Mars vs.Venus? Business education in the US and Europe

There exists a tradition of highlighting the different models that US and European business schools are based on, but in reality, they have more in common than divides them. Leading European schools such as INSEAD were in fact modeled on institutions such as Harvard Business School, and often set up by graduates of the major US institutions. But over time, the European schools have adapted to, and been influenced by, their immediate environments, which are very different to those in the United States.

 Venus and Mars; is how some view European society and thinking as opposed to that of America (it’s debatable if that includes Canada). This metaphor has been used to illustrate the different general abiding attitudes on opposing sides of the Atlantic vis-à-vis social issues, philosophy and religion etc. Does this same paradigm apply to management education?

 Some differing cultural and structural features are at the root of this confrontation between the two different archetypes of American and European business schools. Historically, American and European business schools have put a different emphasis on stakeholders in strategy formulation and decision-making. Two decades ago, references to stakeholders in the US were discredited as borderline communist; the only relevant constituency for managers was shareholders. Conversely, European business schools have developed out of a very different management culture, open to a wider array of stakeholder groups beyond shareholders.

 The European business environment is characteristically regulated and governments have a decisive presence; often as major shareholders in big companies but also through other instances such as awarding licenses, fixing tariffs, preemptively approving mergers or acquisitions or keeping various other prerogatives over companies’ decisions. For example, in Germany the law determines that unions should have a representative in public companies’ boards. In France the word “dirigisme” is often heard among French managers, referring to their government’s strong interventions in the market. [1] Don Antunes and Howard Thomas reflected this fact when they explained that each of the European schools “was influenced by the set of cultural, legal and regulatory characteristics in their home country” [2]

 Furthermore, American universities rely heavily on the income generated by their endowments and their MBA market is the biggest, most homogeneous and sophisticated worldwide. In Europe, management education is still very fragmented and there is a coexistence of various business school models. If I were to choose a word to define higher education in Europe it would be “diverse”. The size of the American education market and the resources available to business schools result in more research-oriented faculties and a more decisive role of a school’s brand name. As regards sources of revenue, business schools in Europe rely almost entirely on the revenues generated by their activities and, in the case of public universities, on state subsidies.

 The chart below lists the structural factors that are usually seen as differentiating the US schools from those in Europe:

Let’s give credit to where credit is due: Management education was invented in America. In fact, the first MBA in history was launched by Dartmouth College, in New Hampshire. However in Europe, the flourishing of business schools only occurred in the late 1950s.

 It is worth noting that many business examples demonstrate that being the pioneer does not necessarily ensure continuing as the benchmark in the long run. The Wright Brothers first flight heralded a subsequent US lead of the aviation industry for the rest of the century. However, Airbus, the European aircraft-manufacturing consortium, has overtaken Boeing in commercial aviation in recent years.

 During the last decade European business schools would seem to have caught-up with their American counterparts and have lost their historical inferiority complex. However, the primacy of American schools will last, at least over the next decade, if there are no clear innovative new models being born in Asia. The higher education industry changes more slowly than other industries, particularly due to more regulation, and it is not foreseeable that there will be big disruptive movements.

 Despite the two differing models of management education, the trend is, irreversibly, towards convergence: it is a consequence of globalization. Will the descendants of Venus and Mars take more after its mother or father? My belief is that the leading schools in China and India will continue to look to their counterparts in the United States for inspiration when mapping their growth strategies, a decision largely based on the perceived brand power and historical presence of the US schools. That said, I also believe that the European schools are closer to hand, more accessible, and more easily copied. Perhaps the most likely outcome is that the Asian schools will create their own business school model, introducing new characteristics, albeit built on long-standing theoretical foundations.

Notes

This post has been adapted from my book "The Learning Curve: How Business Schools Are Reinventing Education" (London: Palsgrave Macmillan, 2011)

[1] The Economist (3 September 2002) stated that: “Another, more important difference is that Europe, where the state generally plays a larger regulatory role, believes more strongly than America in such notions as social justice and corporate social responsibility” https://www.economist.com/node/1312947?story_id=1312947

[2] D. Antunes and H. Thomas,‘The Competitive (Dis)Advantages of European Business Schools’, Long Range Planning 40 (2007), 382-404, p. 387.