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MD 47,9

Mapping globally branded business schools: a strategic positioning analysis

Howard Thomas
Warwick Business School, University of Warwick, Coventry, UK, and

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Xiaoying Li
Department of Management, Birkbeck College, London, UK
Abstract
Purpose The purpose of this paper is to investigate the strategic proles and differences across globally leading business schools. Design/methodology/approach This paper used the concepts of strategic group identity and domain consensus to examine the differences across the business schools. Cluster analysis is applied to identify strategic groups among 82 global schools from the USA, Canada, Europe, Asia and Australia. Findings Ten strategic groups essentially similar strategic clusters are identied by the clustering analysis. The results demonstrate that the groups do have different resource and reputation proles. Research limitations/implications Future research can improve the research base by collecting data on nancial variables such as endowments, providing metrics by which a schools efciency can be assessed, or collecting longitudinal data. Furthermore, a form of cognitive strategic mapping could be achieved through survey and interview mechanisms in order to highlight the perspectives of deans and senior managers of business schools. Originality/value This research contributes to the literature in two aspects. First, this research provides a clear mapping of the strategic bands across globally branded business schools. The results are highly timely in todays debate about the nature and future of business schools. Second, this research demonstrates that strategic group theory can be applied in the business school context. Keywords Business schools, Strategic groups, Cluster analysis Paper type Research paper

Management Decision Vol. 47 No. 9, 2009 pp. 1420-1440 q Emerald Group Publishing Limited 0025-1747 DOI 10.1108/00251740910995639

1. Introduction Over the last two decades, business schools have been among the fastest-growing segments in higher education. The rapid growth of business schools has attracted widespread debate and critique about their nature, value and role in society as well as in the profession of management (e.g. DAveni, 1996; Baden-Fuller et al., 2000; Brickley and Zimmerman, 2001; Zimmerman, 2001; Pfeffer and Fong, 2002, 2004; DeAngelo et al., 2005; De Onzono and Carmona, 2007; Thomas, 2007). However, relatively few studies have investigated the strategic proles and differences among business schools (Antunes and Thomas, 2007). This study aims to address this issue. In this paper, the concept of strategic groups is applied to examine the strategic differences across business schools. Strategic groups are dened as organisations within an industry with similar strategic characteristics, following similar strategies or competing on a similar basis(Porter, 1980; McGee and Thomas, 1986). Since

Hunts (1972) analysis of competition, strategic group theory has been extensively developed and widely used to investigate the existence of strategic similarities and differences in various industries. The current research applies strategic group theory to the context of business schools. In fact, education, including higher education and business education, has been increasingly seen as an industry (Pfeffer and Fong, 2004); therefore, it is an appropriate approach to examine business schools within the framework of strategic group theory. This study is also highly timely in todays debate about the nature and future of business schools (e.g. Segev et al., 1999; Starkey et al., 2004; Hawawini, 2005; Antunes and Thomas, 2007; Thomas, 2007). The current research is not designed to test strategic group theory; instead, it aims to examine the strategic and reputation differences across the globally leading business schools based on the theoretical reasoning of strategic group theory. The motivations for this research are obvious. Over the last two decades, wide existence of league tables and rankings has become a phenomenon in the world of business education and has been continuing inuencing the activities of business schools and students[1]. The value of the media rankings of business schools has attracted extensive discussion from different perspectives and there have been a variety of opinions (e.g. Corley and Gioia, 2000; Trank and Rynes, 2003; Policano, 2005). Recently Policano (2007) argues that the media rankings give the perception that there are more signicant differences between similar MBA programmes than actually exist. Many times it is the arbitrary weighting assigned by the media to the variables in the ranking rather than the quality of the school that accounts for differences across similar programmes. He suggests that a more accurate description of quality can be obtained by rating schools in groups of programmes of similar quality. Although Policanos argument focused on MBA programmes rather than schools, it also intrigued a new way to look at business schools, i.e. examining groups of schools rather than individual schools will be more productive. However, this research does not intend to do a simple rating of business schools; instead, it aims to identify the strategic difference across business schools and the reasons for business school positioning. Our sample is based on one of the available sources of data on top business schools in the world, namely, the Financial Times global MBA programme rankings. A total of 82 global schools from the USA, Candada, Europe, Asia and Australia were selected because they appeared in the top 100 for at least four times over the period 2001-2005. Our results show that ten strategic groups or bands, according to Policano (2007), can be identied and each group exhibits a different resource and reputation prole. The remainder of the paper is structured as follows: Section 2 discusses the literature in strategic group theory and business education. In section 3, we proceed to present the sample selection, variable selection, data description and clustering procedure. Section 4 discusses the results and draws out the implications for business schools. Section 5 summarises the paper and indicates directions for future research. 2. Strategic groups and the strategic scope of business schools 2.1. The development of business education industry Business schools have expanded worldwide since the early twentieth century, especially over the second half of the 20th century (Pfeffer and Fong, 2002). In the

