View/Review: The Rankings Game

Business school rankings. Their relevance ranges from being seen as a useful benchmark between peer institutions and programs to a highly controversial marketing tool. Yet, more and more publications produce rankings each year and students and parents increasingly lend them credibility in their decision-making process. The rankings are not going away, nor are they becoming more uniform and regulated. This forces business schools to compete with each other, not only in admission standards, but course offerings, causing some schools to drop their quality niche programs to become a more well-rounded, full service business school. This dilemma poses the question: will rankings ultimately improve or hinder business schools?

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Orthodox business strategists defend that companies should focus only on those industries where they can excel, based on their resources and capabilities. According to this perspective, the diversification of activities is not a preferred option for growth, unless the newly entered industry is closely related to the company’s core business or there are clear synergies to be exploited. In sum, they defend, “your company can not excel in every industry”. This axiom could be also applied to educational institutions, business schools included, and was very lucidly explained by Prof. Peter Lorange, President of IMD, in a previous post on BizDeans Talk blog: “Strategy means choice. Not only in business but also in educational institutes. In the short term, choices that break with tradition may be painful but I firmly believe that in the long term they pay off. Of course, choices must be made consistently and must be based on a clear strategy, shared and supported by the whole institute”. His statement is evidenced by the success of IMD, the centre that he leads, which is fundamentally focused on executive education programs.

However, the globalization of education, and management education in particular, is changing traditional paradigms. In recent years, we have attended the consolidation of full-service business schools, i.e. institutions that offer programs at all levels of higher education -undergraduate, graduate, PhDs and non-degree executive education courses-, thus having a wide diversified portfolio of activities. Full-service business schools are normally big in size and scale -in terms of faculty, students, facilities or other resources- and resemble large corporations that compete in other global industries. They may belong to wider universities, like Said Business School at Oxford University or The Wharton School at Penn’s University, or enjoy an independent status, like HEC in Paris.

Interestingly, last year’s European Business School Rankings, published by the Financial Times, allows for two conclusions related to the commented issue: First, a significant number of the institutions ranked in the higher positions are full-service business schools; and second, those highly ranked full-service schools do actually excel in different education segments, a fact that contradicts the thesis supported by orthodox strategists.

Like large corporations, leading full-service business schools benefit from many operative synergies and from a “brand halo” effect: they are supposed to achieve the quality of the current programs in their newly launched offerings.

I wonder whether the globalization of management education will foster the polarization of business schools’ models: on the one extreme of the spectrum, “focused schools”, covering only one or two segments of higher education; and on the other end, full-service business schools, offering a wide array of educational activities on a global scale. Will the institutions that do not choose one of these models become trapped in the middle?

Santiago Iniguez, Dean of Instituto de Empresa Business School

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Baylor Business Review, Spring 2007



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