Is there something wrong with German Business Education?

Ignorance and the Wind of Change

All international MBA rankings have something in common – there is no German program listed. It is quite astonishing that countries like Mexico or Singapore are ranked, but there is not a single German MBA program listed. Except IMD (which “produces” less than 100 graduates per year) this is also true for Switzerland and Austria. How is it possible that these economies have developed relatively successfully, but that their management education seems to be internationally not competitive and also not recognized?

There is a number of reasons. The first is historically. At the beginning of the last century, the first business schools started across Europe. The first German business schools were founded in Leipzig, Aachen, Cologne and Mannheim, e.g. Handelshochschule Leipzig was founded in 1898 as the first one in Germany. The institutions were already international by today’s standards, e.g. in 1904 the number of enrolled foreign students at the first time surpassed the number of German students at Handelshochschule Leipzig. However the first and especially the second world war, had a very negative impact on the development of these schools. Handelshochschule Leipzig, which was located in East Germany, came under communist rule, which meant that they were not anymore allowed to educate future “capitalists”.

The second reason is that Germany’s universities aimed not to train future managers, but scientists, which lead to a pure focus on theory. In Germany you can still study business without ever seeing a company from inside and even worse become a professor of Business Administration afterwards.

The third reason is that the German education system has a different structure from the Anglo-Saxon one, i.e. Bachelor and Master degrees were unknown until recently. The standard university degree for Business Administration in Germany is the “Diplom-Kaufmann”, which last in average about 11 semesters. Many international universities and also foreign companies recognize this degree only as a Bachelor in Business Administration. However based on many reports from Germans studying abroad as an exchange student, the academic requirements for a Bachelor are much less rigid. This statement is also true for most of the MBA programs abroad. The Central Office for Foreign Education, which is responsible for the establishment of standards of equivalence between foreign and German educational qualifications, states “From the experience of the German universities, however, the requirements for the German academic degree of ‘Diplom-Kaufmann’ will in most cases exceed those for the British Master’s degree in the field of Business Administration.”

If the German “Diplom-Kaufmann” is indeed at least comparable to an MBA  – why there are no German programs listed in the international rankings?

All international MBA rankings are carried out by American or British newspapers. When they set up the criteria for the rankings, they have the Anglo-Saxon education system in mind, e.g. for studying at German universities there is no GMAT requirement and neither do the students have substantial work experience before studying which leads naturally to lower starting salaries. Moreover, German state universities are not allowed to select their students like their US and British counterparts. They use “natural selection” by high academic standards during the first four semesters of the studies. At large universities only about one third of the students “survive” this period.

So everything is fine with German Business education? Surely not, especially at large German universities they do not have enough professors and other resources. The German government must increase its investment in education, which spend currently less than the OECD average (as percentage of GDP).

However the “wind of change” is now also going through the German education system. Private business schools, like WHU, GISMA and International University, set up new MBA programs, supported by German companies.

Handelshochschule Leipzig was re-founded some years back. In the new MBA program are now almost 80% foreign students and many guest professors come from leading international business schools. They have established exchange agreements with 80 international business schools.

I am waiting for the moment, that the first German business school shows up in the international MBA rankings!

The B-School News, 03.11.2001