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Are innovation and internationalization intertwined? The impact of country of origin and the types of programs in elite business schools

Introduction

Innovation and internationalization are relevant themes that must purportedly be considered by the business schools and the underlying programs when training global managers. However, there is a lack of scholarly articles that analyze the mutual influence of the varying levels of internationalization and the innovation status of business schools. Henceforth, to fill the identified theoretical gap, my colleague Kingsley Okoye and I developed research to address the following question: Are innovation and internationalization intertwined in elite business schools when considering the country of origin and the types of programs?

Innovation in the management education industry

Innovation is a differentiation strategy to counter-attack the increasing number of non-innovative offers that have become common within the management education industry. Therefore, top-ranked programs are the ones that shifted from being teacher-centered to learner-centered and from general case studies to real-life problems. Additionally, there is a shift towards customization and action-learning projects. Executive MBA and traditional MBA programs presented differences regarding their teaching approach. While the former is customer-driven and uses an integrated approach to learning, the latter is subject-driven; participants’ learning experience falls into traditional, well-known blocks/subjects such as Finance, Marketing, HR, and Strategy.

Internationalization in the management education industry

The Ownership-Location-Internalization (OLI) paradigm analyses the international expansion of multinational firms. The framework describes the ownership (O) advantages – the exclusive tangible and intangible assets; and the location (L) advantages, explaining where multinationals expand their businesses. The paradigm also addresses how firms organize their international activities to take advantage of the O- and L-advantages through the internalization (I) advantages. Regarding the L-advantages, they are not the same because elite programs are susceptible to location-specific problems that may undermine their brand legitimacy, while non-elite schools are more vulnerable to overestimating the location’s attractiveness. Therefore, this study believes that location matters differently for the various types of business schools. Our analysis also supports that the internationalization of business schools in general and the L-advantages follows two logics. First, the academic logic explains why elite schools are sensitive to possible failures that may damage their internationally recognized brand. Second, the market logic drives cross-border activities because of the size of the market (e.g., number of qualified prospective students).

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Are innovation and internationalization intertwined? Why and How?

Existing literature on management generally supports a positive relationship between internationalization and firm innovation and suggests a mutual multidisciplinary nature of the dependence between the two constructs. Like most multinational firms, top-level international business schools can obtain competitive advantages by integrating innovation due to the geographically widespread facilities. Perhaps, innovation and internationalization are possibly associated with a virtuous cycle:  firms become internationalized, face a globally competitive environment, which requires innovative approaches, thus, increasing the competitive level of a firm, which suggests the reciprocal interactions between innovation and internationalization

In summary, the evidence we drew for the different literature suggests a complex relationship between internationalization and innovation and the possible impact of location in this mutual dependence. Consequently, the research question that drives this manuscript is: Are innovation and internationalization intertwined in elite business schools when considering the country of origin and the types of programs?

Research methodology

This article follows a three-step methodology to analyze the impact of location on internationalization and innovation. First, we used Linear Regression (OLS) to determine the relationship between internationalization (the independent variable) and innovation (the independent variable).

In the second round, we determined the country of origin’s impact on internationalization and innovation levels. We performed the analysis using the One-way multivariate analysis of variance (MANOVA) test to establish the effect that the country of origin (independent variable) has on internationalization and innovation (dependent variables), respectively.

The third focused on identifying the impact of the country of origin of the business schools on internationalization and innovation. The four types of programs were analyzed and broken down by the four principal different regions: (i) the USA and Canada, (ii) Europe, (iii) China, and (iv) Other Regions (Latin America, India, Australia, South Korea, South Africa, and Japan). We used a pairwise comparison and Post Hoc (Tukey HSD) tests to identify where the significant differences lie (if there exist any) for the four different regions.

Findings and Results

Results from the First Round of Data Analysis

The correlation analysis (OLS) between innovation and internationalization shows no positive correlation between these two variables in the MBA programs. In comparison, there exists a positive correlation between Innovation and Internationalization for the Executive MBA, Executive Education Customized, and Executive Education Open Enrollment Programs.

Results from the Second Round of Data Analysis

We found that the country of origin has no impact on the internationalization and innovation for both the MBA and the Executive MBA programs. Secondly, the results for the Executive Education Customized programs show that location (country of origin) matters for internationalization but not with innovation. Finally, the Executive Education Open Enrollment results showed that location impacts both Internationalization and Innovation.

Results from the third round of analysis and evaluation

The objective of the third phase of evaluation was to identify in which regions (USA/Canada, Europe, China, and Other Regions) the Country of Origin (CoO) impacts internationalization and innovation. The country of origin presented no significant relationship with internationalization and innovation for the MBA program. However, the study found that the Executive Education Open Enrollment programs based in Europe tend to be more innovative, while those in the USA and Canada tend to be more internationalized. Additionally, the Executive Education Customized programs based in the USA/Canada and Europe tend to be more internationalized than those in other parts of the world.

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Discussion and implications

Discussion of the first round of analysis

The differences in the academic demand, duration, and participant’s level of experience explain the non-uniformity of the correlations for the four programs. Surprisingly, the only course that did not present a correlation between internationalization and innovation was the MBA, the centerpiece of management education. Indeed, the first explanation for this apparent illogic outcome is a possible conservative approach from deans and academic leaders responsible for the MBA programs. For instance, due to the importance of this program in the reputation of the business schools, these institutions have limited incentives to take risks and, consequently, to innovate the curricula of their most crucial academic offer significantly. Second, the background of the business professors, largely research-oriented, creates a superior class on the methodology and scientifically-oriented research, not necessarily perceived as innovative by the MBA program participants. Therefore, although the MBA programs show internationalization in terms of diversity of the students, faculty, and sometimes the number of international modules, the programs are not necessarily innovative in delivery methods and content. Finally, MBA programs are longer than the other executive programs, which probably verges to make them less flexible to design, implement, and evaluate changes.

