Entering the U.S. Market

The law of supply and demand drove SKEMA, a French business school, to open campuses in the emerging markets of China and Morocco, and to start planning for expansion into India, Brazil and possibly Russia.

But the decision to set up shop in the United States was driven by something a bit more emotional. “For European students, this is a dream; America is a dream for them,” says Alice Guilhon, the school’s dean. “And it is a dream for us, to be known in the U.S.”

While Harvard Business School, the Wharton School and the Stanford Graduate School of Business might not be the kind of competition that most institutions would willingly seek out, well-regarded European business schools like SKEMA have in the last few years ratcheted up their efforts to be known and respected in the United States.

SKEMA -- created last year by the merger of ESC Lille School of Management and CERAM Business School – is hoping to build its global reputation by situating its new campuses near hubs of the technology industry, and saw a venture in the United States as key to that strategy. “To be in America is to be close to the headquarters of all the big firms, to be where the story began,” Guilhon says. “To be well-known in America, it is leverage for the visibility of the school in the world.”

In plans announced last week, SKEMA will begin offering classes in English to about 300 of its own students on the Raleigh campus of North Carolina State University, beginning in January 2011. The school hopes to have its own 40,000 square foot building open by 2013. As time goes on, the school may become more distinctly American, but at least for the first few years its faculty, administrators and students will primarily come from France and elsewhere in Europe. “It’s very important that we build the SKEMA culture in the U.S.,” Guilhon said. “We need to show it works there.”

SKEMA's decision to build a campus in the United States is an unusual one, says Juliane Iannarelli, director of global research for the Association to Advance Collegiate Schools of Business. "Most programs are partnerships, collaborations," she stays. "The establishment of a campus -- constructing a building -- is pretty rare."

At least three other major European business schools have taken recent steps that go beyond partnerships, if stopping short of SKEMA's dramatic step. These new efforts are more than student and faculty exchanges, offering substantial instruction in the United States, and in some cases competing to attract American students from the start.

Robert F. Bruner, dean of the Darden School of Business at the University of Virginia and chair of the AACSB's Globalization of Management Education Task Force, says it is "an interesting choice" to see foreign business schools enter the U.S. market. "We have an abundance of schools here and usually the idea is to go where the competition isn't."

The schools are driven, he says, by "a desire to establish and succeed in the U.S. as a basis for validating their models." Aiming to have a successful business school in the United States “is like wanting to have your plays produced on Broadway -- the audiences are most discerning."

After three years of planning and renovations, Spain’s IESE Business School will open a North American facility just a block off Broadway. An opening ceremony for the school’s six-story New York Center, just across 57th Street from Carnegie Hall, is set for June 3, and is intended to be a big splash into the U.S. market.

Luis Cabral, the center’s academic director and an economics professor who was hired away from New York University, says expansion into the United States was a logical step in IESE’s efforts to become known worldwide. “We’ve been in South America, Asia, Africa for quite some time now,” he says. “But if we have the goal of being truly global, then we have to be in the United States.”

Despite being ranked as one of Europe’s top business schools, “we’re not as well-known in the United States as we would like to be,” he says. “There are elements of branding here, in making ourselves known on this side of the Atlantic.”

IESE already has reciprocity agreements in place with a few U.S. business schools, including NYU’s Stern School of Business and Columbia Business School. “The problem with those agreements is that they tend to be a relatively small number of students. If they send half a dozen, we send half a dozen,” Cabral says. But offering its own courses in its own facilities gives IESE a chance to send a far greater number of students to the United States. “We’re estimating 70 to 80, at least -- a different scale altogether.”

Full-time and part-time M.B.A. students will have the option of spending a few weeks in New York for elective courses in industries like media, entertainment and finance. “The advantage of taking these courses in New York is that you have a lot of guest speakers that can just walk up to the building,” he says. “They don’t even need to take a cab. That’s not something that most European business schools can say.”

For at least the next few years, though, the New York Center will be an outpost of the main school in Barcelona and won’t offer degrees. “This is just our first step,” Cabral says. “We’ll see what we do next.”

Another Spanish school beginning its foray into the United States is Instituto de Empresa Business School, which has campuses in Madrid and Segovia. Though the U.S. market is saturated with business schools and executive education programs, IE sees room to build its own programs that will largely be offered in the United States, says David Bach, dean of programs. “You could look at this and say you have very sophisticated customers. You could say, if you’re a foreign school, stay away from the U.S. market. But we want to show that we can have success in such a competitive, difficult market.”

In March, IE launched a joint program with Brown University – one of the few elite U.S. universities that doesn’t have its own business school – to offer an executive M.B.A. program that aims to infuse the humanities and social sciences into the typical business curriculum. The program will include five in-person sessions, four of which will be at Brown’s campus in Providence, R.I., and the fifth in Spain. “We’re expecting to attract Americans,” Bach says. “A European M.B.A. is increasingly attractive to U.S. employers who want to know they’re hiring people who understand the world, but not everybody can come to Europe for a year.” The degree will be awarded by IE.

Matthew Gutmann, Brown’s vice president for international affairs, says the partnership will be a way for the university to build ties with business education without creating its own business school. “Businesses are obviously a central part of the world today,” he says. “Though Brown doesn’t have a business school, we have a lot of people interested in business issues on our faculty and some of our students are also interested. We wanted to find a way to start moving into that area.”

INSEAD, headquartered just outside Paris in Fontainebleau, is also hoping to cultivate a presence in the United States. The school established a “strategic alliance” with Wharton in 2001 to exchange students and faculty, but saw the need to do more to build its brand in the Americas. (Wharton itself has eschewed creating its own programs in other countries, says Michael Gibbons, the school's deputy dean. Instead, the school prefers to set up partnerships, "sharing faculty research, giving faculty time, hosting symposiums, facilitating student exchanges --- with a goal of global mindshare.")

In 2007, Mary Lee Rieley, an American who first worked as an administrator at INSEAD in France, was sent to New York to set up U.S. operations as executive director of INSEAD North America. “We always had individuals who flew in from the main campuses to work with companies in the United States, but we wanted to make a commitment to the Americas that we were permanently here, physically here,” she says. The school also has a full-time director of development based in the United States, as well as a few U.S.-based executive education faculty.

It’s much easier to market the school to students and companies in the United States now that INSEAD has a base here. “We’re known as a top-tier business school all around the world, except to some people in the U.S.,” Rieley says. “We want to change that.”

So far, INSEAD’s only academic offerings on U.S. soil are executive education programs offered through companies like the New York Stock Exchange and Pfizer, but rising application numbers from American citizens do suggest the potential for expansion. In the last five years, applications from U.S. citizens to INSEAD’s campuses in France, Abu Dhabi and Singapore have nearly doubled, Rieley says. To maintain diversity, American enrollment has been capped at 10 percent of the student body, “which means we have to turn away many who apply.”

But that doesn’t mean an American INSEAD campus is coming any time soon. “We’re looking to expand the campuses we already have,” Rieley says. “In the U.S., we’re going to focus on building more strategic partnerships with corporations or other schools.”