American Business Schools in the Post-American World

David Cutler for The Chronicle

September 06, 2010

In his 2008 best seller, The Post-American World, Fareed Zakaria argues that the salient feature of the 21st century is not the decline of America's power and influence in the world, but rather "the rise of the rest." It seems likely, Zakaria writes, that the United States will remain the dominant military power for decades to come. In the realms of economics, diplomacy, and culture, however, a multipolar world is already emerging, in which several players seek to develop alternatives to American models and values that do not meet their long-term needs.

Higher education—especially at research-intensive universities—is a major sector of the American economy and, since the 1950s, a leading export. What does "the rise of the rest" mean for institutions that are justly proud of their accomplishments and status as "the envy of the world?"

The recent global experiences of business schools—the most quintessentially American components of academe in the last century—provide insights into the complex new environment in which not only those schools but also universities in general will function in the decades ahead.

In their 20th-century American context, specialized schools that prepared university graduates for jobs in management, marketing, accounting, and other disciplines relevant to business were successful because they met the needs of a dynamic and expanding post-World War II economy. Their success was such that world leaders interested in economic development sent their brightest students to be educated at such schools. The competitive advantage of American business schools as sources of well-prepared graduates turned into something resembling a global monopoly in the 1990s, when the Soviet Union collapsed and its former members made the transition to various forms of capitalist economies.

In those heady days, America's top-ranked business schools continued and expanded their historic recruitment of international students, mostly from elite, Westernized, Anglophone families. Those students could handle high academic expectations and the ever-steeper price tags of a prestigious American degree. For the most part, they also adjusted well to the academic and social routines of their American peers on campuses.

At the close of the 20th century, many more American business schools took notice of the favorable global conditions and looked for ways to pursue influence and revenue outside the United States. Academic leaders responsible for the allocation of institutional resources listened eagerly to their enrollment-management staffs and to external consultants. Demand for American-style business degrees, the experts agreed, was brisk and rising. Early adopters would be able to establish their presence in the most populous and stable markets. Business programs, especially M.B.A.'s and executive M.B.A.'s, were indeed cloned within a decade in the most promising markets—mostly in places like Singapore, Hong Kong, and the United Arab Emirates, where pro-Western rulers were in charge, academic and investment partners were available, and the language of instruction was English.

American business schools led the way, although European competitors such as Insead, the London Business School, and a few Australian and Canadian institutions also participated. The expansion of business-school programs to countries in Asia and the Middle East that were deemed good risks ran the gamut from short-term, on-site courses for senior and midlevel business professionals to full-fledged degree programs. At low-risk locations in major population centers, the expansion generally met institutional expectations. Host governments cooperated, some provided operational funds and student scholarships, and the students came.

However, not everything went according to the best-laid plans of American institutions. Even under the best of circumstances, American business schools found it difficult to replicate the home-campus conditions that were familiar and acceptable to their faculty members. No less difficult, especially when M.B.A. programs were offered, was operating within the accreditation constraints of the Association to Advance Collegiate Schools of Business. In the Middle East, of course, the Persian Gulf war and later the invasion of Iraq became additional sources of friction between the administrators of American business schools and their Arab hosts.

In retrospect, however, it is clear that demography and culture, not politics, placed limits on the ability of American business schools to clone themselves successfully abroad, even where conditions were favorable and suitable local partners could be found. From the 1980s through the late 1990s, the enrollment-management experts got several things right. Demand for American business degrees was indeed brisk and rising. But the experts did not consider (or perhaps did not understand) the nature of the new markets in which they were encouraging their institutions or clients to invest.

Whether in the Middle East, Asia, or Latin America, sons and sometimes daughters of the elites continued to seek opportunities to enroll at top-ranked business schools in the United States. The events of September 11, 2001, created visa difficulties for students from Muslim countries, but the overall pattern did not change significantly. Academically proficient young people who could count on financial support from their families or their governments still found their way to American business schools known for their strong academic programs and their impressive rosters of global alumni.

But, by and large, the offshore "clones" of American business schools attracted significantly different student bodies: young men from an emerging urban middle class whose families struggled to send them to an American business school, and young women for whom study abroad was neither financially possible nor culturally appropriate.

Those new, and potentially far larger, student populations seeking an American business education did not easily meet the standard criteria for admission, such as SAT scores for undergraduates and GMAT scores for prospective M.B.A.'s. Not all applicants were ready for English-only curricula and for Western norms concerning such matters as relationships with faculty members, respect for deadlines, and definitions of plagiarism. These issues aside, AACSB-accredited business schools could not provide programs of study at prices that middle- and low-income students could afford. Their business model is dependent on the use of research-active full-time faculty members with terminal degrees in business disciplines. That is expensive faculty, even by American standards. The model was simply not viable in environments where enrollments of masses of students, limited resources, and inadequate infrastructure were the norm.