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USA, business schools have become the largest single eld in higher education. The number of bachelors and masters degrees in business awarded has been reaching records for decades and has increased 215 per cent since early 1970s. In the academic year of 2003-2004, approximately 22 per cent of all bachelors degrees, 25 per cent of all masters degrees, and 3 per cent of all doctoral degrees, were business degrees, while the numbers were 14 per cent, 11 per cent and 2 per cent respectively in the year of 1970-1971[2]. In Europe, the modern forms of business school developed later but have grown rapidly in the latter part of twentieth century. In Britain, there are now approximately 120 business schools and full-time undergraduate and postgraduate students grew by 26 per cent and 157 per cent respectively in just eight years between 1996 and 2004[3]. Currently, there are around four thousand business schools in the world and business education has grown rapidly. While most of the prestigious business schools are located in the USA, Canada or Europe, it is noted that newer business schools in Asia, Australia and Latin America have started to enter the global market. Although the early forms of business schools were initially established in Europe, their fast standardisation and development in the USA has had a far greater inuence on the nature and role of the modern business schools with the USA. MBA programme established as the dominant educational model (Pfeffer and Fong, 2002). With increasing globalisation, business education has grown into a global industry, faced with an increasing range of competitors in a global market. Indeed, business education has been described as an industry instead of a mechanism for socialising and educating the young (Pfeffer and Fong, 2004). The industry of business schools has become very large with an increasingly diverse set of players and rapidly intensifying competition. Other than promoting teaching and research quality, business schools have also responded to the changing market by growing their endowments, expanding their scope and geographical spread, and growing their budgets, endowments, and developing their nancial support (Gioia and Corley, 2002). The above discussion naturally leads to the following questions: What is the range of models adopted by business schools? What are the consequent strategic proles and differences across business schools? And what are the sources of, and reasons for, their positioning? Can strategic groups be identied among the globally branded business schools? If so, what are the different proles and characteristics of these groups? 2.2. The theory of strategic groups In this study, strategic group theory is applied to investigate the above questions. Ever since Hunts (1972) studies of competition, strategic group theory has provided an analytic framework to answer questions about the similarities and differences in organisations strategic behaviour, the effect of organisations strategies on performance, and changes in strategy and performance over time (e.g. Cool and Schendel, 1988; Fiegenbaum and Thomas, 1995; Short et al., 2007). There are two aspects of competitive strategy which are frequently examined in strategic group studies: resource pattern (e.g. R&D and investment expenditures) and strategic scope commitments (e.g. degree of vertical integration and product range). It is clear that rms within any industry are heterogeneous in terms of the resources they

possess and strategies they pursue and it is precisely these differences in resources and strategies that create different performance outcomes. It is based on such differences within an industry that strategic groups of rms with similar resource and scope characteristics can be identied. Porter and McGee and Thomas (1986) dened a strategic group as a cluster or groups of rms where each group consists of rms following similar strategies in terms of key decision variables (i.e. in terms of the differences in strategies), while Barney dened a strategic group as a set of rms that are attempting to modify or exploit similar structural characteristics of a given industry (i.e. in terms of the resource heterogeneity of rms). Following Porter and Barney most existing researchers, however, have incorporated a mix of strategic and resource variables in strategic group formation (Harrigon, 1985; McGee and Thomas, 1986; Mascarenhas and Aaker, 1989; Dranove et al., 1998). They argue that in forming strategic groups, a systematic integration of differences in skills, resources and strategic choices of rms will provide a broader explanation of the characteristics of these strategic groups. 2.3. Application of strategic group theory to the context of business schools Existing studies have found evidence of the existence of strategic groups in various industries such as pharmaceutical, insurance, retailing, steel and knitwear[4]. Traditionally neither business schools nor universities have been the context for applying the tools of strategic group analysis. However, strategic group theory has been applied to the analysis of MBA programmes (Segev et al., 1999; Paucar-Caceres and Thorpe, 2005) and the study of German universities (Warning, 2004). Segev et al. (1999), when studying the curriculum design of 25 leading US MBA programmes, found that there were six distinctive clusters of programme proles that illustrated the concept of strategic grouping at the programme level. Paucar-Caceres and Thorpe (2005) replicated the study of Segev et al. and identied ve clusters in 32 MBA programmes in the UK. They then compared the characteristics of the grouping of the UK MBA programmes and found that the clustering in the UK is not as strong and clear as that in the USA. Despite the conicting results, these studies demonstrated that strategic groups can be found in the education context. The existing studies discussed above, however, examined only a product of business schools, i.e. MBA programme, while strategic group traditionally is a tool for the analysis of strategy at rm level. If MBA programmes can be classied into different strategic groups, it should be possible to nd strategic groups across business schools as a whole and thus, provide insight into the competitive dynamics of business schools. As Segev et al. (1999) rightly pointed out, there are other indicators than MBA programmes that determine a business schools strategy and distinctive competence, such as its faculty, endowment income, student quality, and the potential synergy between the programmes and the location. These factors, as well as a schools brand and reputation, are potential sources of competitive advantage of business schools (Ferguson et al., 2000). Table I presents a mapping of the strategic landscape of British business schools across a wide range of dimensions, including reputation, research and quality elements (Ivory et al., 2006; Antunes and Thomas, 2007). As discussed in Section 2.2, the factors chosen to form strategic groups should represent both resources and strategies. In the business school context, these factors

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Reputation

High Internationally prestigious, renowned as centre of knowledge creation Published in top international journals, inuencing leading academics/teachers in other top-rated schools

Medium Nationally prestigious, regarded as a high quality academic institution Signicant impact among other academics, government or business, usually at a national level

Low Locally/regionally acclaimed as an important education institution Work more specially focused on individual organisations in local industries

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Research

Type of teaching

MBAs mainly for local Post-experience or Post-experience or executive education for executive education for managers, BScs/MScs for students with little middle/junior senior managers. or no management managers, doctoral Highly rated MBA experience programme, also MBAs/MSc, some undergraduate Low (more emphasis on Medium (leaving research) signicant time for research) High Moderate Provide high quality education for the countrys leading employers and students High (leaving little time for research) Low Broaden access to HE to previousl disadvantaged groups. Direct links with local SMEs and students

Teaching volumes

Financial margin from teaching

Broader social function Flagship, elite institution. Good for national prestige Table I. Strategic scope of business schools

Source: Ivory et al. (2006)

should, therefore, reect the resources of a school involving such issues as nancial endowment and budget, faculty skills and administrative resources whereas strategies include such factors as the programme and research prole. The resources and prior strategic choices of a business school therefore determine its position within the global business education industry and explain both its performance and reputation differences relative to competition. In this study, we aim to map the strategic positioning of business schools based on their resources and strategies. Strategic group theory also provides a way to examine the reputation of business schools. We expect that the strategic groups of business schools, if they exist, will also have different reputations. This paper differs from the existing studies in the following aspects: First, our sample consists of a large sample of business schools covering a range of prestigious schools in the USA, Canada, Europe, Australia and Asia. While previous studies by Segev et al. (1999) and Paucar-Caceres and Thorpe (2005) examined 25 and 32 schools respectively, we include 82 schools in our sample with a much wider geographical coverage. Second, this study examines the strategic positioning of business schools, rather than that of MBA programmes.

