrelative competitive strengths.

We immediately turn to the first research element, namely a brief review of the history of thebusiness school.

Business schools: Background and History

Business schools have gained strong recognition over the last 100 years. From their initial establish-ment in the 19th century in continental Europe and the US, they have become highly legitimisedinstitutions in the US since the early 20th century and have expanded worldwide over the secondhalf of the 20th century, so that formidable competitors sensitive to local market needs now existin Europe, Asia and Latin America.5 The knowledge provided by business schools shapes the struc-ture of management development activities and academic programmes which, typically, includedegrees at the undergraduate, masters and doctoral levels, as well as post-experience educationthrough non-degree programmes such as company-sponsored executive courses.

It is important to recognise that the impetus for the evaluation and development of businessand management knowledge within higher education originally started in Europe, not in the US.In fact, the idea that the knowledge of commerce should be institutionalised and taughtstarted in continental Europe, as a result of the military power of the Napoleonic and Prussianregimes.

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For instance, in France, the Paris-based Ecole Superieure de Commerce was founded by the ParisChamber of Commerce in 1819, with the aim of complementing the quality of engineering educa-tion, and with the goal of becoming a school beyond secondary technical educationean ambitiononly achieved in 1854. The mid-19th century also saw the foundation of a school of commerce inAnvers, Belgium in 1852. In Italy, a school of commerce was founded in Venice in 1867. In the late19th century, similar schools appeared in Austria (Vienna, 1856), Germany (Aachen, 1898; Cologne,

1901; Frankfurt-am-Main, 1901; and Mannheim 1907) and Switzerland (St Gallen, 1898).6

However, in Europe business school education developed more slowly and on a national, ratherthan regional, basis. In the UK, for example, there was little development after the foundation ofschools of commerce at the universities of Birmingham (1902) and Manchester (1904). Thepost-World War II recommendation of the British Institute of Management, created in 1947ethatbusiness schools should be developed in the UKewas not implemented. It was only in the 1960s,following the Franks Commission Report, which had a similar policy intent to the Ford andCarnegie reports in the US in 1959, that the business school model was accepted.7 Franks policyrecommendations led to the birth of business schools to provide leaders and much needed cap-tains of industry, with the development of London Business School and Manchester Business

School as elite, full-time MBA programmes designed around the two-year full-time US-basedMBA model.8 Subsequently, newer business schools, such as Cambridge (Judge), City (Cass), Cran-field, Henley, Lancaster, Oxford (Said) and Warwick (WBS) have developed MBA programmes ofan increasingly diverse character but, primarily, of a one-year, full-time duration.

The picture was rather different in the US but with extremely interesting linkages to develop-ments in European management education. In the US, the development of business schools startedtaking shape a little later than in Europeethat is, in the late 19th centuryeinfluenced heavily, asSpender notes, by the Cameralist traditions of German universities such as Halle and Berlin(founded in 1906).9 They gained a fuller and more solid consolidation in the 20th century.10 Thespread of this type of institution all over the US was fast, with the development of both independentand university-based business schools. By the early 1900s names such as Wharton (formed byEdmund James after extensive study of economics in Germany), Chicago, Harvard (formed by Ed-win Gay in 1904 after doctoral study in economics at the German Cameralist School in Berlin),Columbia and Dartmouth had already started to gain recognition.11 Formalisation of degree-levelbusiness education progressed quickly. Wharton launched a Bachelors programme in business in1881, Dartmouth offered the first Masters degree in business in 1900 and Harvard launched theMaster of Business Administration (MBA) degree in 1908. A number of business schools werecreated afterwards but tended to rely on the earlier European models.

The era of development of business schools in the US until the late 1950s could be described asthe trade-school era. These schools, typically, catered for undergraduate students (with somepractically-based Masters programmes), did not undertake much research and taught from a de-scriptive viewpoint. This trade school orientation changed rapidly, following influential reportson management education from the Ford and Carnegie Foundations in 1959.12 These reports for-mulated policy prescriptions that drove the development of business schools towards a research anddiscipline-led focus with an emphasis on scientific method, research and knowledge creation anda strong focus on graduate education in business. This focus also created a significant gap betweenthe rigour of the scholar, discipline-based, academic research tradition anchored firmly in the eco-nomic and social sciences and the relevance of understanding and improving management practicefor the management clients of business schools.

The idea that the knowledge of commerce should be institutionalised

and taught started in continental Europe

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top of the apex of the pyramid, the reputation or goodwill that a school builds up over time asa consequence of the social capital generated over time.

The first levelewhich covers the early 20th centuryeis the period during which different businessor commerce schools, typically in national contexts, began to create their unique product positionsand, through a process of developing and sharing their visions among each other, defined frames ofreference or boundary beliefs about the nature of such a school, usually with definitions such as weare a school of commerce (UK schools). Each of the schools (such as the German Handelshoch-schulen) was also influenced by the set of cultural, legal and regulatory characteristics in their homecountry, which also determined factors such as the rate of adoption and size of those schools.

Throughout the rump of the 20th century, and at the second level of our model, the differentindustry logics and beliefs about business schools became much more widely shared. The faststandardisation of the US-style business school model, focused around the MBA, established thatmodel as a strategic reference point and, ultimately, as a dominant industry model or recipe, whichis self-reinforcing and taken for granted.21 During this process, at the national level, locally-definedschools tended to imitate each other and adapted to each others norms and practices and, then,explored and embraced the promising practices from key reference points and countries, such asthe US-style model.22 Such institutionalising processes across the entire global business school do-main argue that adaptation to consensual models or recipes is likely to occur.23 As a consequence,nationaleor, perhaps, key regionaleplayers become the immediate role models, such as the Grande

Brand

Loyalty

Governance

Funding & Endowment

International Mindset

Innovation

Knowledge Transmission

Corporate Linkages

Language, Culture, Regulation

Standardisation

Size

REPUTATION STATUS

Figure 1. Differentiation Factors

Each of the schools was influenced by the set of cultural, legal and

regulatory characteristics in their home country



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Ecoles in France, but with the elite US business schools (such as Wharton and Harvard) as theglobal role models or recipes.

As business schools evolved from the 1970s until the present dayethe third level of ourmodelethe reputational elites and structures become well-developed with clear identities ofindustry leaders and national and regional champions established. Harvard, Chicago, Stanford,MIT etc became the leaders in the US with IESE in Spain, Bocconi in Italy etc established as leading

national schools in Europe. Consumerism pressures (ie reputational rankings from the FT, TheEconomist etc) and accreditation processes such as AACSB (the Association to Advance CollegiateSchools of Business) International, Equis (European Quality Improvement System) etc, have alsoheightened the reputations of national champions and the industry leaders through the regularpublication of league tables and strong social recognition of their values. In essence, the reputationorderings that emerge over time develop from the social codings and interpretation of businessschool differences in performance.

In summary, the model suggests that first-level industry beliefs, second-level industry recipes andthird-level reputational orderings together represent the cognitive foundation of the business schoolcommunities, leading to the present day social construction of the business school industry. The

European schools of today, therefore, rely on insights drawn from a mix of national and Europeanregional models as well as key reputationally strong US schools. To reinforce these points, we reviewthe current landscape of European management education, and attempt to show, through a moredetailed examination of the model, how the differences between European and US-style manage-ment education are formed.

