It is common knowledge that the MBA was born in one of America’s most prestigious universities. The MBA programme was established at the Harvard University Graduate School of Administration in 1908. At that time, this now grand institution had only 15 faculty members and a regular class of 33 students. The Graduate School of Business Administration required students to complete four years of undergraduate studies before applying to the business programme. Other universities soon followed suit. Harvard was the trendsetter and a champion of business administration – a role model, and one that became the foundation of the European MBA.
History of the MBA
The concept of placing business management on the same level as medicine or law wasn’t well received in the early 20th century. But as corporations flourished, there grew a need for skilled management professionals, and colleges and universities started their own business schools. Educators realised that business schools had to provide formal tuition to prepare students for leadership positions. Core courses, including accounting, business strategy, economics, finance, manufacturing and production, were designed to provide students with basic concepts of business which had to be mastered before delving into specialisations.
At the dawn of the MBA era, however, programmes were lacking in vigour because they failed to instil in students the essential skill of successfully managing a business and communicating properly to benefit the company. Indeed, two damning reports appeared in 1959, condemning American graduate management education as little more than vocational colleges filled with second-rate students taught by second-rate professors who did not understand their fields, did little research and were out of touch with business. Thus, at the end of the 1950s, US colleges and universities restructured their business programmes to be more comprehensive, and to provide programmes somewhat similar to those of today’s B-schools. This resulted in the creation of the classic American MBA model: a first year of required core courses to provide the basics of management and a second year of electives to allow specialisation or deeper study.
The Emergence of the European MBA
It was at this time that interest in management education took root in Europe. The first genuinely European MBA programme, which borrowed the American idea of setting up a B-school, but was not an exact replica, was founded in France, at INSEAD. In 1957, the Fontainebleau-based institution launched an MBA programme which offered comprehensive training in all of the necessary hard skills, but was also geared towards business conditions in Europe and the need for appropriate company management. Curiously, the founder of the INSEAD MBA Programme was a Harvard professor – Georges Frederic Doriot. But he was not exactly leaking information to the enemy. Doriot was an expatriate, originally born and raised in Paris, France. He had immigrated to the US to gain his MBA degree from the only institution that offered it at the time. He decided to stay on, becoming a professor at the Harvard Business School in 1926 and gaining US citizenship in 1940. Seventeen years after his US residence was made official, Doriot, who had also gained the title of ‘father of venture capitalism’, returned to his home country and founded the INSEAD MBA programme. From its very launch the programme boasted academic excellence and a curriculum that provided effective education that secured a competitive edge for its graduates. The first class graduated in 1960 and consisted of a total of 60 students from 14 different countries.
INSEAD was not unparalleled in Europe. IMD in Switzerland, the Henley Business School at the University of Reading and Ashridge Business School were all started by groups of companies to provide training and were dedicated to the idea of creating managers with more diverse skills. Although European business schools can’t boast the lengthy history of their American counterparts, their popularity and prestige is certainly rising, and some are undoubtedly among the best in the world, such as the London Business School (LBS), IMD, INSEAD, IESE and IE.
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Dissecting the differences
It is not a question of which MBA, American or European, is superior. It’s about making an educated choice. But with nearly 500 MBA programmes in Europe and over 700 in the United States, students face a plethora of choices before deciding which side of the Atlantic is right for them.
One major asset that the European degree has flaunted from its very inception is that it offers ‘fast-track’ training squeezed into 10-12 months compared to the same volume American institutions would teach in two years. Time has always been important to business people, hence a shorter programme can appeal to those who want to return to their real-life career as quickly as possible.
“Ten months is an adequate amount of time to get hard skills and leadership skills without having to necessarily completely rethink your career trajectory,” says 28-year-old Belinda Navi, an MBA graduate from INSEAD. Ms. Navi plans to return to the videogame industry after the business school’s 10-month programme, and hopes to vault from a business-development role into management.
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Another important difference is that European schools have a significantly higher percentage of non-national students and faculty members than their American counterparts. At the top business schools in the United States - Wharton, Columbia and Harvard - roughly 33% to 45% of students come from abroad. That figure is close to 90% at some of Europe’s top-ranked business schools, such as LBS and INSEAD. A survey of the proportion of overseas faculty members at those schools reveals a similar trend.
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Moreover, European B-schools are becoming increasingly globalised, with most top European MBA programmes offering studies at one of their campuses abroad – for example, HEC Paris boasts a Qatar programme while INSEAD has gained an even greater popularity with its two-campus structure – one in Europe (Paris) and another in Asia (Singapore).
Though the MBA is one of the degrees with a proven ROI, money can be an issue because the investment is substantial. Tuition and fees for elite American MBA programmes can top 200,000 USD; selective European programmes typically cost half as much. And there have been considerable price reductions in recent years, too. At London Business School, for example, the tuition cost for a student starting a two-year MBA programme this August totals 67,750 GBP, or 103,895 USD. A year ago, it would have cost about 10,000 USD more, or 113,892 USD, and 10 years ago, the same tuition would have been 123,603 USD.
Reasonable tuition costs – about 30,000 USD – helped Patrick Lowry, a 26-year-old University of Delaware graduate, decide on the 15-month MBA programme at the Frankfurt School of Finance & Management. “That’s less than half of anything I would pay for a respectable programme in the US,” he says.
Besides, studying abroad and choosing from one of a multitude of European MBA programmes will offer immersion in a completely different culture and pave the way for the development of additional soft skills, such as adaptability and flexibility, which could be a considerable advantage in the business world. Furthermore, doing an MBA abroad is arguably the best-possible introduction to the business landscape in that country. And most would agree that taking up the challenge of studying abroad can be not only financially rewarding, but personally rewarding too.
Of course, the idea of Europe, with its rich cultural and historic background, its intricately interconnected economies and governments, and its diverging liberal models on social and economic issues, can offer much more than just business education. Europe embodies diversity in all of its forms, especially now that the continent faces so many challenges. And that is perhaps the European MBA’s most alluring quality. Europeans are aware of this. But for someone outside the Old Continent, the “European Ideal” must be experienced to be understood.
This article is original content produced by Advent Group and included in the 2016-2017 annual Access MBA, EMBA and Masters Guide under the title “Transatlantic Origins: History of the European MBA”. An online version of the Guide is available here.