3. Identifying strategic groups of business schools There are three main methodological issues that need to be considered in the formation of strategic groups. First, the sample needs to be carefully selected, with existing literature suggesting that the results could be sensitive to the characteristics and the breadth of the chosen sample. The second is the selection of variables upon which the classication can take place. Lewis and Thomas concluded that the formation of strategic groups is sensitive to the choice of the variables used for forming these groups, suggesting that appropriate care must be directed to choosing relevant variables. Third, an appropriate clustering method needs to be chosen. Different clustering procedures may produce different results. 3.1. Sample selection This research aims to map the strategic characteristics of globally branded business schools. To full the research objectives, the sample was drawn initially from the Financial Times annual ranking of global MBA programmes. The schools originally selected consisted of 86 business schools that were in the FT top 100 for at least four times over the period of 2001-2005. We choose to select the sample based on FT rankings as they cover a wider range of schools than other rankings such as Business Week, Wall Street Journal, and is probably the least region-biased, which allows us to examine all of the leading schools in the world. Prior to the application of group formation techniques, we used the dissimilarities matrix of squared Euclidean distance to detect outliers and no outlier was detected. Four schools were excluded from the sample due to data problems[5]. We nally obtained a sample of 82 schools, among which there are 54 US schools, 19 European schools, six Canadian schools and three Asian or Australian schools. 3.2. Variable selection and data collection Given the constraints of data availability, we selected seven variables to reect the strategies of business schools. Both resource variables and strategic variables are considered in the current research. Resource variables selected include governance, size, student quality, output quality and faculty research quality. The strategic variable we chose is the degree of internationalisation. Although data unavailability made it impossible to include variables such as nancial endowment and teaching volume (both scale and scope) in the research design, the selected variables may cover these issues to a certain extent (e.g. size is correlated strongly with nancial endowment and teaching volume). Brief rationales for each of the chosen variables follow: . Governance. The ownership or the governance system of an organisation may inuence its strategic choice and performance. For business schools, governance is dened as the type of nancial and legal arrangements that structure the relationships of a school with governmental and private interests. The variable is measured by categorising schools into private or public. Private schools typically have greater nancial resources and more importantly, nancial exibility arising from their possession of large nancial endowments or from fund raising capabilities which enable them to hire the best faculty and invest in leading-edge technology and equipment[6].

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Size. Size can inuence organisational market power, exibility and strategic response to environmental concerns (Porter, 1980). In the case of business schools, larger schools tend to attract more funding and good quality staff and students. Size in this study is measured by the number of the graduate students. Student quality. In an input-output model, students can be seen as the inputs of the schools and the quality of the inputs will obviously have impacts on the output, i.e. the performance of the schools. In this paper, student quality is measured by the average GMAT score. The GMAT is an attainment test administrated by GMAC and required by all major business schools for student entry[7]. Output quality. If students are seen as the input of the business schools, the graduates can be seen as the products. Undoubtedly the perceived quality of graduates of the school is one of the most important resources of business schools, in attracting potential students and employees. To measure the perceived output quality of a schools graduates, we use the percentage increase in the MBA graduates salary from graduation to three years after graduation as it is hypothesised that better quality graduates tend to be paid more. Research productivity. Most business schools claim a dual mission: to educate practitioners and to create knowledge through research. In fact, the top business schools, i.e. the so-called research schools, emphasise research strongly and stress its inuence or enhancing the reputation of a school. For instance, Baden-Fuller et al. (2000) used the schools research performance to measure the reputation of European business schools. In this study, research productivity is measured by the number of publications per faculty member in the 40 leading academic and research journals specied by the Financial Times in its ranking database[8]. Degree of internationalisation. With the advent of globalisation, signicant progress has been made in the internationalisation of business schools throughout the world. The capacity to provide education in the international dimensions of business will continue to have a strong inuence on the performance and reputation of the schools. In this study, internationalisation is measured by the percentage of international students in each school.

Data for this research were collected from various sources, including the Financial Times ranking data, Petersonss MBA Programs 2005 and Business Week Guide to Best MBA Schools. The primary source of the data was FT ranking data for the year of 2005. For those schools which were not represented in the FT 2005 league table, we substitute their proles in FT 2004. Data concerning the number of graduate students and average GMAT score of MBA students were collected from Petersonss MBA Programs 2005, with missing data amended from Business Week Guide to best MBA schools 2005 or the schools web sites. Information about governance was derived from one of the authors personal knowledge and through web site conrmation. The number of the publications in FT 40 journals was manually counted by the researchers[9]. Table II lists the specic measures of the selected variables, which represent a synthesis of the information in Table I. Table III presents the correlation matrix of the

Variable Governance Size Student quality Teaching quality

Denition 1 private, 0 public The number of graduate students The average GMAT scores of MBA students The percentage increase in MBA graduates salary from the beginning of MBA to three years after graduation The number of publications per faculty member published in the FT 40 top journals over the period 2001-2004

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Table II. Description of the variables

Degree of internationalisation The percentage of international MBA students Research productivity

Governance Governance Graduate students GMAT score Salary increase International students Average publication Note: n 82 1 0.38 0.40 0.31 2 0.21 0.20

Graduate students 1 0.48 0.26 2 0.28 0.43

GMAT score

Salary increase

International students

Average publication

1 0.40 2 0.29 0.59

1 2 0.56 0.24

1 2 0.38

Table III. Correlation matrix of the variables

seven variables we used in this research. Descriptive statistics of the variables can be found in the rst row of Table IV. 3.3. Strategic group formation procedure Cluster analysis is a technique used to examine the interdependent relationships among a range of variables. Harrigon (1985) pointed out that clustering is a preferable means of sorting competitors into strategic groups because additional interpretation of competitive dynamics is then possible. Since the late 1980s, cluster analysis has been widely used as a technique in identifying strategic groups within an industry (McGee and Thomas, 1986; Ketchen and Shook, 1996). However, research by Ketchen and Shook (1996) into the use of clustering techniques within strategic management points to a number of common aws in methodology and concluded that only 7 per cent of studies followed a robust procedure. Common errors include the use of only one clustering technique, where the recommendation is to use an agglomerative technique in conjunction with a divisive technique to check the consistency of the cluster obtained. Furthermore, an empirical analysis of 48 existing published strategy studies by Ketchen and Shook (1996), indicates that the implementation of cluster analysis in these studies has been often less than ideal, perhaps detracting from the ability of the studies to generate cumulative knowledge. These ndings suggest that cluster analysis methods must be chosen carefully. The current research uses a two-step clustering approach to form