The European landscape in management education

Table 2 provides a partial map of the management education landscape in Europe, which dem-onstrates the breadth of the market. In France, for example, Insead, a private school based in Fon-tainebleau, is an European outlier in that it competes strongly with the major US schools,

whereas HEC/ESSEC/E. M. Lyon and ESCP/EAP are the so-called French Grande Ecoles, the Frenchelites (ie the most prestigious and, perhaps, more theory-driven schools). Bordeaux, ESCEM-Tours,Grenoble, Nantes (Audencia), Toulouse etc, on the other hand, are exemplars of the 25 EcolesSuperieures de Commerce (essentially, more practice-orientated schools) all of which are linkedinstitutionally with the training and education needs of local chambers of commerce and areanchored to the regions whose companies provide significant financial support.

In Germany, business schools were slow off the mark in adopting separate institutional forms,despite the long German heritage of management education. This is largely because of the Germantraditions in education with five-year first degree courses in businessethe so-called Diploma-Kauf-mann as the dominant educational model. With the advent of the Bologna Accord in 1999, whichsought to harmonise the framework of higher education degrees in 40 European countries (a systemwhere a Bachelors degree lasts three to four years at a maximum and a Masters course lasts one totwo years), there has been a clear trend towards MBAs in Germany at schools such as Koblenz (pri-vate), Mannheim (a university-based school) and ESMT (the European School for Managementand Technologyea prestige private school).

Spain, for a relatively small European country, has three highly-regarded business schools. IESE,supported by the Opus Dei (and developed with academic assistance from Wharton and Harvard)and ESADE, supported by the Jesuits, are both university-based schools, whereas Instituto de Em-presa in Madrid is a standalone, perhaps, more professionally-orientated business school.

In the UK, according to the Association of Business Schools (ABS), there are now more than 100MBA programmes available from a wide range of schools.24 London Business School (LBS), like

Insead in France, follows a US-style business school model and attempts to compete stronglywith the major US schools. Henley and Cranfield focus much more on MBA and executive educa-tion programmes, whereas university-based business schools, such as Cass-City, Judge-Cambridge,LUMS-Lancaster, Said-Oxford and WBS (Warwick Business School), offer a wider range of pro-grammes from undergraduate to post-experience programmes.



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Scandinavia and Northern Europe have a widely-regarded range of national champions inmanagement education in Stockholm, Oslo, Helsinki and Copenhagen, and a Scandinavian ap-proach to management exemplified in journals such as the Scandinavian Journal of Managementand the Scandinavian Journal of Economics. Finally, eastern Europe has developed its businessschools over the past 15 years, with schools such as Warsaw and the Kozminski EntrepreneurshipSchool in Poland and the George Soros-funded school in Budapest leading the business school rev-olution in the transition economies.

The snapshot provided by Table 2 indicates the diversity, quality and range of cultural offeringsprovided by European business schools. For example, in the UK there are clearly a range of differentschools and models. LBS, and to some extent Oxford, model themselves very closely on the elite USmodel (eg Columbia, Harvard, Northwestern, Stanford, Wharton). Standalone schools, such asAshridge and Henley, have a professional focus on practically-orientated MBA, DBA and executiveprogrammes and do not emphasise basic research. Bath, Lancaster and Warwick combine strongundergraduate and graduate programmes with an emphasis on strong social science-based research.The Open University, Henley and Warwick have pioneered distance-learning MBAs, whereasschools such as Leicester, with its focus on a critical school of management and a critical MBA,stress linkages between the humanities and social science research. The Imperial (Tanaka) schoolhas adopted a technology and knowledge focus for its school, stressing research on finance andtechnology-based management. The Cass (City) school has an emphasis on economics, financeand insurance, given its close proximity to the City of London. The evidence, therefore, suggestsmuch greater diversity and niche behaviour in UK schools than the greater institutionalisation

Table 2. A partial map of European management education

Country Representative schools

Austria Wirtschaftsuniversitet, Wien (Vienna); Donau University (Krems)

Belgium Vlerick School of Management (Leuven/Gent) (Ghent)

Czechoslovakia CMC Postgraduate School (Prague)

Denmark Copenhagen Business School (Copenhagen)

Finland Helsinki School of Economics (Helsinki)

France Insead (Fontainbleau); HEC, ESSEC, ESCP/EAP, EM Lyon, Sciences PO (Paris),

Grenoble, Audencia, Nantes; Bordeaux, ESCEM-Tours, Toulouse

Germany WHU(Koblenz), ESMT (Munich), Mannheim, GISMA (Hanover); Leipzig, WHU

(Munich); Cologne; Frankfurt-am-Main

Holland NIMBAS (Utrecht), Erasmus(Rotterdam); Nijenrode (Breukelen)

Hungary Central University Business School (Budapest)

Italy SDA Bocconi (Milan)

Ireland Smurfit/Quinn Schools, UCD (Dublin)

Norway Norwegian School of Management/BI (Oslo)Poland University of Warsaw Postgraduate Management Centre (Warsaw); Koszminski

School (Warsaw)

Slovenia IEDC/Bled School of Management (Bled)

Spain IESE/University of Navarra (Barcelona); Esade (Ramon-Llull) (Barcelona); Instituto

de Empresa (Madrid), EADA

Sweden Stockholm School of Economics (Stockholm)

Switzerland IMD (Lausanne), Geneva, Hochschule St Gallen (St Gallen)

UK LBS (London); Warwick Business School (Coventry); Said-Oxford; Judge-Cambridge;

Manchester Business School (MBS); LUMS (Lancaster); Imperial (London); Cass (London);

Edinburgh (Scotland); Cardiff (Wales); Henley, Cranfield, Ashridge,

Russia Moscow State University

Sources: Financial Times (FT Ratings); Economist (Which MBA), EFMD, AACSB, AMBA



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and model conformity which exists in the US. As a result, the UK market demonstrates that a rangeof schools, namely, quasi-US-model schools, professionally-orientated schools, social science-basedschools, schools with specialisms such as finance or technology and humanities/social science-basedschools co-exist. Similar clusters and patterns can be identified in other European countries such asFrance, where Insead is seen as the US elite model, the Grande Ecoles as the key social scienceschools and national elites, the Ecoles Superieures as the more professionally, practically-orientated

schools and Paris/Dauphine as a specialist school. On the basis of these two examples, the othercountries in the European map should follow a similar pattern of clusters involving internation-ally elite schools, national role model schools, practically-focused schools and specialist schools.

Following this brief review of European business schools, we link the social constructionist

perspective with the key differentiation elements or drivers that characterise the European businessschool model and contrast it with the more common, and widely copied, US model.

Differences between European and US business schools

Table 3 provides a map of the key drivers of differentiation between US and European schools. Itidentifies three sources of difference, namely, institutional differences, which are associated withthe first phase of our social construction model, in which different viewpoints and interpretationsof business schools are debated and shared in a national context; competitive differences, whichcorrespond to the second phase of the social construction model, in which markets and a dominantUS recipe form, strong competition develops and the key drivers or differentiators between the USand Europe in management education become evident; finally, social capital differences whichreflect the processes of maturity and growth of business schools at the third phase of the social con-struction model, where national and international brands and school images are formed. Here weexamine output and reputation measures for US and European schools. Figure I also providesa conceptual framing of the differences model, showing the processes of business school evolutionfunnelling into the mature, established rankings, status and reputation measures.25 Baden-Fullerand Ang note, in a constructionist vein, that Status and reputation are close allies, and reputationis typically defined as the expectation of a high level of quality as perceived by an audience. 26

Institutional differencesIt is clear that perhaps 30-40 years ago it was important for aspiring European managers to travel tothe US and study at a leading business school, as it was seen as the gold standard at the time.Presently, the situation in Europe (see Table 2) is such that there are a range of very good Euro-pean-based schools, which focus on Europes distinctive strengths. Such European models, there-fore, have adapted to the institutional frameworks and the many different languages, culturesand regulations that exist across Europe.

