Life is getting a lot more complicated for business schools. Competition between them is intensifying, globalisation is changing where and how courses are taught and to whom, and the financial crisis and the response of companies to it are stoking debate about the intellectual content of curricula. To these sweeping themes should be added little local difficulties such as visa restrictions in the UK or the willingness of employers across Europe to pay for executive programmes.
"I'd be concerned about full-time MBAs for the next three to four years," says Julia Tyler, executive vice-president of the Graduate Management Admission Council, the body which runs the Graduate Management Admission Test (GMAT) exam. According to GMAC's research, the percentage of 1,900 schools polled worldwide reporting an increase in the number of applications for full-time MBA courses has fallen for the second year running. Only 44 per cent said applications were up this year. In contrast, about 60 per cent of schools said applications were up for part-time MBAs and Masters degrees.
Student preferences are changing in other ways too. In years past, most students taking the GMAT were from the United States. But this year 52 per cent were from outside the US. Correspondingly, the number of students applying with their GMAT scores to US business schools is declining in favour of schools in other parts of the world, notably Europe and Asia. "The centre of gravity is shifting. It's obvious that there's a mass appetite in Asia for management education," says Tyler.
How are business schools responding to these structural changes in the market? The frequent answer is they are trying to expand and raise income. One popular route is to add more Masters degrees, for which there seems to be an insatiable demand as students look for cheaper and more specialised courses. Hull University Business School (Hubs), for example, has launched an MSc in money, banking and finance, which combines ideas from the economics, accounting and finance departments. "We think the course is an example of modern thinking. It's recruiting well," says Professor Mike Jackson, the school's dean.
Another increasingly popular route is extending international links. Bristol Business School, at the University of the West of England, is collaborating with the University of Barcelona and the Berlin School of Economics and Law to allow students to select modules from each institution as part of their degree. Bristol also has a teaching arrangement with the business school at Taylor's University College in Malaysia, which is soon to become a full university with an Amba-accredited degree. "Collaboration between institutions will be the model", says Dr Peter Simpson, director of MBA and executive education at Bristol. To illustrate the point, in December 2009 Hubs had 300 students taking its two-year executive overseas MBA from four locations.
Simpson also has ambitious plans to expand the MBA programme, hoping at least to double the current full-time class of 25 and to increase the international presence on the part-time MBA, which is expected also to number about 25 when the next course starts in January. "We've been concentrating on getting into new overseas markets", Simpson says, calling Nigeria "the new India."
A third route is to try to make courses more attractive. This links to the intellectual questioning which followed the financial crisis. Solutions range from adding electives or project features to an existing curriculum and strengthening certain course components to a wholesale revamping of the curriculum. From next spring, Imperial College Business School will offer new electives in competition and regulation and mergers and acquisitions, looking at some of the key issues the crisis revealed. It has also increased the time devoted to economics teaching by 30 per cent.
But Imperial has eschewed a broader transformation of its MBA curriculum. "The commercialisation of science and technology is Imperial College's mission, and, as a business school, people expect that. We know what we're good at, what our students want, and we know what employers want," says Simon Stockley, director of the full-time MBA programme. He does not want to increase the full-time MBA class beyond the present 80 students. Imperial also has 150 taking the part-time MBA.
However, others have overhauled their curricula. A few years ago, before the crisis, Hubs tried to get round the notorious "silo" problem – the tendency for key parts of the traditional MBA such as strategy, marketing and human resource management to isolate themselves from each other – by integrating subjects across themes. Thus the five core themes of managing strategically, managing knowledge, managing the value chain, managing relationships and managing the global context all contain elements of corporate and social responsibility, which is often taught separately in other schools. "You're connecting up the social responsibility bit with the business interest, which isn't philanthropic," says Jackson. Hubs has 40 students on its full-time MBA and 25 on its domestic executive MBA.
Bristol has also sought to integrate responsible management across its MBA curriculum. "Responsible management pulls it all together and deals with the financial crisis. What the crisis shows is that regulation doesn't solve the fundamental problem, which is about values. You can't regulate what senior managers do," he says.
A further enticement to potential students is extra support for them. Bristol has launched an international talent scheme to place foreign students with UK companies which need help to break into export markets. In the year since it started, the scheme has found positions for 25 students helping companies with translation, websites, marketing and local customs in countries as far afield as Vietnam and China.
But implementing improvements can be daunting. One difficulty is the sensitive matter of rankings. Business schools have quietly questioned the methodology behind rankings for years. However, the protests have grown since the crisis, because rankings generally give substantial weighting to the increase in earnings after gaining an MBA. This favours schools which produce bevies of investment bankers, but has little bearing on the intellectual rigour of a curriculum or its practical effect of training better managers.
Employers' expectations also restrict the room for manoeuvre. MBA curricula the world over have an uncanny resemblance to each other. "The rankings drive the format of many MBA curricula, but the fact remains that most programmes have broadly similar content because that's what is demanded by employers", says Stockley. At Hubs, Jackson stresses that, while research as well as teaching must be rigorous, they must also be relevant to companies.
Economic constraints have to be taken into account as well. MBA courses are expensive to put on, but competition for students tends to curb the amount schools can charge. Hubs charges £16,500 for its one-year MBA and £7,000 a year for the two-year executive MBA; Bristol charges £16,200 for both MBAs. ButImperial's reputation enables it to command £34,000 for its full-time degree, £39,500 for the weekend executive MBA and £38,000 for the weekday executive MBA. Most MBA courses make their institutions little or no money, not least because schools offer bursaries and other forms of financial help to students.
Recruiting faculty can also be tough as competition drives up academic salaries and mops up the supply of UK nationals. "The biggest problem as a business school is to find the staff we want," admits Jackson, citing particular difficulties in recruiting lecturers in accounting and marketing. Hubs had 15 staff vacancies last year and still cannot fill some posts. One solution is to look overseas, but the UK's new visa restrictions are another obstacle.
In addition, government budget cuts could have a significant impact. Universities are bracing themselves for a 30 per cent cut in funding over four years. On the face of it, that should not affect business schools because they usually generate a surplus, chiefly from Masters and other courses. But vice-chancellors often claw part of that surplus back for general university purposes and some business school deans fear that their cash cow will be milked even more to offset the decline in public funding. Less public money and companies adjusting to straitened economic times could also hit research funding – a cruel blow for schools such as Imperial whose research is highly rated. A business dean's lot is not always a happy one.