Private Business

As business schools proliferate around the world, a handful of privately owned universities have come onto the scene promising to offer new approaches to business education.
Private Business

In the rapidly growing world of management education, traditional business schools face competition from all sides. Among their rivals for student interest are privately owned business schools that have been organized by individuals or consortia of people with business and academic backgrounds. While these schools vary significantly in the quality of education they provide, what all of them do offer is a direct alternative to a traditional business school education. Especially in countries with lagging economies, these schools frequently give students a more flexible, market-driven education than state-supported schools can provide.

For instance, the Leon Kozminski Academy of Entrepreneurship and Management (LKAEM) in Warsaw, Poland, was founded by a consortium that wanted to provide a high-quality business education for a country in a transitional period. “The state schools were not able to make necessary improvements fast enough due to their size and their bureaucracies,” says Dorota Dobija, International Programs Director of the school. “State schools were focusing mainly on economics and related areas, and there were no professionally designed, high-quality programs in business.”

Such high-quality business programs can fulfill a real need in a country desperate for qualified business managers, as was the case ten years ago in Paraguay. At that time, says Sergio Somerville, communications director of Universidad Americana in Asunción, state schools were rife with obsolete programs that did not graduate students with the skills required by the corporate community. Perceiving “a lack of business and management capacity, in private enterprises and the public sector,” he says, a group of business leaders and academics founded the school.

Advantages and Drawbacks

Because they don’t face the constraints of state-run institutions, privately owned schools can respond more rapidly to the needs of business—and the needs of students. According to Chris Dalton, MBA Director of Central European University (CEU) in Budapest, Hungary, “We are less bureaucratic, more flexible, more customer-oriented, and faster to react to market changes.”

Such flexibility also is the hallmark of the virtual university Cardean University in Deerfield, Illinois. Since courses are taught online, there is no geographic barrier to enrollment; classes are formed every three weeks, allowing students a chance to sign up almost at will. This ability to accommodate students’ schedules is something no brick-and-mortar school is equipped to offer, says Geoffrey Cox, president of the school.

Another advantage some of these schools offer is a common language, which allows students from diverse, even global, backgrounds to learn together simultaneously. All of Cardean’s online classes are conducted in English, as are the BBA classes at LKAEM. At the Graduate School of Business at CEU, the full-time MBA is offered entirely in English, whereas other schools in the region teach in the local language or conduct only some classes in English, says Dalton.

In some cases, private schools also possess technological advantages over other schools. Cardean, for instance, has developed its own software that takes full advantage of distance learning over the Internet. Dobija notes that LKAEM has built up-to-date classrooms, computer labs, and lecture halls. At the Universidad Americana, says Somerville, students can use a business sciences library with computer access to a wide array of international databases, and this library is one of the benefits that draws students to the school.

Nonetheless, these privately owned business schools face challenges that more traditional schools do not. Not surprisingly, many students prefer to attend established schools with well-known reputations. In many cases, especially in Eastern Europe and Latin America, privately owned schools are also at a real disadvantage when it comes to cost. Students at Universidad Americana, CEU, and LKAEM must pay a tuition higher than they would pay at state schools, and when scholarship money is not available, this can be a barrier to student enrollment.

Says Dobija, “State schools get state funds, while private schools must rely on tuition and private donations.” In CEU’s case, some of those funding problems have been alleviated by new scholarship money that has enabled the school to widen its recruiting net across the entire region.

Even when money isn’t an issue, privately owned universities aren’t necessarily the right choice for all students. In the case of Cardean, says Cox, “we can’t offer some of the advantages of place-based schools. We can’t reproduce the intense kind of community interaction you get from sitting in a room with people.” Some students might review various attributes of these schools, from the perceived quality of the institution, to its location, to its educational offerings, and decide that a private institution is not for them.

All four of these private schools have found it imperative to collaborate with established business schools, often drawing on outside faculty for advice in constructing the curriculum or help in teaching it.

Close Collaboration

To strengthen both their academic credentials and their appeal to potential students, all four of these private schools have found it imperative to collaborate with established business schools, often drawing on outside faculty for advice in constructing the curriculum or help in teaching it. For instance, from the beginning, Cardean formed an academic consortium with five top business schools: Columbia University, Stanford University, Carnegie Mellon, the Chicago Graduate School of Business, and the London School of Economics. These professional ties have been essential to the school’s success, says Cox.

“Such an association gave us a kind of instant validity,” he says. “It created a visibility and an immediate respect that would have been hard for a brand-new institution to establish. It clearly signaled that we had a deep commitment to serious, quality education.”