It is also important to recognise that there is a new European order in management education asa result, not only of the Bologna Accord (signed in 1999), but also the influence of European ac-creditation agencies. These may upset the balance of power in a significant way. In the case of themain accreditation agencies (AACSB International in the US and Equis in Europe), that provide anattestation of the quality of a school, there are clearly different criteria and philosophies involved ingaining the European accreditation (Equis) and the primarily North American accreditation(AACSB)27. For Equis, there is a much broader focus and a clear examination of executive educa-tion and corporate linkages and a definite requirement to explain international linkages. AACSBdoes not require any discussion of international or corporate linkages because it simply accreditsthe institutional range of degree and educational programmes and, mainly, the faculty inputs

The evidence suggests much greater diversity and niche behaviour in

UK schools than in the US



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and curricula designs. As a consequence, Equis has a strong European flavour, which stresses thediversity and international linkage theme as an important element in the design of managementeducation, and does not assume the primacy of a single unitary modelethe US-based functionaland discipline-orientated modelefor management training.

As noted earlier, the focus in the US for a single, somewhat insular educational model, arose fromthe fast, institutional standardisation of business education. In the US, the standardisation of busi-ness education started very early, and the founding of the AACSB in 1916 provided a significantbuilding block for institutional development, as accreditation could improve the market recogni-tion that various business schools needed.28 This drove a process of convergence towards similarityand mass production in business education.29 The best example of such convergence and standard-isation is the successful market acceptance of the MBA title, which quickly became the model forgeneral management education worldwide and became both an effective licence to practices man-agement and an attestation of a high standard of business analysis.

The standardisation of business education in Europe evolved at a much slower pace because ofthe diverse influence and importance of various national bodies and governmental policies. It was

Table 3. Broad differences between European and US business schools

Europe US

Institutional

Differences

Language/Culture/

Regulation

Many languages;

25 nation states (EU)

Multicultural

Heavy regulation

Single language

More homogeneous culture

Low level of regulation

Standardisation Slower acceptance and

institutionalisation of B-Schools

Fast acceptance and

institutionalisation of B-Schools

Size Small to medium size

(c150 B-schools)

Medium to large size (c800 B-schools)

Competitive

Differences

Governance/

Values

Predominantly public funding

Strong public sector linkages

Predominantly private funding

Weak public sector linkages

Funding and

Endowment

Small endowments

Weaker resource base

Large endowments

Strong resource base

International

Mindset

International in outlook

Students/faculty more international

Less international, more insular

Students/faculty less internationalInnovation Practical, problem-based learning

Critical reflective thinking

Range of models: one-year

MBA,distance learning, action-

orientated learning

Two-year model for MBA

Discipline and research-based

Knowledge

Transmission/

Corporate links

Knowledge conveyed in books

and practice-orientated journals

Greater reliance on

executive education

Closer to business

Knowledge conveyed in discipline

and research-based journals

Fewer schools promote

executive education.

Social Capital

Differences

Rankings Lower overall rankings in

league tables

Favoured for international

outlook, career progress,

value for money

Higher overall rankings in league tables

Favoured for initial salary, salary

progress, alumni and research quality

Reputation Some strong brands but,

generally, lower brand

identity and reputation

Many strong brandseparticularly

private schools.

High brand identity and reputation



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more than 80 years after the AACSB created a US system of accreditation and audit of businessschools that in 1997 the European Foundation for Management Development (EFMD) developedthe European Quality Improvement System (Equis). This international system of strategic audit andaccreditation was designed by the Europeans for the assessment of their own business schools. 30

Five years earlier, the Association of MBAs (AMBA) had created an accreditation scheme in theUK focusing specifically on the growing range of UK MBA-awarding business schools but thishad a much less international focus. Thus, whereas the US-based business school environmentgained fast standardisation, the European one was relatively slow to standardise; rather, therewas a focus on national champions which recognised the differential educational, cultural, legaland language requirements of each European country. In summary, the European model involvesa range of national champions as role models, whereas the US has a much more homogeneousbusiness school model.

The sizeof business schools differs significantly in the US and Europe.31 Size, as a strategic vari-able, indicates that the school has achieved significant growth and a sound resource base. Size en-ables business schools to generate and exploit economies of scale and scope, eg a broader resourceprofile, a wider range of programmes and courses and the ability to attract and pay high-qualityfaculty to gain a sustainable, competitive advantage.32 For example, as a consequence of standard-isation and the quick acceptance of the MBA model, some of the largest US schools, eg Harvard,Kellogg (Northwestern) and Wharton accept more than 500 MBA students a year given theirmuch larger markets and global recognition, whereas most of the European programmes tend tobe much smaller and focused on national or regional norms. However, it is important to notethat high-quality niche strategies and programmes offered by small business schools can be verysuccessful. Such is the case for instance of IMD in Switzerland, which specialises in internationalmanagement development for large corporations and offers a small but highly-ranked one-year

Table 4. Financial Times rankings of MBA programmes (1999-2005)

Business Schools Governance 2005 2004 2 003 2002 2001 2 000 1999 A verage

Ranking

Harvard Business School (US) Private 1 2 2 2 2 1 1 2

Pennsylvania/Wharton (US) Private 1 1 1 1 1 2 4 2

Columbia Business School (US) Private 3 3 3 3 5 5 2 3

Stanford Graduate School (US) Private 4 7 4 4 3 3 3 4

Chicago GSB (US) Private 6 4 5 5 4 6 6 5

Insead (EU) Private 8 4 6 6 7 9 11 7

London Business School (EU) Private/Public 5 4 7 9 8 8 8 7

MIT/Sloan (US) Private 13 9 10 7 6 4 5 8

Northwestern/Kellogg (US) Private 11 11 9 10 9 7 7 9

NYU/Stern (US) Private 9 8 8 8 10 13 17 10

Dartmouth/Amos Tuck (US) Private 7 10 11 11 13 15 9 11

IMD (EU) Private 13 12 13 14 11 11 13 12

Yale/SOM (US) Private 9 13 12 12 20 18 20 15Duke Fuqua (US) Private 18 20 15 19 18 17 15 17

The following business schools appeared in the top 20 positions at least in one year of the period:

6 times: UC Berkeley (Haas) and Virginia (Darden) (Public)

5 times: UCLA (Anderson) (Public)

4 times: University of Michigan (Public)

3 times: University of Western Ontario (Ivey) and University of North Carolina (Kenan-Flagler) (Public)

2 times: Emory and Cornell (Johnson). (Private)



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full-time MBA programme. In general, US business schools tend to vary in size from medium tovery large (particularly in large state schools, such as Texas and Ohio State), whereas the Europeanschools vary from small to medium, reflecting the wide range of countries, resource bases and con-texts in which they operate.

Competitive differencesThe competitive differences in business school models reflect key drivers of management educationand become evident as competitive recipes are shared and as imitative behaviour takes hold. Thesystem of governance is a clear difference between the European and US-based business schools.We define governance as the type of financial and legal arrangements that structure the relation-ships of a school with governmental and private interests. These arrangements can be expressedalong a continuum from a privately-funded and owned institution to one almost entirely relianton governmental and public funding. In general terms, the present pattern in the US is of

Table 5. Relative performance of US and EU business schools

Criteria Deviation of US

Business Schools

Average Rating

from Top 20

Average Rating

Deviation of EU

Business Schools

Average Rating From

Top 20 Average Rating

EU Business Schools

Average rating

Performance Relative

to US Business Schools

Average rating.

