Business schools are hardly in the habit of signing agreements at press conferences. But that is what three European schools – Audencia, MIP and HHL – did when they announced that they would co-operate in the recruitment and placement of MBA students. The network is the first of its kind in Europe and could presage closer co-operation between the institutions in the future. However, the arrangement also highlights the pressures smaller schools face in competing globally for top quality students.

Audencia School of Management is in Nantes, France, MIP is part of the Politecnico di Milano, Italy and HHL is the Leipzig School of Management in Germany. All have pedigrees dating from the 19th century, are well regarded and are accredited by one or more major organisations. Although they have strong regional roots, they also place students in international companies that want MBAs able to work for them globally.

The aim of the alliance is to increase the chances of MBA graduates from these three schools being hired by international companies, according to Professor Jean-Pierre Helfer, dean of Audencia. The schools' MBA programmes are small but expanding. Between them they can muster about 200 full-time and part-time MBA students. Of those, Audencia has 25 full timers, HHL 35 and MIP 65. This poses a problem for potential employers. The companies may not doubt the standard of the MBAs graduating from the schools, but they prefer to deal with a handful of bigger schools rather than a host of smaller ones. "It's hard for companies to deal with all schools," admits Helfer.

The schools are in a dilemma as well. They need to attract the students employers want, but that means demonstrating to potential MBAs that there is a good chance of a prestigious job to recompense them for the time and expense – about €25,000 for an MBA – the degree entails. The dilemma is especially acute in recruiting students from Asia and the Far East, mainly India and China. These countries produce an ambitious and growing stream of students who scour the world for the best places to study – and who multinationals want to employ.

The co-operation between the three schools is designed to break this vicious circle. It addresses both the "upstream" side – recruiting students – and the "downstream" side – placing students. Professor Hans Wiesmeth, Rector of HHL, says: "Students get access to a network of European companies. The direct benefit to the companies is a wider choice of top quality students."

Now the schools will need one representative instead of three to attend an MBA fair. Because the schools are in three of Europe's biggest economies and are well plugged into European companies, they will be able to present themselves as pan-European. It is much easier to market Europe as a whole in the Far East than to market an individual country, says Professor Gianluca Spina, Dean of MIP. "If you attend a fair in Shanghai, Taipei or Seoul you first have to explain where Milan, Leipzig or Nantes is."

Previously, the schools mainly placed students with companies bilaterally. Spina says that many of its student placements are "customised" – a company such as Fiat will request a candidate with specific qualifications. These relationships will continue but will be pooled in a common database. The schools will invite each others' students to their job fairs and plan to hold a joint jobs fair in Brussels next autumn – the first such fair in Europe. A company will now be able to get instant access to all 200 MBA students, putting the schools in direct competition with larger rivals.

The new venture will be financed by investing current recruitment and placement budgets in it. "To succeed, we will invest," Wiesmeth says. Existing staff will use shared technology to run the recruitment and placement, rather than setting up a new body."The idea is that a network is stronger than buildings," Helfer says

The schools will remain independent, however, and will continue to compete for students. But they are co-operating already in other areas. Audencia and MIP have launched an English Masters in supply chain and purchasing management; Audencia and HHL have a double MBA diploma. So the alliance raises the possibility of closer co-operation, for example in staff and students exchanges, and extending co-operation in recruitment and placement to other institutions in Europe. As economic conditions deteriorate, it could well be an attractive model for other, smaller business schools.