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All schools Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Group 8 Group 9 Group 10 F-test

Note: * indicates that F-statistic is signicant at signicant level of 0.00

Table IV. Descriptive statistics of the strategic groups Graduate students Mean SD 539.15 418.591 1,619.00 316.724 509.33 383.132 534.14 165.373 202.00 46.605 536.80 237.086 288.13 98.055 418.13 164.777 464.93 193.259 350.00 175.272 536.80 237.086 F 29:6 * 654.05 34.803 705.63 7.726 689.00 15.588 688.00 12.396 660.67 17.926 669.27 18.231 623.75 17.678 647.50 14.392 643.87 20.315 637.50 15.629 669.27 18.231 F 33:2 * 132.59 22.592 146.75 15.791 111.00 31.953 145.43 16.359 152.67 4.163 138.02 14.508 112.38 13.071 116.25 20.852 143.33 15.370 139.30 14.576 138.02 14.508 F 9:8 * GMAT score Mean SD Salary increase Mean SD International students Mean SD 46.24 21.887 32.50 4.504 90.33 6.658 30.43 4.077 72.33 2.082 34.00 6.557 80.88 9.920 60.38 11.587 31.67 11.255 33.80 7.843 34.00 6.557 F 51:2 * Average publication Mean SD 0.5239 0.30826 0.8806 0.21602 0.5690 0.26686 0.8144 0.27266 0.1153 0.11080 0.8186 0.18846 0.1959 0.07665 0.5145 0.12092 0.4062 0.12903 0.3499 0.17686 0.8186 0.18846 F 21:3 *

Governance

82 8 3 7 3 15 8 8 15 10 5

46 public 36 private All private All private All private All private All public All public All public All private All public All public

strategic groups, which reduces the potential biases introduced by employing a single method (Ketchen and Shook, 1996). The two-step clustering combines hierarchical and k-means techniques and has been used in other strategic group studies (e.g. Ketchen and Shook, 1996; Ferguson et al., 2000; Short et al., 2007). The two-step clustering analysis process identied ten clusters strategic groups. The determination of the number of the groups and the identication of the ten groups are presented in the Appendix. We also tested the robustness of the clustering by using alternative measures of the variables or different sets of variables and have obtained qualitatively the same results, i.e. the ten groups we obtained using different sets of variables have the same characteristics as those we present in this paper[10]. This indicated that strategic groups of the globally branded business schools are very stable. The descriptive statistics of the ten groups can be found in Table IV, which shows that the within group differences are much smaller than the between group differences. Furthermore, the results of F-test indicate that all the variables allow the discrimination between the ten groups at the signicance level of 0.00. 4. Discussion of the results The group memberships are presented in Table V. Moreover, we present the average ranking of each school and group for 2001-2005 in Table VI. Unsurprisingly, we note that the groups do have different resource and reputation proles, e.g. Group 1 has an average reputation ranking of 5 while Group 10 has an average reputation ranking of 78. Our reasons for this assertion are given in the following paragraphs. Group 1 includes eight elite business schools, all of US origin with very strong and dominant international brands: They typically have large graduate programmes and the highest reputation. Wharton and Stern also have very large, highly regarded undergraduate programmes in business. They are world leaders in research across the elds of business studies while at the same time attracting the highest quality students. Group 2 contains three elite European schools. They have strong reputation and brand but are much smaller in terms of nancial endowment. Generally they concentrate on MBA programmes and executive education programmes. These schools are well known as schools which strongly compete with the dominant US schools, in that their peer groups are Group 1 and 3. Group 3 contains the other top US private schools with well-established reputations. These schools traditionally concentrate on MBA, postgraduate and executive education programmes. A few of them, such as the Marshall school at USC, have an undergraduate programme but all have strong international standing. They are also very competitive with those schools in Group 1 and successful in terms of nancial endowment and fund raising. Group 4 contains another three top European schools, concentrated in Spain, but with a global footprint. In fact, the growth of IESE, ESATE and Instituto de Empersa over the last 20 years has been very impressive. For example, IESE, through the guidance of an advisory committee set up by Harvard Business School and IESE, has over the last 50 years become a leader in MBA and executive MBA programmes in a global scene.

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Group 1

n 8

Group members Harvard Business School University of Pennsylvania: Wharton Columbia Business School Stanford University GSB University of Chicago GSB New York University (NYU): Stern Northwestern University: Kellogg MIT: Sloan London Business School Insead IMD

Characteristics Elite schools Traditionally concentrate on MBA, postgraduate and executive education programmes However, NYU and Wharton have signicant undergraduate programme. All schools have large endowments Elite European schools Strong reputation and brand; smaller in terms of nancial endowment; concentrate on MBA and executive education programmes; modest endowment Top US private schools Generally small size (USC is the exception); generally concentrate on MBA, postgraduate and executive education programmes (USC is again the exception); very competitive and successful in terms of nancial endowment and fund raising Top European schools Like schools in Group 2, they are not university-based business schools, but adopt a school-alone model Top US and Canadian public schools with national reputation; typically full line of educational programmes; Less focus on executive programme; Commonly funded by state or national government but often have a signicant nancial endowment

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2 3

Duke University: Fuqua University of Southern California: Marshall Carnegie Mellon: Tepper Emory University: Goizueta Dartmouth College: Tuck Yale School of Management Cornell University: Johnson Iese Business School Instituto de Empresa Esade Business School UC Berkeley: Haas University of Michigan: Ross University of North Carolina: KenanFlagler UCLA: Anderson University of Minnesota: Carlson University of Texas at Austin: McCombs University of California at Irvine Ohio State University: Fisher University of Wisconsin: Madison University of Virginia: Darden University of Illinois at UrbanaChampaign Michigan State University: Broad Pennsylvania State: Smeal University of Toronto: Rotman Purdue University: Krannert Warwick Business School University of Oxford: Said Imperial College London: Tanaka HEC Paris University of Cambridge: Judge Manchester Business School City University: Cass Rotterdam School of Management