Salary weighted 23% 42% 20%

Salary increase 14% 65% 51%

Value for money 6% 10% 15%

Career progress 16% 6% 21%

Aims achieved 3% 2% 1%

Placement success 6% 34% 28%

Employed at three months 2% 3% 1%

Alumni recommend 173% 651% 477%

Women faculty 13% 15% 2%

Women students 1% 3% 4%International faculty 66% 0% 66%

International students 25% 40% 65%

Faculty with doctorates 2% 34% 32%

FT Doctoral rating 5% 16% 11%

FT Research rating 37% 296% 259%

Notes:

(a)The criteria are those used in the FT ranking (see Financial Times), which contains c100 schools in its annual

global ranking of MBA programmes.

(b)The Top 20 schools are similar to those in Table 4.

(c)The EU business schools are those in the FT rankings outside the top 20 and their averages are compared with

either the average of the top 20 schools or the average of US schools in the rankings outside the top 20 over the

period 1999e2002.

For example, in the case of the alumni recommendation criterion, the average US school ranking is 173% below that

of the average of the top 20 schools, while the average EU school rating is 651% below that of the average of the top

20 schools. Further, the EU average performance is 477% below that of the US schools on this criterion. Clearly,

when positive signs occur in the percentages, EU schools score better than US or top 20 schools. This occurs across

criteria such as value for money, career progress, women faculty and internationalisation.



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a competitive abundance of private schools (which have a very significant resource base), alongsidepublic or state schools, whereas in Europe it is of a clear dominance of publicly-funded schools(with more constrained resource bases). For instance, following a detailed analysis of the FT rank-ings described earlier, we show in Table 4 that out of the 14 business schools (11 from the US andthree from the EU) which consistently appeared in the top 20 positions over seven years, virtuallyall are private. Thus, the private funding of business education common in the US model is a phe-

nomenon rather uncommon to their European counterparts.The funding and endowment of business schools is also a major difference between these two

regions. Because of the ready acceptance of the business school in the US as an establishedinstitution and the recognition of the value of private education in the USeas we indicatedaboveethe US business schools started fundraising campaigns and, thus, generated financial re-sources from sponsors, corporations and loyal alumni. The success of this approach to businessschool development can be seen for instance in the case of Harvard Business School, the bestendowed of all, which has amassed an endowment of more than $1bn.33 In comparison, Euro-pean business schools either have very small endowments or none at all. This has made themmuch more reliant on annually acquired funds and budgets and particularly the revenue stream

from the MBA programme to manage and develop their resources.34

In Europe, typically, if theMBA programme falters, then so too does the revenue stream. Therefore, a business modeldependent on cash flowseas is the case in most European business schoolseis likely to beable to cover operating expenses and generate small surpluses but much less likely to providesignificant cash flow to fund new business opportunities or facilities investment. The existenceof private endowments clearly brings financial strength for a school to weather the effects ofMBA programme downturns and to invest in future growth. This financial independence, auton-omy and the capacity to deploy critical resources, in turn reinforces and builds upon a businessschools image and strategic positioning.

Despite the relative lack of financial muscle in Europe, the European business schools and theirleaders have always possessed a strong international mindset.35 This mindset means that the Eu-ropean sensitivity to international business, languages, diversity and culture is a competitive advan-tage. Europeans have learnt how to deal with the complexities of international trade and, moreimportantly, have developed a strong motivation for success in international business and withit a distinctive approach to management education. It is also clear from a further detailed varianceanalysis of the FT rankings data that students attending European MBA programmes will betaught by a more international faculty and meet a more diverse set of students than equivalentUS students (see Table 5). As a consequence, they should be able to develop language and cross-cultural sensitivities and working skills in their business school experience in order for them to suc-ceed in a world of international trade and globalisation.

Flexibility and innovation are also key competitive advantages of European schools. They haveexperimented with and adopted alternative delivery technologies much faster than their US coun-terparts. For example, Henley Management College, the Open University Business School andWarwick Business School in the UK are among the world leaders in distance learning forms ofthe MBA. Europeans have also innovated with a much more flexible one-year MBA model(Cass, Judge, Leicester and Warwick etc) and have not slavishly followed the analytic, functionaland discipline-orientated two-year US MBA model. European schools have also focused on a learn-ing style, rather than a teaching style (defined by discipline-based knowledge and the facultys wayof knowing) of management education.36 They have adopted problem-centred, project-based

The private funding of business education common in the US model is

a phenomenon rather uncommon to their European counterparts



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learning with field studies and counsulting projects and an emphasis on practice and critical, reflec-tive thinking, ie the aim is to understand the students way of knowing and learning and to pace theflow of understanding and logic with the students manifest capabilities.

Europeans also tend to transmit knowledge through books, media articles and practice-basedjournals and often eschew the so-called top journals in the field, which have a primarilyacademic, discipline-based orientation. For example, of the 40 top journals in the FT MBA rank-

ings, 33 are US-based with a focus on disciplines and cutting-edge research. Few European journalsare listed but, nevertheless, there is a strong knowledge development tradition in Europe. Forexample, the Scandinavian approach is codified in journals such as the Scandinavian Journal ofEconomics and Management. The European Group of Organisational Studies (EGOS) has nearly1,000 members at its annual conference, publishes the journal Organisation Studies and presentsan European critical and interpretive perspective on the field of organisation studies.

European schools have also been extremely successful in corporate linkages and partnerships,and have managed to translate that success to the classroom. With the absence of endowment fund-ing in Europe, European schools have developed creative ways to develop research and learningprogrammes with corporations that are directly linked to corporate problems and issues. As a con-

sequence, European schools have focused on solving relevant business (as opposed to academic)problems and have placed the solution of business problems and executive education as highpriorities in their visions, missions and overarching strategic intent.

Social capital differences: reputation effects and brand loyaltyIn aggregate, following the logic of the social construction model, the interactions of the institution-alising and market development processes over the longer term produce what we call reputationeffects. Reputation effects can clearly influence the patterns of competition for resources in thebusiness school market, as reputation hierarchies act as mobility barriers for the entry of new, up-coming schools into the elite, high reputation category or strategic group.37 Moreover, this elite cat-

egory tends to form a closed system which is difficult to penetrate. In the case of business schools,as DAveni argued, reputation across different audiences influences the ability to gather resources.38

In parallel with these reputation effects, a high brand loyalty also develops among a schoolsalumni. Those who invested their time and money to acquire a degree or qualification froma high-quality school want the symbolic value of this degree to be recognised and enhanced overtime. Since reputation has self-reinforcing dynamics, this loyalty reinforces the reputation of thebusiness school itself, facilitates the acquisition of new students and resources and produces a vir-tuous circle. Baden-Fuller and Ang describe this process as building a charmed-circle of resourcesand benefits.39

We can further substantiate our argument for these reputation effects by re-examining the evo-lution of the rank performance of the top 20 business schools over the seven-year period of thefull-time MBA ranking of the FT. Table 4, described earlier, shows that 14 schools were present inthis top 20 for the whole seven-year period, with little change in their average ranking. Out ofthese 14 top business schools, only three are European (Insead, London Business School andIMDewhich are primarily private and tend to follow a US-style model), while 11 are from theUS. Table 4 shows the remarkable lack of mobility in the top schools rankings, particularlywhen recognising that the FT ranking covers more than 100 schools worldwide.

Similar findings are obtained from the business school rankings of Business Week. Corley andGioia report that only a very small elite group of schools consistently occupy the top positionsand show that over the 12 years in their study only 15 schools have ever been in the top 10.40 Thesedata show a pattern in which a select, predominantly private and well-endowed group of schools

consistently score the top ranking positions and are labelled winners by the media. Therefore,we believe that the schools in the top 20 are likely to profit most significantly in terms of statusfrom the brand and reputation effects they have developed over the period of their existence.

