Ukraine war tests business schools’ resilience

As the founding director of IEDC Bled School of Management in Slovenia, Danica Purg has steered the institution through manifold political and economic changes in central and eastern Europe, a region in which business schools are coming into their own.

Established in 1986, IEDC Bled has weathered significant changes, including Slovenia’s transition from being part of the former Yugoslavia. Now, the school’s resilience is being tested once again by the Ukraine war, which has implications for student mobility, faculty exchanges and international partnerships in the region.

The war has cast its shadow over business education in central and eastern European (CEE) countries, limiting the enrolment of participants at schools such as IEDC Bled, particularly from Russia and Ukraine — two key markets.

“The war is hurting us in different ways,” says Purg, who is also president of Ceeman, a management development association focused on CEE schools.

Like other business schools in the area, IEDC Bled has had to swiftly adapt to these geopolitical changes. Diversifying recruitment efforts, the school has been focusing on students and corporate clients from regions less affected by the turmoil, including central Asia and western Europe.

“We are turning to other markets,” Purg says. “We cannot survive solely on neighbouring countries any more.”

Higher enrolments from countries including Greece, Turkey and China have partially offset the decline in student numbers from Russia and Ukraine, and Purg believes that this transition will ultimately strengthen the school, making it more internationally diverse. “We can turn this crisis into an opportunity,” she says.

FT European Business Schools Ranking

This story is from the ranking report publishing on December 4

Business education in CEE nations has undergone a transformation over the past few decades. The end of the cold war and the dissolution of the eastern bloc ushered in a rising demand for management training, driven by the transition from planned economies to market-oriented systems. This created a greater need for skilled business professionals, schools say.

For example, the Stockholm School of Economics in Riga was established with the Latvian government in 1994 to raise the Baltic states’ competitiveness following the collapse of the Soviet Union. “The founders were explicit: the school was set up to contribute to the democratic, social and economic development of the region,” says Anders Paalzow, rector of SSE Riga.

Over time, the school expanded its focus to encompass other CEE countries. More recently, in response to the Ukraine conflict, it updated the curriculum to include courses that reflect the changing political realities.

“Geopolitics is a subject that is suddenly much more important,” Paalzow says, to ensure that graduates are ready to operate in a complex international environment.

Global accreditation from bodies such as AACSB International and Equis, run by the EFMD Global management development network, have been a significant milestone for CEE business schools, helping them attract international students and faculty from around the world. Over the past decade, the number of schools in the region accredited by Equis has grown from three to eight. This development is also reflected in the 2023 FT European Business Schools Ranking, which includes institutions from Poland, Hungary, Slovenia and the Czech Republic.

“For us, the past 30 years has been a period of adjustment to the global rules of the business education game,” says Professor Grzegorz Mazurek, rector at Kozminski University in Poland. “There are some diamonds in the region.”

Mazurek adds that regional economic development has enhanced the development of business schools in CEE countries by providing greater resources, talent and opportunities. “The best business schools are generally located in the best economies,” he says.

While these schools have come a long way, financial constraints remain a significant challenge. Many of them are publicly funded and have a limited budget, impacting their ability to invest in faculty development, research and infrastructure. “Our budgets are much lower than in the west — that is our competitive disadvantage,” admits Jiří Hnilica, dean of the Faculty of Business Administration at Prague University of Economics and Business, in the Czech Republic.

To address this issue, schools are seeking to diversify their funding sources, setting up endowment funds and soliciting more alumni donations and corporate sponsorships.

“That’s not traditionally been part of our culture,” says Hnilica. “We have to change that.”

Eric Cornuel, the president of EFMD Global, adds that diversified funding is important to stem a “brain drain”, where talented faculty leave the region for more lucrative opportunities in western Europe or beyond.

Looking ahead, Cornuel says international collaborations with institutions from around the world are critical for CEE schools to raise their profile and attract overseas faculty and students, particularly as low birth rates and high emigration limit the domestic talent pool.

However, he notes that international students are drawn to business schools in the region for several compelling reasons, including the rich cultural heritage in some older cities, a relatively low cost of living and competitively priced tuition fees.

“The region isn’t the best-kept secret of management education, but the gap between western and eastern European business schools is narrowing,” says Cornuel.