15

Table V. Strategic group membership and the characteristics of each group

Other top European schools Some quite new, e.g. Judge and Said, and have been growing fast; very strong national champions or regional schools Little evidence of signicant nancial endowment Broad programme focus (continued )

Group 7

n 8

Group members Melbourne Business School Australian Graduate School of Management Hongkong UST Business School University of British Columbia: Sauder McGill University Queens School of Business York University: Schulich University of Western Ontario: Ivey University of Rochester: Simon Vanderbilt University: Owen Georgetown University: McDonough Boston University School of Management Rice University: Jones Case Western Reserve: Weatherhead Brigham Young University: Marriott SMU: Cox Babson College: Olin Washington University: Olin Thunderbird: Garvin University of Pittsburgh: Katz Tulane University: Freeman Wake Forest University: Babcock University of Notre Dame: Mendoza Indiana University: Kelley University of Iowa: Tippie Virginia Tech: Pamplin College of William and Mary University of South Carolina: Moore University of Georgia: Terry Texas A&M University: Mays University of Arizona: Eller Arizona State University: Carey University of Maryland: Smith University of Durham Business School Craneld School of Management Edinburgh University of Management School University of Bath School of Management Bradford School of Management/Nimbas

Characteristics Top non-US public schools Some quite new, e.g. Melbourne, and have been growing fast; very strong national champions or regional schools Little evidence of signicant nancial endowment Broad programme focus

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Next-tier of US private schools; Typically full-line educational programmes and national/regional USbased reputation; schools such as Babson and Thunderbird have signicant global reputation based on entrepreneurship and global management. Pittsburgh is one of the few US schools with a well regarded one-year postgraduate programme Signicant nancial endowment

10

Next-tier of US public schools Typically have full-line educational programmes and regional US-based reputation; mainly state-assisted Signicant nancial endowment

10

UK schools with a common focus on postgraduate and MBA programmes and executive education; Bath, Bradford and Edinburgh have undergraduate programme; generally lower reputation Table V.

Group 5 contains mainly the top US public schools with very strong US and Canadian reputations, including the Rotman school, the well-established Canadian business school at the University of Toronto. A few schools such as Berckley (Haas), Michigan (Ross), Virginia (Darden) and UCLA (Anderson) have a growing global reputation. These schools typically have a full line of educational programmes ranging from undergraduate to doctoral programmes with a lesser focus on executive programmes. They are commonly provided base funding by state governments in the USA but operate with a greater reliance on privately funded graduate and executive education

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School Group 1 Harvard Business School University of Pennsylvania: Wharton Columbia Business School Stanford University GSB University of Chicago GSB New York University: Stern Northwestern University: Kellogg MIT: Sloan Group 2 London Business School Insead IMD Group 3 Dartmouth College: Tuck Yale School of Management Duke University: Fuqua Cornell University: Johnson Emory University: Goizueta Carnegie Mellon: Tepper University of Southern California: Marshall Group 4 Iese Business School Instituto de Empresa Esade Business School Group 5 UC Berkeley: Haas University of Michigan: Ross University of North Carolina: Kenan-Flagler University of Virginia: Darden University of Toronto: Rotman UCLA: Anderson University of Illinois at Urbana-Champaign Michigan State University: Broad University of Minnesota: Carlson Pennsylvania State: Smeal University of Texas at Austin: McCombs University of California at Irvine Ohio State University: Fisher Purdue University: Krannert University of Wisconsin: Madison

2001 5 2 1 5 3 4 10 9 6 9 8 7 11 20 13 20 18 15 28 17 32 40 24 31 64 40 14 16 21 22 46 12 48 77 61 77 24 38 42 63 47 34 27 52

2002 5 2 1 3 3 3 8 10 6 10 9 6 14 20 11 12 19 13 31 21 30 46 25 35 79 42 15 23 20 16 31 16 57 71 71 55 40 63 55 43 60 49 28 27 67 22

2003 5 2 1 3 4 5 8 9 10 9 7 6 13 20 11 12 15 19 29 23 31 42 18 26 83 39 15 25 23 14 21 20 49 60 81 48 32 40 39 47 69 47 35 28 62 30

2004 6 2 1 3 7 4 8 11 9 7 4 4 12 21 10 13 20 16 22 28 38 33 13 15 71 39 22 30 17 19 21 32 40 51 60 44 46 60 40 46 56 40 26 22 53 34

2005 6 1 1 3 4 6 9 11 13 9 5 8 13 22 7 9 18 24 27 32 37 22 12 19 35 40 13 16 17 20 21 26 48 49 52 55 57 64 79

Average 5 2 1 3 4 4 9 10 9 8 7 6 13 21 10 13 18 17 27 24 34 37 18 25 66 40 16 22 20 18 28 21 48 62 65 56 40 53 53 45 62 45 30 27 54 32 (continued )

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Table VI. Average ranking of the schools and groups, Financial Times, 2001-2005

Group 6 University of Oxford: Said Rotterdam School of Management HEC Paris University of Cambridge: Judge

43 25 29 37 42

School Manchester Business School Imperial College London: Tanaka Warwick Business School City University: Cass Group 7 York University: Schulich University of Western Ontario: Ivey McGill University Hong Kong UST Business School University of British Columbia: Sauder Melbourne Business School Queens School of Business Australian Graduate School of Management Group 8 University of Rochester: Simon Vanderbilt University: Owen Georgetown University: McDonough University of Notre Dame: Mendoza Boston University School of Management Rice University: Jones Brigham Young University: Marriott Case Western Reserve: Weatherhead SMU: Cox Babson College: Olin Thunderbird: Garvin Washington University: Olin University of Pittsburgh: Katz Tulane University: Freeman Wake Forest University: Babcock Group 9 University of Maryland: Smith University of Iowa: Tippie Virginia Tech: Pamplin University of Arizona: Eller Arizona State University: Carey College of William and Mary University of South Carolina: Moore University of Georgia: Terry Texas A & M University: Mays Indiana University: Kelley Group 10 Craneld School of Management Bradford School of Management/Nimbas University of Durham Business School Edinburgh University Management School University of Bath School of Management

2001 36 64 40 73 47 35 19 37 48 58 87 42 51 29 24 29 73 53 76 47 53 55 33 72 66 55 58 23 57 79 51 84 45 70 67 42 68 41 85 50 96