Overall, the combination of brand loyalty and reputation effects referred to above suggests theexistence of critical differences between schools inside the top 20 and those outside. We suspect



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this could be particularly true relative to the main European schools. European business schools donot have the same strategic orientation as US schools and position themselves in the market againstcriteria that more closely reflects the cultural and competitive characteristics of those markets. Aspointed out earlier, a re-examination of the analysis in Table 5 shows that European schools ratemuch more highly on international dimensions, career progress and value for money but fallbehind on the salary, research and alumni criteria. Note that the latter criteria reflect longer estab-

lished reputations.Moreover, the perception that high-paying employers have of the quality of particular business

schools is itself crucial in deciding the salary offered to new recruits. Those schools that are able toestablish a reputation with such employers or place students into top flight, fast-track careerchannels are more likely to create a self-sustaining momentum for success in the rankingsgame. Generally the more established US business schools in terms of size and endowment clearlybenefit from such reputation advantages.

It is also noteworthy that the 14 schools that remained in top 20 group for all seven years of theFTrankings (Table 4) are all, primarily, US-based (or modelled) private institutions with large en-dowments. These well-endowed business schools, therefore, have access to greater financial re-

sources with which to make strategic investments and hire a high-quality, research-productivefaculty. The lower European faculty salaries and the relative lack of clear and appropriate incentivesfor research productivity contrast with the strong research orientation and heavy investments inresearch by top US business schools. This makes it increasingly difficult for European businessschools to bridge the research gap between themselves and the top US business schools, if th is re-search standard comes to be evaluated by a standardised norm of predominantly US origin. 41

However, European schools see such US-dominated rankings as a useful source of market infor-mation but not necessarily the ultimate standard to be targeted and scaled. Rather, as Van Roonnotes the [European] schools see rankings as a valuable source of business intelligence, that candrive decision-making aimed at developing the schools products and services. Schools, however,

say they try hard to resist pressure to radically alter the school on a more fundamental level to caterbetter to the [FT] rankings criteria, seeing this as a challenge to their identity and value system.42

In essence, both European and US critics would argue that accreditation and rankings are forcingdeans to focus on the wrong things; that is, image management at the expense of focusing on, forexample, narrowing the gap between theory and practice, and providing sound advice to profes-sional managers.43

Conclusions and implicationsUsing both social construction theory and research evidence from the literature, the paper arguesthat there is no such thing as a single, widely-accepted European model for a business school.Rather national champions or elites have emerged in Europe (see Table 2), and these tend tobe defined by national and cultural characteristics with some US flavour (see Table 3). That is, theirphilosophy is largely dictated by national and regional considerations with some elements borrowedfrom the homogeneous US-style model (eg the two-year MBA), given its dominance in the 1970sand 1980s, and its strong influence from complementary products such as textbooks (eg theRichard D. Irwin Co text and case books), cases and teaching materials (Harvard Business School)and journals such as Harvard Business Review and the Sloan Management Review.

The strengths of the leading US business schools (see also Tables 2 and 3) derive from the com-petitive advantages associated with their gains as fast first-movers in management education,ie product standardisation (eg MBA), business school legitimisation, strong and well-establishedbrands and reputations (eg Harvard, Wharton) and above all, significant financial strength andvery large private endowments fuelling their position in the market. In essence, as a consequenceof fast standardisation and fast adoption of the business school in the US, money resources inabundance moved mountains in establishing US business schools and their curricula, and indeveloping strong brand images and reputations internationally (see Tables 4 and 5). Alongside



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these elite US schools, a cadre of other strong US schools developed in state universities and pri-vate schools.

European business schools, on the other hand, have developed strength mainly over the last 20 or30 years, with the fast development of business schools in higher education worldwide. The initialshortage of key faculty to staff the schools was solved by sending promising young faculty fromEuropean countries to leading US schools to complete their postgraduate study. There were clear

initiatives in the UK (via the Foundation for Management Development) and in France and othercountries, through government-sponsored initiatives, to provide doctoral fellowships/scholarshipsfor study in the US. These newly-minted US-trained, but European, PhD students then returned to

join home faculties and developed curricula defined and derived, initially at least, from their USexperience. Quite quickly, however, leading programmes in Europe developed their own identityas students and faculty sought to make them more relevant to the business practices and customsin their own countries. As a consequence, national champions and role models developed fromthe 1970s and through the 1990s (see Tables 2 and 3) with distinct identities and competitive char-acteristics, and have reinforced their reputational position over the last decade (see Fig. 1 andTables 4 and 5). As they never possessed the abundant financial resources of their US counterparts,

the European schools positioned themselves uniquely in their markets as niche, segmented players,targeting their distinctive, national and regional characteristics and the requirements of theirmanagement audiences.

We summarise some of the key competitive strengths of the European schools here (see alsoTable 3). First, their relatively small size has made them more agile and flexible in analysing localmarket needs and responding to them.44 For example, the Open University, Henley ManagementCollege and Warwick Business School spotted the demand for distance learning and have developedincreasingly high-quality blended learning models which now attract thousands of students each

year to very well-regarded high-quality programmes. (Contrast this with the US, where theprivately-owned University of Phoenixepart of the Apollo Group quoted on Nasdaqeis the onlyreally significant competitor).

Second, European schools have also developed strong customer relationship management capa-bilities and are close to the customer in corporate linkages and executive education, particularlybecause executive education is both a revenue source and means of developing practically-orientedfaculty. Schools such as Ashridge, Henley and Cranfield in the UK, EADA in Spain and NIMBAS inthe Netherlands are good examples. Third, European Schools have embraced the field of publicmanagement and policymuch more strongly, partly because of the critical importance of the publicsector and public sector funding to European economic activity. For example, MPA (Master ofPublic Administration) degrees are now offered in such schools as Manchester, Nottingham andWBS in the UK, Copenhagen in Denmark and Esade in Spain. The EFMD has been instrumentalin pioneering the growth of EABISethe European Academy of Business in Society (headquarteredin Brussels)ewhich includes around 20 major European schools as members and jointly promotesprogrammes and research in the public/private interface, corporate social responsibility, sustain-ability and corporate citizenship (including issues of greening and global warming).

Fourth, European schools have developed a reputation for innovation and innovatory capabil-ities and learning styles. European education is usually seen as more reflective, based on dialogueand on one-to-one individualised instruction.45 An example of an innovatory learning style is

Leading programmes in Europe developed their own identity as

students and faculty sought to make them more relevant to the

business practices and customs in their own countries



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Professor Gibson Burrells attempt to develop a critical management school at the University ofLeicester in the UK and encourage the development of innovation and creativity through dialogue,criticism and integrative learning. In addition, most European schools require students to followthe tradition of action learning and carry out real-life project experiences and practical assignmentsto link theory with the practical insights that can only be achieved through project and problem-based learning. For example, Lancasters MSc in Applied Management carries out action learning

principles in practice.Fifth, European schools definitely possess an international mindset. The analysis in Table 5

clearly shows that European schools have a much stronger international faculty and a more diverseethnic and international student body. The EUs tradition as a major trading bloc and the historicalheritage of the Belgian, British, Dutch and French colonial regimes have built a set of embeddedcultural and international linkages that is a source of competitive strength. Until very recently,the US schools could afford to be comparatively insular in their rather homogeneous models ofbusiness education. With the growth of elite European schools, leading US schools have soughtto build alliances with Europe and develop increased status and reputation (for example, theTrium Executive MBA between LSE in London, HEC in Paris and NYU in New York, and the

