The Long-Term Dominance of North American and European Business Schools

Respectable international MBA rankings reveal a simple truth: North American and Western European business schools continue to dominate the MBA world, writes Ross Geraghty.

North America and Europe continue to dominate the world of business schools. A regional breakdown of the 200 elite schools to feature in the 2012/13 QS Global 200 Business Schools Report is telling in this regard. No fewer than 84 schools are North American, with Europe accounting for a further 65.

This is echoed in applicant preference. TopMBA.com research reveals that, though other regions are slowly gaining in popularity, Western business schools remain ahead.

“As countries such as China and South Africa increasingly feature in global economic discussion, MBA applicants are being attracted to local business schools aiming to benefit from developing a cultural understanding and close ties with local employers,” explains Nunzio Quacquarelli, managing director of QS Quacquarelli Symonds and author of the QS TopMBA.com Applicant Survey 2012.

“However, at the same time, the top 10 MBA study destinations retain a strong lead in popularity amongst MBA applicants and are almost exclusively Western nations. The only exception is Singapore; a nation well-known for offering western business ideals, as well as strong business education links to Western Europe.”

A proud heritage

The MBA began in the US, with Tuck School of Business at Dartmouth creating the first management program in 1900, and Harvard Business School offering the first MBA in 1908 and pioneering the still-dominant case study method in 1920. Chicago introduced the executive MBA in 1943. The first non-US school to offer MBAs was the University of Western Ontario’s Richard Ivey in 1950.

This heritage is the reason for North American schools’ strength, believes Professor Sridhar Balasubramanian, associate dean for the MBA program at the University of North Carolina’s Kenan-Flagler Business School: “A key reason for this dominance is the key role of business research [including] the development of influential theories and concepts, the establishment of important empirical findings, and the publication of impactful books.

“The research culture that supports research productivity has been nurtured over time. This culture cannot be transplanted or mandated. It has to be built from the ground-up. Strong scholars will be attracted by the presence of other strong scholars at the institution. But attracting an accomplished cohort of scholars to ‘kickstart’ the process can be difficult in the first place.”

Professor Murali Chandrashekaran is associate dean of professional graduate programs at the University of British Columbia’s Sauder School of Business. For him, the historical context is essential: “Business administration as an academic discipline and modern management practices were born in the West out of necessity to support and propel rapid industrial development at the turn of the 20th century.

“So, the infrastructure for business education in North America and Europe has long been firmly established and has boomed ever since. While in more recent times other parts of the world have embraced management as a discipline worth serious academic study, the tradition and infrastructure remain much stronger in the West and the knowledge frameworks that continue to be applied by businesses around the world are still Western in their roots.

“Moreover,” he continues, “the established strength of the West is bolstered by dissemination platforms of business knowledge, including academic journals, and by the major accrediting bodies, which are Western in origin.”

Coupled a strong reputation with recruiters, this gives Western schools a continued advantage. This doesn’t rule out Asian business schools competing for talent, particularly with domestic recruiters, but, as Chandrashekaran continues: “The consequence of this well established tradition is a global acceptance of North American and European MBA and other business degrees as valuable commodities in the global job market.”

An MBA from long-established North American or Western European school, then, often still carries the most weight with recruiters.

Competition drives quality

As business schools generally espouse pro-market economic theory, it’s natural that the notion of competition raising quality comes into play. American schools dominated until the 1950s, when European schools such as INSEAD, Manchester and Smurfit in Dublin began seriously challenging – as Asia-Pacific schools may in the future – forcing each institution to raise its game.

Professor Balasubramanian reflects: “Particularly in North America, business schools are locked in intense competition to move ahead in the rankings… one has to run hard to even stay in place. A business school that maintains the status quo will quickly slip behind. This drives rapid innovation in these business schools across different areas.

“Schools outside North America and Western Europe have historically faced a less competitive environment….They have many intelligent and talented students knocking on their doors to get in, and filling up the classes with high quality students has never been a major challenge.

“Schools in North America and Western Europe,” on the other hand, “fight hard over the pool of applicants, and have to constantly differentiate themselves in the marketplace to draw a high-quality cohort of entering students. This again drives innovation.”

In recent times Asian schools have improved enough to retain some of the talent that would have previously looked abroad. In cases like CEIBS in China and the Indian School of Business, some have begun to attract overseas talent to their campuses.

The Asia-Pacific MBA

North America and Europe are being tested harder by Asian business schools. In 2004 there were only 10 Asia-Pacific schools in the QS Global 200 Business Schools Report, so 36 in 2012/13 represents an impressive return.

Simon Evenett, academic director of the St Gallen MBA says: “Across Asia universities are investing considerable sums both to retain their best students and to overseas talent keen to take advantage of opportunities in emerging markets. No one should be surprised as the balance slowly shifts.”

Professor Balasubramanian at UNC Kenan-Flagler agrees: “It must be said that with the entry of new, often privately managed, business schools in countries outside North America and Western Europe, the competitive scenario is changing, and these schools are also transforming themselves much more rapidly than they have in the past.”

As emerging economies become developed economies, driven by the efforts of highly trained business leaders, it will be interesting to see if Asian schools can replicate European schools’ achievements six decades ago.