2002 48 85 36 81 49 31 18 36 47 60 84 46 67 52 42 24 25 65 74 38 63 77 49 53 57 41 53 57 65 55 29 49 60 70 52 49 38 73 82 45 75 44 89 77 89

2003 44 78 34 68 49 26 22 37 59 73 64 40 69 53 38 35 17 54 62 40 51 64 53 57 57 49 72 76 64 59 33 52 60 86 64 56 45 78 69 45 80 54 85 95 73 91

2004 37 75 32 42 50 22 29 39 69 67 72 52 53 59 35 44 17 75 63 48 75 84 59 63 73 42 56 73 80 59 27 49 63 90 60 49 36 80 79 56 84 63 86 82 93 95

2005 44 53 53 60 52 22 34 39 44 55 63 75 84 52 27 31 32 39 44 47 49 49 60 64 66 66 70 71 71 63 30 35 58 60 66 73 78 82 88 83 58 76 91 93 96

Average 42 71 39 65 49 27 24 38 53 64 68 60 63 53 34 32 24 61 61 45 60 70 54 58 62 46 65 69 67 59 28 48 60 77 59 62 48 77 77 47 78 52 83 89 77 93

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Source: Financial Times global MBA programme ranking table, 2001-2005

Table VI.

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programmes and, with the decline of state funding, many of them often have raised signicant nancial endowments. Group 6 includes the top public European schools. These schools have been gaining prole rapidly over the past two decades except HEC, which is a veteran player among European business schools. They are often national champions and strong regional players. Some are developing a international prole. Some of them exhibit similar levels of reputation with the schools in Group 5; however, they usually have lower average student GMAT scores and are not as competitive as those schools in terms of research productivity. A characteristic of all these European schools is that they are developing very strong individual identities and creating a set of unique, distinctive speciality and focus in management education. For example, European schools lead the study of public management and business in society, e.g. ESADE, WBS, etc. Group 7 comprises the top non-US public schools, including schools from Canada, Australia and Asia. Like the schools in Group 6, they are relatively new schools and have been developing very rapidly over the past two decades. However, they are in most cases regarded as very strong national champions or regional schools. There is little evidence of signicant nancial endowment in these schools. They usually have a broad programme focus. Group 8 includes next-tier of US private schools with mainly a US-based reputation. They typically run full-line educational programmes of high quality and have signicant nancial endowment. Group 9 contains next-tier of US public schools. These schools typically have full-line educational programmes and a regional reputation. They are mainly state-assisted. Group 10 contains a number of UK schools with a national or regional focus and reputation and with postgraduate, MBA programmes and executive education. Compared to those European schools in Group 6, they tend to have a lower reputation with the exception of Craneld, which is more widely known for its focus on relevant management education. 5. Summary and conclusion This paper used the concepts of strategic group identity and domain consensus to examine the differences across the business schools. The ten strategic groups identied by the clustering analysis provide a clear mapping of the strategic bands across globally branded business schools. Table V provides a discussion of each of the ten groups and Table VI gives an average reputation ranking for each group with Group 1 having the highest reputation score and Group 10 the lowest. The elite US schools in Group 1 are clearly, and dominantly positioned with competitive advantages associated with their gain as fast rst-movers in management education, i.e. product standardisation (e.g. MBA), business school legitimisation, strong and well-established brand and reputation (e.g. Stern, Wharton) and above all, signicant nancial strength and very large nancial endowments fuelling their position in the market (Antunas and Thomas, 2007). Some of the European schools in Group 2 have clearly established themselves as high reputation global schools with a US avour. Other European schools such as the Spanish schools in Group 4 seem to be following the pattern of Group 2 schools and

they create US-style elite schools with a clear Spanish and Latin American identity. They are their local and regional distinctiveness as a play force for success in the global market. Thus the Spanish have positioned themselves a strong global niche players with distinctive products and capabilities. As Antunas and Thomas (2007) point out, other European, Asia and Latin American schools can maintain and develop strong national niche brands yet build them regionally and globally with a diverse set of strategic approaches, i.e. they should . . . local, ace regional and more globally. Over time we believe that there will be continual competitive jockeying in terms of business school strategic positioning. For example, Group 2 schools will clearly target Group 1 schools positions while at the same time facing increasingly strong competition from Group 3 and 4. Schools in Group 6 such as Oxford (Said) and Cambridge (Judge) will increasingly leverage the high quality, established brands and reputation of their parent universities to move them into membership of Group 1 through 3. And, emerging Asia and Australian schools (e.g. Melbourne) will seek creative business models and positioning strategies that related to their competitive riches and capabilities as they seek to enhance their global prole. One thing that is clear is that the global landscape and group positioning will change undoubtedly as global markets evolve in the next ten years with perhaps only the very elite schools maintaining their dominant positions by continually building their brands and reputation strength with mountains of money, innovative programmes, high quality faculty and students. In conclusion, we would like to point out some limitations of this study and offer them as possible avenues for extensions. First, we were not able to include strategic variables such as endowments and research income due to data unavailability. Future studies can, therefore, improve the research base by collecting data on nancial variables such as endowments and providing metrics by which a schools efciency can be assessed. Second, also due to data problems, we were not able to assess the longitudinal aspect of business school strategies through analysing a range of performance measures over time. Such longitudinal structures are time consuming, but follow the processional research tradition advanced by Mintzberg (1983) and Pettigrew (1990); they provide insight into the emergent strategies of schools over time. Third, this study, like many other strategic analyses, is based on objective variables drawn from published data sources. We believe that a form of cognitive strategic mapping could be achieved through survey and interview mechanisms in order to highlight the perspectives of deans and senior managers of business schools. This is in the tradition of Scandinavian researchers such as Wedlin (2006), and can provide very clear insights into the cognitive ways and mental model of managers.
Notes 1. The rst effective ranking was constructed by John Byrne at Business Week in 1998. Since then, there has been a variety of rankings published respectively by Financial Times, Wall Street Journal, Business Week, US News, Forbes, etc. See Peters (2007) for a short history of business school ranking. 2. The ratios were calculated according to Digest of Education Statistics 2005 edited by National Centre for Education Statistics (NCES). According to the NCES, there were 307,149 bachelors degrees, 139,347 masters degrees and 1,481 doctoral degrees were awarded in the