LBS/Columbia executive MBA programme). As Baden-Fuller and Ang argue such alliances canenhance a schools reputation with winners on one continent typically forming partnerships withwinners in other continents.46

What then are the implications for managers and administrators of the increasing competitivestrength of European business schools? Recent league tables clearly indicate that there aresome European schools at or near the top 20 in the full-time MBA rankings (eg Instituto di Em-presa, Oxford, IESE etc). And the strong recent performance of European schools in full-time MBA,executive MBA and executive education tables in the FT and The Economistrankings attest to theincreasing quality of the European schools. There is clear evidence from brochures and school web-sites that firms such as Ford, IBM and British Airways are sending increasing numbers of their fast-

track employees on to modular executive MBA degree and executive programme courses at insti-tutions such as Esade, IMD, Ashridge, Cranfield, Henley, Lancaster and Warwick. Given key busi-ness schools strategic willingness to develop strong corporate partnerships and their flexibility andexpertise in programme design and development, managers should continue to reinforce theirrelationships with these business schools.

Managers should also be aware that undergraduate, MBA and Masters programmes in Europenormally require at least one real-life project as part of the assessment process of the graduatingstudent. Such action learning projects, therefore, offer an opportunity for managers not only togain the benefits of student expertise on ongoing projects but also to explore the potential oftapping into a set of creative insights about the project situation that may not have been raisedwithin the company. It also enables a manager to judge the quality of the students insightsthrough the projects value and quality and, hence, their potential for longer-term employment.

Further with a strong and well-established European capability in blended learning and dis-tance learning (eg Open University, Henley and WBS), managers can also fit an employees man-agement development into the normal work cycle without the need to grant extensive leave forsignificant periods of study. In addition, the students learning experiences in management devel-opment programmes can be blended into normal work experience and on-the-job training, sothat the theoretical education is balanced with, and integrated into, the real-life projectexperience.

Most of the above implications relate to the managerial use of business school education throughprojects, executive education or distance learning. In practice, because of such linkages, relation-ships of trust and goodwill can be built, so that managers may feel able to approach business schoolfaculty about problems and gain practical advice. European schools, because of their relatively smallsize, can provide sources of professional advice through their focus on key specialist areas. Forexample, managers in the UK can approach LBS, Cass-City, Oxford or WBS for advice on financeor Imperial-Tanaka for advice on the management of technology.



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The implications for administrators and business school deans are less clear. Some suggestionsare given below.

With regard to the strategic positioning of European business schools, we believe that a clear stra-tegic option exists for European business schools as they attempt to increase their competitivenessin the global market. That is, to leverage their competences and distinctiveness in local and regionalmarkets as a platform for positioning in the global market. They should think local, act regional and

move globally.47

By acting thus they can position themselves as strong global niche players witha distinctive product and a capability set. Because of its rich variety in culture, languages andpolitical and legal systems, the European region can produce highly distinctive regional players. Ex-amples of such regional niches include Instituto di Empresas emphasis on leadership, the focus ofAshridge, Cranfield and Henley on executive training, WBSs focus on small and medium-sizedenterprises and entrepreneurship, Esades focus on the public sector, LBS and City-Casss focuson finance and so on.48 Schools such as Bath, LSE (with its Interdisciplinary Institute of Manage-ment), Lancaster and WBS combine excellent management education and research embedded ina strong social science culture. The evidence suggests that European schools can maintain strongniche brands, yet provide high-quality management education with a diverse set of strategic

approaches.

As indicated earlier, there has been so much criticism of MBAs in business schools that it is prob-

ably time for innovative Europeans to take the lead in reforming MBA programmes.

49

An article bysenior personnel at Booz Allen suggests the elements of a reform agenda.50 These include morecourses in communication and people skills, an emphasis on basic skills for problem-solving,more and better grounding in social science theory to move beyond simple case study generalisa-tions, improving curricula to incorporate learning-by-doing, encouraging students to take a broadset of electives outside the core and developing curricula specialisms in specific industries. Whetheror not this reform is appropriate, it is evident that it incorporates values and theories about basicskills, the thorough grounding in the social sciences and action-based learning that are already com-petitive strengths of European Schools. European schools can clearly take the lead in reforming theMBA.

The other key strength of European schools is a strong capability in innovation through theirdistinctive learning styles and approaches. It is about time to take seriously Starkeys concept ofa knowledge-based business school and re-energise our own theories and teaching.51 By attackingthe practical boundaries of the subject and being open to theoretical developments in the social sci-ences, sciences and the humanities, we should be able to create better tools and ideas to address andsolve managerial problems. It is through our own creativity and strategic choices that we shall betterserve future generations of students.

Finally, how can European business schools respond to this new knowledge-based competitivedomain? How can they balance rankings and research? Can they improve the nature of the rankingsplaying field at a European level?

An important strategic issue for European deans and directors surrounds the current dominanceof the US schools in the rankings, the emergence of increasingly competitive Indian (eg the IndianInstitutes of Management, IIM) and Chinese business schools (eg CEIBS) and the longer-term pos-sibility of European business schools competing strongly within the current top 20 schools in theworld (see Table 4)eat least as specified by league table rankings such as the FT.52 For many rea-sons, including private endowments, resource capabilities and already established reputations, we

The evidence suggests that European schools can maintain strong

niche brands, yet provide high-quality management education



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believe it will be difficultebut not impossibleefor European schools to locate into the top 20position unless they adopt those business models and creative positioning strategies that relateto their competitive strengths and distinctiveness. As we stress in this paper, reputation and brandsrepresent the long-term social capital of the school and act as isolating mechanisms and mobilitybarriers that must be scaled in order to arrive at an elite position.53 Nevertheless, when a Europeanschool confronts the second, close to Premier League, tier of business schools (ie positions ranked

from, say, 21e

40 in the FT rankings), it is clear that there has been considerable competitive jock-eying for position among those schools, and significant entry pathways exist for high-quality Euro-pean schools to enter that tier (perhaps alongside high-quality Asian schools) and strive to reach forthe elite rankings.

Clearly, rankings and league tables are continuing and important elements within the competi-tive market for business education, as issues of image, reputation and brand loyalty have a very sig-nificant influence on alumni, students and other business school constituencies.54 We applaud theFTfor providing, in its most recent 2005 rankings, a separate league table for European s chools, asthis recognises the distinctive character, quality and competitive appeal of those schools.55 We be-lieve that it may also be a sensible strategy for leading European business schools to use their own

professional management advocacy bodies (such as EFMD in Brussels, ABS and AMBA in the UK)to take a strong lobbying position towards improving the conduct of the ranking process with theeventual aim of achieving an increased focus on the use of European performance criteria in suchrankings. In turn, these bodies should then attempt to persuade publications such as ManagementToday, European Business Forum or EuroBusiness to work with them and develop European rank-ings to increase consumer awareness of European schools and promote and improve their position-ing in the global management market. It is noteworthy, for example, that news magazines such as

AsiaInc already provide rankings of Asian business schools for customers in their region, recognis-ing the need for good market data in such an important region of the world.56

AcknowledgementWe are grateful to Anna Goussevskaia, Xiaoying Li and Phil McCready for research assistance, andto John McGee and David Wilson, professors at Warwick Business School for helpful and insightfulcomments about this paper. We also acknowledge the constructive comments of a number of anon-

ymous referees and the editor of this journal.