For most of the same reasons, the CEU Graduate School of Business has maintained partnerships of varying degrees with schools in the U.S. and Canada. From the mid-’90s until 2002, the school ran a joint international MBA program with Case Western Reserve University, accredited by AACSB International and granted by Case Western.

“We still maintain strong ties with Case—for example, offering student exchanges and dual degrees,” says Dalton. “In addition, our MBA students can apply for an exchange semester at any one of eight partner business schools.” While the benefit to the private schools is instant legitimacy, the benefit to established schools is a powerful one as well: a chance to give their students and faculty the in-depth, handson experience of living and learning in another country.

At Universidad Americana, multiple exchange programs with schools in Latin America, Europe, and the U.S. also allow students to benefit from international experience and cross-curricular learning. Double certification programs are offered through Fachhochschule Worms in Germany, Centro de Estadística y Software Matemático (CESMA) in Spain, and San Diego State University in California. “The schools maintain complementary strengths that allow both institutions to benefit from the affiliation,” says Somerville. “In this way we obtain synergy.”

To offer its students access to a more global education, LKAEM has developed partnerships with universities in Russia and former Soviet republics, the U.S., India, Israel, Mexico, Kenya, South Africa, and Indonesia, says Dobija. LKAEM joined the Socrates/Erasmus exchange program in 1999, which allowed it to sign student exchange agreements with more than 30 European universities from Germany, Denmark, Finland, Sweden, the U.K., and Spain. “These agreements usually grant full academic recognition of the courses taken abroad,” says Dobija. So far, she notes, they have proven to be both successful and effective.

Academic Credentials

Another reason that privately owned schools rely on close alliances with partner schools is that one of their greatest challenges is finding enough qualified faculty, especially in regions where business schools are not plentiful. Instruction at CEU is provided by about ten faculty members, and the school maintains a pool of approximately 20 additional individuals who are either local adjunct professors or visiting faculty, usually recruited from North America or Western Europe.

Privately owned business schools rely on close alliances with partner schools because one of their greatest challenges is finding enough qualified faculty.

At Universidad Americana, nearly a third of the academic staff is from outside Paraguay. On-site faculty members are supplemented throughout the year by 21 visiting international professors from Spain, Chile, the U.S., Uruguay, and England. Of the 220 professors employed by the school, 22 are full-time; many of them are engaged in their own continuous improvement processes. “Eighty part-time and 22 full-time professors are pursuing a 600-hour post-graduate diploma for didactic enhancement,” says Somerville. Faculty are also required to upgrade their knowledge with seminars and academic activities locally and overseas, and they must conduct research in commercial environmental problems.

LKAEM’s courses are taught by 162 full-time faculty and 85 part-time faculty, but the school benefits hugely from exchange programs with other schools. Last year 13 faculty members from LKAEM were invited to be visiting professors at schools in the U.K., Canada, the U.S., Sweden, France, and Finland; the school welcomed visiting professors from schools in Israel, Italy, the U.K., the U.S., France, Spain, and Germany.

For the most part, Cardean courses are created by faculty from the consortium partners and taught by a cadre of full-time instructors. However, to accommodate any fresh influx of students, the school maintains a pool of trained adjunct professors who can be called in at any time and who can follow the courses as designed. These adjunct instructors might include professors who have full-time jobs at other schools, individuals with advanced degrees who are in the working world, or professors who are currently spending most of their time caring for children at home but who want to keep teaching on a part-time basis.

Along with maintaining exchange programs with faculty at established universities, most of these schools enhance their credibility by pursuing some form of accreditation or certification, either through state boards of education or official organizations. Such formal recognition provides reassurance to students considering an education at these privately owned schools.

What Lies Ahead

While representatives from these schools feel they offer an excellent alternative to business students, they are quick to point out that founding a private business school is not a simple matter. Not all countries or regions can support another business school; that is particularly true in areas of the world where there are no companies prepared to hire newly minted MBAs, notes Dalton. “It might be difficult to establish a school where no one values a business degree,” he says.

Would-be owners of private business schools also must be aware of the potential costs involved, from conducting a market survey to generating public awareness of their schools to investing in physical and technological necessities. If these owners don’t spend the required funds on research, technology, and pedagogy, says Cox, “they probably won’t be very successful from an educational standpoint.”

Nonetheless, as worldwide demand for management education continues to grow, the number of privately owned schools is also likely to increase. Traditional schools can choose to view them as competitors or collaborators, either working with them on programming and faculty exchanges or putting their energy into enhancing and marketing the strengths of their own established degrees.

Traditional universities also can choose to emulate some of the assets of these private schools, particularly by making their own institutions more responsive to the schedules of students and the needs of corporations. Most school administrators understand how important it is to be nimble in today’s market, and the agility of these private institutions underscores that lesson.