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disciplines of business administration in the year of 2003-2004. The numbers were 115,396, 26,490 and 774 respectively for the year of 1970-1971. 3. These were calculated based on the statistics provided by Higher Education Statistics Agency (HESA), which documents 150,260 undergraduate students and 38,720 postgraduate students for 2004-2005 and 119,241 undergraduate and 15,075 postgraduate students for 1996-1997. 4. Strategic group theory has been examined using the data drawn from various industries, e.g. pharmaceuticals (Cool and Schendel, 1987; banking (Amel and Rhoades, 1988), knitwear (Porac et al., 1989), insurance, retailing, steel (Nair and Kotha, 2001), and retail grocery Athanassopoulos, 2003). For comprehensive reviews on strategic groups, see Ketchen et al. (1997), Bogner et al. (1998). 5. The schools eliminated are Ipade, ESCP-EAP, CEIBS and SDA Bocconi. They were eliminated due to the problems of missing data or inaccurate data. 6. Some US public schools, e.g. Michigan, have signicant nancial endowments and are exception to the rule. They are sometimes considered to be quasi-public schools and categorised as public Ivys, i.e. the public equivalent of Ivy League Schools. It would be interesting if we could include other variables such as endowment to measure Governance, unfortunately it is not plausible due to data unavailability. 7. More information about GMAT can be found at www.gmac.com 8. A full list of the 40 journals can be found on the web site of the Financial Times. There are different ways to assign value to each publication. One method is to assign the value of 1 to each publication. Another way is to assign 1 to single-authored publication, to assign 0.5 to each author for publication with two authors and so on. In this study, we adopt the rst method. 9. Data were double-checked in order to reduce the error rate. We also compared the average publications of each school with its FT research ranking and found that they were generally consistent. 10. For instance, we used the number of graduate faculty as an alternative measure of size and percentage of international faculty as an alternative measure of degree of internationalisation to conduct the clustering procedure, all obtained similar results. Group 1, Group 2, Group 4, Group 6, and Group 10 cluster very well for each clustering, while the other ve groups have slightly different members. These results are not presented in the paper due to space limitations but are available on request. References Amel, D. and Rhoades, S. (1988), Strategic groups in banking, The Review of Economics and Statistics, Vol. 70 No. 4, pp. 685-9. Antunes, D. and Thomas, H. (2007), Competitive (dis)advantages of European business schools, Long Range Planning, Vol. 40 No. 3, pp. 382-404. Athanassopoulos, A. (2003), Strategic groups, frontier benchmarking and performance differences: evidence from the UK retail grocery industry, The Journal of Management Studies, Vol. 40 No. 4, pp. 921-53. Baden-Fuller, C., Ravazzolo, F.R. and Schweizer, T. (2000), Making and measuring reputations: the research ranking of European business schools, Long Range Planning, Vol. 33 No. 5, pp. 621-50. Bogner, W.C., Mahoney, J.T. and Thomas, H. (1998), Paradigm shift: the parallel origin, evolution and function of strategic group analysis with the resource-based theory of the

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rm, in Baum, J.A.C. (Ed.), Advances in Strategic Management, Vol. 15, JAI Press, Stamford, CT, pp. 63-102. Brickley, J.A. and Zimmerman, J.L. (2001), Changing incentives in a multitask environment: evidence from a top-tier business school, Journal of Corporate Finance, Vol. 7 No. 4, pp. 367-96. Cool, K. and Schendel, D. (1987), Strategic group formation and performance: the case of the US pharmaceutical industry, 1963-1982, Management Science, Vol. 33 No. 9, pp. 1102-24. Cool, K. and Schendel, D. (1988), Performance differences among strategic group members, Strategic Management Journal, Vol. 9 No. 3, pp. 207-23. Corley, K.G. and Gioia, D.A. (2000), The ranking game: managing business school reputation, Corporate Reputation Review, Vol. 3 No. 4, pp. 319-33. DAveni, R.A. (1996), A multiple-constituency, status-based approach to interorganizational mobility of faculty and input-output competition among top business schools, Organizations Science, Vol. 7 No. 2, pp. 66-189. De Onzono, S.I. and Carmona, S. (2007), The changing business model of b-schools, Journal of Management Development, Vol. 26 No. 1, pp. 22-32. DeAngelo, H., DeAngelo, L. and Zimmerman, J.L. (2005), Whats really wrong with US business schools?, USC and University of Rochester working paper, Rochester, NY. Dranove, D., Peteraf, M. and Shanley, M. (1998), Do strategic grous exist? An economic framework for analysis, Strategic Management Journal, Vol. 19 No. 11, pp. 1029-44. Ferguson, T.D., Deephouse, D.L. and Ferguson, W.L. (2000), Do strategic groups differ in reputation, Strategic Management Journal, Vol. 21 No. 12, pp. 1195-214. Fiegenbaum, A. and Thomas, H. (1990), Strategic groups and performance: the US insurance industry, 1970-84, Strategic Management Journal, Vol. 11 No. 3, pp. 197-215. Gioia, D. and Corley, K.G. (2002), Being good versus looking good: business school rankings and the Circean tranformation from substance to image, Academy of Management Learning and Education, Vol. 1 No. 1, pp. 107-20. Harrigon, K.R. (1985), An application of clustering for strategic group-analysis, Strategic Management Journal, Vol. 6 No. 1, pp. 55-73. Hawawini, G. (2005), The future of business schools, Journal of Management Development, Vol. 24 No. 9, pp. 770-82. Hunt, M.S. (1972), Competition in the major home appliance industry, 1960-1970, doctoral dissertation, Harvard University, Cambridge, MA. Ivory, C., Miskell, P., Shipton, H., White, A., Moeslin, K. and Neely, A. (2006), UK Business Schools: Historical Contexts and Future Scenarios. Summary Report from an AIM/EBK Management Research Forum, Advanced Institute of Management Research, London. Ketchen, D.J. and Shook, C.L. (1996), The application of cluster analysis in strategic management research: an analysis and critique, Strategic Management Journal, Vol. 17 No. 6, pp. 441-58. Ketchen, D.J., Thomas, J.B. and Snow, C.C. (1997), Organizational congurations and performance: a meta-analysis, Academy of Management Journal, Vol. 40 No. 1, pp. 223-40. McGee, J. and Thomas, H. (1986), Strategic groups: theory, research and taxonomy, Strategic Management Journal, Vol. 7 No. 2, pp. 141-60. Mascarenhas, B. and Aaker, D.A. (1989), Mobility barriers and strategic groups, Strategic Management Journal, Vol. 10, pp. 475-85.