Appendix I. Criteria of FT rankings

Criteria Weight Description

Salary Weighted 20 The average salary today with adjustment for salary variation between

industry sectors. The figure is a weighted average of salaries three years

after graduation from the previous and the latest surveys and is in US

dollars (adjusted for purchasing power parity).

% Increase 20 The percentage increase in salary from the beginning of the MBA to three

years after graduation. The figure is a weighted average of the increases

from the previous and the latest surveys.

Value for money 3 Measures the time taken to recover all costs, including lost salaries.

Specifically, the rate of return for each dollar spent between the start of the

MBA to three years after graduation.

Career progress 3 The degree to which alumni have moved up the career ladder three years

after graduating. Progression is measured through changes in level of se-

niority and the size of company in which they are employed.



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References1. See J. W. Schmotter, Reflections on Two-Plus Decades: A World of Difference, Selections 3e7 (2004).

2. See J. Pfeffer and C. T. Fong, The end of business schools? Less success than meets the eye, Academy of

Management Learning & Education 1, 78e95 (2002); K. Starkey and S. Tempest, The world-class businessschool: A UK perspective, 49, Council for Excellence in Management and Leadership, London (2001);

Marie Laure Djelic, Exporting the American Model, Oxford University Press (1998).3. See L. Engwall, Foreign role models and standardisation in Nordic business education, Scandinavian

Journal of Management16, 1e24 (2001); J. F. Porac, H. Thomas and C. Baden-Fuller, Competitive groups

as cognitive communities: the case of the Scottish knitwear industry, Journal of Management Studies 26,296e416 (1989).

4. See P. McCready, Ranking International Business Schools, Working Paper, Warwick Business School(2001).

5. Political scientists argue that institutions designate the set of rules that evolve over time and shape organ-isational processes and outcomes. The variety of institutionalism we adopt is historical institutionalism.

Appendix I (continued)

Criteria Weight Description

Aims achieved 3 The extent to which alumni fulfilled their goals or reasons for doing an

MBA.

This is measured as a percentage of total returns for a school.

Placement success 2 The percentage of the alumni from four years ago (eg alumni from 2002for the year 2006) that gained employment with the help of career advice.

Employed at 3 months 2 The percentage of the most recent graduating class that had gained

employment within three months.

Alumni recommended 2 Eg for 2006: alumni of 2002 were asked to name three business schools

from which they would recruit MBA graduates. The figure represents the

number of votes received by each school.

Women faculty 2 Percentage of female faculty.

Women students 2 Percentage of female students.

Women board 1 Female members of advisory board as a percentage.

International faculty 4 The percentage of faculty whose nationality differs from their country

of employment.

International students 4 The percentage of international students.

International board 2 Percentage of the board whose nationality differs from their country

of employment.

International mobility 6 A rating system that measures the school with the most internationally

mobile alumni based on the movements of the graduates from four years

ago (graduates from 2002 for the year 2006).

International experience 2 Weighted average of four criteria that measure international exposure

in the course.

Languages 2 Number of working languages required on start and on completion of the

MBA.Faculty with doctorates 5 Percentage of faculty with a doctorate

FT Doctoral rating 5 Number of doctoral graduates from the last three academic years with

additional weighting for those graduates taking up a faculty position at

one of the top 50 schools in the previous survey.

FT Research rating 10 A rating of faculty publications in the FT selection of journals

(40 internationally elite journals). Points are accrued by the business

school at which the author is presently employed.

Note: The definitions of the criteria are sometimes amended for purposes of clarification on an annual basis.



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For an example of historical and institutional analysis of management education with particular referenceto European countries and the US see P. Bourdieu, The state nobility: Elite schools in the field of power,

Polity Press, Cambridge (1996); M. Kipping and O. Bjarnar (eds.), The Americanization of European busi-

ness: The Marshall Plan and the transfer of US management models , Routledge, , London (1998).6. L. Engwall and V. Zamagni (eds.), Management Education in historical perspective, Manchester University

Press (1998).7. For what became known as the Franks Commission Report, see Report of Commission of Inquiry,

chairman: Lord Franks, 2 volumes, Oxford University Press (1966). For the North American discussion,see R. Gordon and J. Howell, Higher Education for Business, Columbia University Press, New York (1959);F. C. Pierson, et al The education of American businessmen: A study of university college programs in BusinessEducation, McGraw-Hill, New York (1959).

8. For examples of contemporary policy reports commissioned by the UK government and research agencieswith the intent to evaluate and therefore shape and institutionalise management thought and educationsee UK Department of Education and Skills and UK Department of Trade and Industry, Government

response to the report of the Council for Excellence in Management and Leadership (Nottingham,2002). And UK Business Schools: Historical Contexts and Future Scenarios, AIM, London, ISBN0 9551850-7-6 (2006).

9. See JC Spender, Management as a regulated profession, EURAM speech, 4/27/2005.

10. Bourdieu (op. cit. at Ref 5).11. See E. F. Gay, The Founding of Harvard Business School, Harvard Business Review 4, 397e400 (1927).

12. A critical appreciation of the effects of these reports on business education is provided by W. G. Bennisand J. O. Toole, How Business Schools Lost Their Way, Harvard Business Review (May 2005).

13. See S. L. Ghoshal, Bad Management Theories Are Destroying Good Management Practices, Academy ofManagement Learning and Education, (March 2005) See also. J. Gosling and H. Mintzberg, AgendaeThe

education of practicing managers, MIT Sloan Management Review45(4), (2004); G. Hawawini, The futureof business schools, Journal of Management Development24(9), 770e783 (2005); J. Pfeffer and C. T. Fong,The business School Business: Some Lessons From the US Experience, Journal of Management Studies41(8), 1501e1520 (December 2004); H. Mintzberg and J. Gosling, Educating managers beyond borders,Academy of Management Learning & Education 1, 64e76 (2002); C. Ivory, P. Miskell, H. Shipton,

A. White, K. Moslein and A. Neely, UK Business Schools: Historical Contexts and Future Scenarios, AIM,London (2006); H. Mintzberg, Managers not MBAs, Pearson Education, London (2004); Pfeffer andFong (op. cit. at Ref 2); P. Lorange, New vision for management education: Leadership challenges, Elsevier

Science, Oxford (2002); A solid argument on the positive influence of an MBA education is given by R. E.Boyatzis, E. C. Stubbs and S. N. Taylor, Learning cognitive and emotional intelligence competencies

through graduate management education, Academy of Management Learning & Education 1, 150e162(2002).

14. Examples of such differences are provided by R. F. Amdam, The business school in European perspective,Business History 1, 64e76 (2002); C. Baden-Fuller and S. H. Ang, Building reputations: The role of alli-ances in the European business school scene, Long Range Planning 24, 741e755 (2001); Kipping and

Bjarnar (op. cit. at Ref 5); P. Raimond and C. Halliburton, Business school strategies for the single

European market, Management Learning 26, 231e

247 (1995).15. See L. Engwall, Foreign role models and standardisation in Nordic business education, Scandinavian Jour-

nal of Management 16, 1e24 (2000).16. P. L. Berger and T. Luckmann, The social construction of reality: A treatise in the sociology of knowledge,

Doubleday, New York (1966); K. E. Weick, Sense-making in Organisations, Sage Publications, California

(1995); J.F. Porac and H. Thomas, Managing Cognition and Strategy: Issues, trends and future directions,

pp.165e181 in A. Pettigrew et al, Handbook of Strategy and Management, Sage, London (2002).17. Porac and Thomas (op. cit. at Ref 16).18. H. C. White, Where do markets come from? American Journal of Sociology 87, 517e547 (1981).; H. C.