Further, as demand for programs and enrollment numbers climbed, cultural and political factors came into play. In several host countries, eagerness for access to American business expertise and professional networks did not mean wholesale acceptance of American curricula and pedagogical strategies, like the ubiquitous case studies of American-based corporations.

Graduate students in the United Arab Emirates, for instance, noted that to function in their region, they needed to apply principles of Islamic finance even while learning those of Western finance. In China, M.B.A. students questioned the usefulness of American instructional materials that made no mention of the challenges of managing Chinese enterprises. In India, a generally pro-American business press nevertheless asked why American business schools focused heavily on private-sector issues and case studies when in most countries (including the United States), graduates were probably destined to move back and forth between public- and private-sector jobs throughout their working lives.

Speaking about his partners at Fudan University in 2006, Patrick Moreton, who is Washington University in St. Louis's representative in China, summed up his host country's academic and political agenda: "China is borrowing what it can and creating what it needs." In 2009, BusinessWeek magazine informed its readers that the Indian Institutes of Management were "on Wall Street radar," not only as opportunities for private equity investors but also as new models of business education. Most recently, South Korea's Yonsei University, which touts its expertise in chaebol, or the management of family-run enterprises, has offered its services globally. The chaebol curriculum reflects the work of well-known American researchers, but the program works only where it reflects indigenous value systems.

Similar efforts are continuing at the business school of Tsinghua University, in Beijing. Given that institution's history and pre-eminence, it is reasonable to assume that other Chinese universities will also "borrow what they can" from American researchers and create what they need: that is, customized, culturally appropriate curricula and pedagogical strategies.

Quite similar developments are taking place in Latin America, a region that business reporters in the United States mostly ignore, except when obstreperous politicians or natural disasters stir things up. For example, the graduate business school of the Federal University of Rio de Janeiro, in Brazil, strives to develop instructional models that combine quality content (much of it borrowed from American and Australian universities), financially affordable access for residents of the metropolitan area, and online access for thousands of potential students in the vast interior provinces.

Another relevant model might be Mexico's Monterrey Institute of Technology, sometimes called "the MIT of Mexico." Appropriately for a university in a country with deep poverty and widespread illiteracy, Monterrey Tech attends not only to the needs of its own students but also to the needs of many communities where it offers programs. Since the early 1990s, its business and engineering schools have been leaders in distance-delivery of programs. Moreover, in stark contrast with Mexico's old-fashioned state universities, Monterrey Tech has also been a leader in collaboration with elementary and secondary schools, to ensure that students from all strata of society will be prepared to pursue a university education.

What do Fudan, Yonsei, and Tsinghua Universities, the Federal University of Rio de Janeiro, and Monterrey Tech have in common? All of them exemplify "the rise of the rest." They are not exactly hotbeds of anti-American or anti-Western sentiment. Quite the contrary. With few exceptions, they are led by American-trained men and women. They know quality in instruction and research. Most important, they know that their graduates will compete in a global, market-based economy whose legal frameworks and rules of engagement were created in the century of American dominance. But they believe that they must find their own paths to success.

What can all of us in American higher education learn from the recent experiences of American business schools and their global relationships? Higher-education leaders in Brazil, China, Mexico, and other nations are generally quick to acknowledge that the intellectual foundations and organizing principles of American higher education, including its commitment to academic freedom and to peer evaluation, will remain the global gold standard for decades to come. They also acknowledge, though much less publicly, that America's top-ranked institutions of higher learning will continue to be magnets for an elite of academically talented, affluent, and Westernized future leaders from across the globe.

Those same leaders outside the United States, however, also believe that the key challenge of this century is to make university education accessible to large numbers of students and to do so in countries where economic, political, and social conditions converge to make the task quite difficult.

To remain major players on a global scale, if no longer the dominant players, American business schools as well as their universities will have to prove that they understand why and how "the rise of the rest" is bringing such issues to the fore. That means a greater willingness on their part to listen, observe, and learn. Above all, it means joining colleagues across the globe to develop alternatives to the academic models developed in Western Europe and the United States in the past couple of centuries.

In the 20th century—the American century—the United States was the unchallenged leader not only for the quality of its universities but also for the access to higher education it provided for students of modest means. America's political and academic leaders blazed that historic trail in the 1960s and 1970s, reaping great social and economic benefits by doing so. There is exquisite irony in the fact that they must now learn from others how to redefine and pursue that same goal in new ways. But learn they must.

Clara M. Lovett is president emerita of Northern Arizona University. She is a trustee of Thunderbird School of Global Management.