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Mintzberg, H. (1983), Structure in Fives: Designing Effective Organizations, Prentice-Hall, Englewood Cliffs, NJ. Nair, A. and Kotha, S. (2001), Does group membership matter? Evidence from the Japanese steel industry, Strategic Management Journal, Vol. 22 No. 3, pp. 221-35. Paucar-Caceres, A. and Thorpe, R. (2005), Mapping the structure of MBA programmes: a comparative study of the structure of accredited AMBA programmes in the United Kingdom, Journal of Operational Research Society, Vol. 56 No. 1, pp. 25-38. Peters, K. (2007), Business school rankings: content and context, Journal of Management Development, Vol. 26 No. 1, pp. 49-53. Pettigrew, A.M. (1990), Longitudinal eld research on change: theory and practice, Organization Science, Vol. 1 No. 2, pp. 267-92. Pfeffer, J. and Fong, C.T. (2002), The end of business schools? Less success than meets the eye, Academy of Management Learning and Education, Vol. 1 No. 1, pp. 78-95. Pfeffer, J. and Fong, C.T. (2004), The business school business: some lessons from the US experience, Journal of Management Studies, Vol. 41 No. 8, pp. 1501-19. Policano, A. (2005), What price rankings?, BizEd, September/October, pp. 26-33. Policano, A. (2007), The rankings game: and the winner is . . ., Journal of Management Development, Vol. 26 No. 1, pp. 43-9. Porac, J.F., Thomas, H. and Baden-Fuller, C. (1989), Competitive groups as cognitive communities the case of Scottish knitwear manufacturers, Journal of Management Studies, Vol. 26 No. 4, pp. 397-416. Porter, M. (1980), Competitive Strategy, Free Press, New York, NY. Segev, E., Raveh, A. and Farjoun, M. (1999), Conceptual maps of the leading MBA programs in the United States: core courses, concentration areas, and the ranking of the school, Strategic Management Journal, Vol. 20 No. 6, pp. 549-65. Short, J., Ketchen, D., Palmer, T. and Hult, G. (2007), Firms, strategic group, and industry inuences on performance, Strategic Management Journal, Vol. 28 No. 2, pp. 147-67. Starkey, K., Hatchuel, A. and Tempest, S. (2004), Rethinking the business school, Journal of Management Studies, Vol. 41 No. 8, pp. 1521-31. Thomas, H. (2007), An analysis of the environment and competitive dynamics of management education, Journal of Management Development, Vol. 26 No. 1, pp. 10-21. Trank, C. and Rynes, S. (2003), Who moved our cheese? Reclaming professionalism in business education, Academy of Management Learning and Education, Vol. 2 No. 2, pp. 189-205. Warning, S. (2004), Performance differences in German higher education: an empirical analysis of strategic groups, Review of Industrial Organization, Vol. 24 No. 4, pp. 393-408. Wedlin, L. (2006), Ranking Business Schools: Forming Fields, Identities and Boundaries in International Management Education, Edward Elgar, Cheltenham. Zimmerman, J.L. (2001), Can American business schools survive, working paper FR 01-16, University of Rochester, New York, NY. Further reading Baden-Fuller, C. and Ang, S.H. (2001), Building reputations: the role of alliances in the European business school scene, Long Range Planning, Vol. 34 No. 6, pp. 741-55. Bennis, W.G. and OToole, J. (2005), How business schools lost their way, Harvard Business Review, Vol. 83 No. 5, pp. 96-104.

Caves, R.E. and Porter, M. (1977), From entry barriers to mobility barriers: conjectural decisions and contrived deterrence to new competition, Quarterly Journal of Economics, Vol. 91 No. 2, pp. 241-61. Demski, J. and Zimmerman, J.L. (2000), On research vs teaching: a long-term perspective, Accounting Horizons, Vol. 14 No. 3, pp. 343-52. Gonzalez-Fidalgo, E. and Ventura-Victoria, J. (2002), How much do strategic groups matter, Review of Industrial Organization, Vol. 21 No. 1, pp. 55-71. Ketchen, D.J., Thomas, J.B. and Snow, C.C. (1993), Organizational congurations and performance: a comparison of theoretical approaches, Academy of Management Journal, Vol. 36 No. 6, pp. 1278-313. Kwok, C.C.Y. and Arpan, J.S. (2002), Internationalizing the business school: a global survey in 2000, Journal of International Business Studies, Vol. 33 No. 3, pp. 571-81. McNamara, G., Deephouse, D.L. and Luce, R.A. (2003), Competitive positioning within and across a strategic group structure: the performance of core, secondary and solitary rms, Strategic Management Journal, Vol. 21 No. 2, pp. 161-81. National Centre for Education Statistics (2005), Digest of Education Statistics 2005, National Centre for Education Statistics, Washington, DC. Peteraf, M. and Shanley, M. (1997), Getting to know you: a theory of strategic group identity, Strategic Management Journal, Vol. 18, Summer, pp. 165-86. Trieschmann, J.S., Dennis, A. and Northcraft, G. (2000), Serving multiple constituencies in the business school: MBA-program vs research performance, Academy of Management Journal, Vol. 43 No. 6, pp. 1130-41. Wernerfelt, B. (1984), A resource based view of the rm, Strategic Management Journal, Vol. 5 No. 2, pp. 171-80. Appendix The number of the groups is decided based on both the statistical results and the practical knowledge about the business schools. We assigned different number of groups to conduct the clustering and the experimental results suggest that ten groups are appropriate to map the 82 business schools. Figure A1 (overleaf) presents the process of the clustering. Corresponding author Howard Thomas can be contacted at: Howard.thomas@wbs.ac.uk

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Figure A1. Process of grouping the business schools

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