White, Identity and Control: A Structural Theory of Social Action, Princeton University Press, NJ(1992); Weick (op. cit. at Ref 16).

19. P. Di Maggio and W. W. Powell, The iron case revisited: Institutional isomorphism and collective ratio-nality in organisational fields, American Sociological Review 48, 147e160 (1983).

20. J. C. Spender, Industry Recipes, Blackwell, Oxford (1989).

21. Spender (op. cit. at Ref 20).22. Engwall (op. cit. at Ref 15).



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23. Di Maggio and Powell (op. cit. at Ref 19).24. Association of Business Schools, Pillars of the Economy: How UK Business Schools are meeting the global

competitiveness challenge, ABS, London (2004).25. Examples of such differences are provided by R. F. Amadam, The business school in European perspective? Busi-

ness History39,183e184 (1997); Baden-Fuller andAng (op. cit. at Ref 14); KippingandBjarnar(op. cit. at Ref 5);

Raimond and Halliburton (op. cit. at Ref 14).26. Baden-Fuller and Ang (op. cit. at Ref 14).

27. To see the criteria for accreditation, view either at www.efmd.org or www.aacsb.edu.28. To reflect its growing global role in business schools accreditation AACSB is now called AACSB Interna-

tionaleAssociation to Advance Collegiate Schools of Business, International. An interesting report of

contemporary issues facing business education is provided by International, Management education at

risk, AACSB International (2002). www.aacsb.edu/.29. T Hedmo, K Sahlin-Andersson and L Wedlin, The emergence of a European regulatory field of management

education: Standardizing through accreditation, ranking and guidelines, Stockholm (2001).

30. In its first five years of existence, Equis accredited some 50 institutions in 14 European countries andanother 10 outside Europe in countries such as Australia, Brazil, Canada, Hong Kong, Mexico, SouthAfrica or the US. Online information on the EFMD is found at www.efmd.be.

31. R. J. Alsop (ed.), The Wall Street Journal Guide to the top business schools 2003, Simon & Schuster, New

York (2002).32. See M. E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors, for discussion

of the role of size as a strategic variable, Free Press, New York (1980).33. Robert Weisman, Harvard Business broadening its world, The Boston Globe (9/23/2003).

34. J.-L. Barsoux, Insead: From intuition to institution, Macmillan, London (2000).35. Angel Cabrera, Diversity is StrengthePersonal View, Financial Times (8 September (2003).

36. See R. E. Boyatzis, S. S. Cowen and D. A. Kolb, Innovation in professional education: Steps on a journey from

teaching to learning, Jossey-Bass, California (1994).37. On competition for resources see J. M. Podolny, A status-based model of market competition, American

Journal of Sociology98, 829e872 (1993); on reputation hierarchies as mobility barriers see S. A. Lippmanand R. P. Rumelt, Uncertain imitability: An analysis of interfirm differences in efficiency under compe-

tition, Bell Journal of Economics 13, 418e

453 (1982); McGee Thomas, and Wilson, Strategy: Analysisand Practice, McGraw-Hill, Maidenhead (2005).

38. R. A. DAveni, A multiple-constituency, status-based approach to interorganizational mobility of faculty

and input-output competition among top business schools, Organization Science 7, 166e190 (1996).39. Baden-Fuller and Ang (op. cit. at Ref 5).

40. D. A. Gioia and K. G. Corley, Being good versus looking good: business school rankings and the Circeantransformation from substance to image,Academy of Management Learning & Education 1,107e120 (2002).

41. A point argued by C. Baden-Fuller, F. Ravazzolo and T. Schweizer, Making and measuring reputations:the research ranking of European business schools,, Long Range Planning 33, 621e650 (2000).

42. See Ilja Van Roon, Steer clear of B-school spin, European Business Forum 15, 39e40 (2003) Autumn.

43. See J. L. Zimmerman, Can American business schools survive? Simon School of Business Working Paper

No. FR 01-16, University of Rochester (2001).44. Burton Clark, Creating Entrepreneurial Universities, discusses the rise of Europes entrepreneurial univer-

sities, including Warwick as the UK example, Pergamon/Elsevier, Oxford (1998).45. For a critical note, see Boyatzis, Cowen and Kolb (1994). Mintzberg (2004).46. Baden-Fuller and Ang (op. cit. at Ref 5).

47. Our argument is similar to exemplary studies on competitive strategy in global industry, such as those

conducted by Michael Porter, and also by Sumantra Ghoshal and Christopher Bartlett. For Porterswork in this line, see M. E. Porter, Competition in Global Industries: A conceptual framework, inM. E. Porter (ed.), Competition in Global Industries, Harvard Business School Press, Boston, 15e60,

(1986) For the other authors, see. C. A. Bartlett and S. Ghoshal, Managing Across Borders: The Trans-

national Solution, Harvard Business School Press (1989).

48. Zimmerman (op. cit. at Ref 43).49. Burton Clark (op. cit. at Ref 44); Bennis and Toole (op. cit. at Ref 12); Pfeffer and Fong (op. cit. at Ref 2);

and Ghoshal (op. cit. at Ref 13).

50. J. Doria, H. Rozanski and E. Cohen, What Business Needs from Business Schools, Business Strategy

Review, 2e8 (2002).

http://www.efmd.org/http://www.aacsb.edu/http://www.aacsb.edu/http://www.efmd.be/http://www.efmd.be/http://www.aacsb.edu/http://www.aacsb.edu/http://www.efmd.org/


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51. Starkey and Tempest (opt. cit. at Ref 2).52. GFME, A Global Guide to Management Education, Emerald Publishing, Bradford (2006).

53. I. D. Dichev, How good are business school rankings? The Journal of Business 72, 201e213 (1999);DAveni (op. cit. at Ref 38).

54. A consideration of the importance of rankings for policy-making is given by P. Thomas and D. Watkins,

Institutional research rankings via bibliometric analysis and direct peer review: A comparative case studywith policy implications, Scientometrics 41, 335e355 (1998); Effects of rankings for business school faculty

is provided by K. D. Elsbach and R. M. Kramer, Members responses to organisational identity threads:Encountering and countering the Business Week Rankings, Administrative Science Quarterly41, 442e476(1996). The point of view of consumers of business school knowledge is explored by P. Bloom, How com-

parative product information affects consumers and competition: The effects of the Business Week and

US News & World Report ratings, Advances in Consumer Research 25, 433e439 (1998).55. See Baden-Fuller, Ravazzolo, Schweizer (op. cit. at Ref 41).56. See Asias best MBA schools, published in AsiaInc, 43e66 (August 2003).

BiographiesDon Antunes is a Research Fellow at IMD in Lausanne, Switzerland. He was a Research Fellow at Warwick Business

School and has taught at the Universities of Cambridge, Oxford and ESCP-EAP. He is an active member of the

Academy of Management and the Strategic Management Society. [email protected]

Howard Thomas is the Dean of Warwick Business School and Professor of Strategic Management. He was

previously Dean of the College of Business and Towey Distinguished Professor of Strategic Management at the

University of Illinois at Urbana-Champaign. He has held visiting or permanent posts at the University of Edin-

burgh, London Business School, Harvard Business School, University of Southern California, University of British

Columbia, MIT, Australian Graduate School of Management and Northwestern University. He has published and

consulted widely in the field of strategic management and is a Fellow of the British and the American Academy of

Management and the Strategic Management Society His textbook (with J. McGee and D. Wilson) Strategy: Analysis

and Practice has recently been published by McGraw-Hill. [email protected]

mailto:[email protected]:[email protected]:[email protected]:[email protected]

the competitive (dis)advantages of european business schools

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