The second evaluation analyses the correlation between internationalization and innovation in the three remaining programs, the Executive MBA, Executive Education Customized, and the Open Enrollment programs. First, the highly competitive scenario of the executive education industry, in which multinationals compare a large pool of programs in management on a worldwide scale. Thus, differentiation is the basis for the competition between the programs, which requires innovation. Second, the executive modules are shorter than the full-time MBA programs. Therefore, changes in the executive programs are easier to design, implement, and evaluate, which leads to a higher perception of innovation. Third, the faculties in the executive programs are more diverse. These programs invite high-level executives, CEOs, consultants, and guest speakers with diverse backgrounds, including journalists, athletes, and even media celebrities.

Moreover, the very nature of customized programs requires business schools to design and deliver customer-and-project-specific solutions. Therefore, innovation and internationalization are tightly connected and are intrinsic parts of such programs.  Besides, the managerial implication of this finding is that both innovation and internationalization are, essentially, a critical response to the cutthroat business environment in the sector of management education, an idea analyzed by Schlegelmilch (2020).

Consequentially, the first round of our analysis partially addresses the research question. Are innovation and internationalization intertwined in elite business schools? Regarding the types of academic offers, the answer is yes, but not for all programs. Specifically, the main program, the MBA, shows no correlation between Internationalization and Innovation.

Discussion of the second round of analysis

We found that the impact of location on internationalization and innovation differs according to the programs’ types. For example, for the MBA and Executive MBA programs, the country of origin of the business schools does not affect their internationalization and innovation, an astounding result due to the leadership, experience, brand, sizes of both student class and faculty, alumni clubs, and first-mover advantage of the North American and European business schools. On the other hand, the country of origin affects internationalization and innovation for the executive education open and customized programs.

The internationalization modes used in the MBA programs explain the quite surprising lack of country of origin effects. Many elite business schools deliver their MBA and Executive MBAs primarily in their main campuses, using the import mode of internationalization, which presents a weak international experience for participants as its main weakness. Therefore, MBA and Executive MBA programs show negligible country of origin effects because of the constraints of the import model of internationalization. Overall, the second round of our analysis partially addresses the research question. Are innovation and internationalization intertwined in elite business schools? When considering the country of origin effects, the answer is no for the MBA and Executive MBA programs, but yes for the executive education open and customized programs.

Discussion of the third round of analysis

The third analysis identified the country of origin more impactful on the dependent variables, internationalization, and innovation. Because the previous study showed that country of origin is not a significant factor for MBA and Executive MBA programs. We focused only on the Executive Education Customized and the Executive Education Open Enrollment programs in this round of analysis.

For the Executive Education Customized programs, the impact of country of origin on internationalization is more significant in programs based in Europe than in the ones found in Other Regions and for programs based in the USA/Canada compared to the programs from Other Regions. We could reasonably expect both results because business schools in the US/Canada and Europe tend to be more experienced and better funded than counterparts from other regions. The same analysis applies to the Executive Education Open Enrollment programs. This result confirmed Western business schools’ power position and influence

However, we found no impact of the country of origin between USA/Canada on European business schools and vice-versa. This lack of predominance of business schools from the US/Canada over European programs is surprising because most of the former’s business schools existed before the latter. Additionally, elite business schools from the US and Canada tend to have larger endowments and alumni networks than Europe. This unexpected outcome contradicts the general observation that American business education served as a reference point for the remainder of the world, a process called “the Americanization” of management education. To this effect, we suggest several reasons for the lack of impact of location in the business school from the USA and Canada vs. the European business schools.

First, elite schools from the USA/Canada and Europe may be are risk-averse. We believe that the location advantages are subject to schools’ relative position in the hierarchy of business schools. Elite programs are sensitive to location-specific disruptions that may undermine their public legitimacy in their home countries.

Consequently, USA/Canada and European business schools compete internationally with management programs from the remaining regions. Second, the market and academic logic differences can explain the lack of locational advantages between USA/Canada and European business schools. Third, we analyzed two particular cases of American management ideas and practices in two different countries, Finland and the United Arab Emirates (UAE). Fourth, Finnish business schools and their European siblings struggled to become academic institutions in a highly regulated environment with centuries-old traditions in higher education practice. Consequently, the Finnish business education system gradually incorporated the American model during the latter half of the twentieth century in academic logic.

On the other hand, there is a decentralized education system in the UAE with limited regulation by the educational authorities in a market logic perspective. Under this scenario, the North American business schools could easily leverage their location advantages in an open, unregulated market. In contrast, in the European case, North American business schools could not leverage their location advantages due to the strong controls exerted by European academic authorities.

Another particular result was the non-existence of country of origin advantages in China and the Other Regions programs. However, the results were not surprising because of two main reasons or factors: (i) the presence of Chinese schools in the FT rankings is limited (although growing), and (ii) their programs are new compared to western programs.

The third round of analysis also addressed the research question. Are innovation and internationalization intertwined in elite business schools considering the country of origin or location? Yes, for the USA/Canada and Europe. However, this research did not find location advantages between USA/Canada and European programs compared to each other and vice versa.

Conclusions and Implications for Practice

MBA programs are the only courses with no correlation between internationalization and innovation. This result indicates that the leaders of these programs tend to be conservative. Country of origin also matters because it impacts different settings of the four types of programs in management education differently.

The implications for practice derived from the results of this research also include that deans and managers of elite programs from the USA/Canada and Europe should target other regions to take advantage of the country of origin effects. In contrast, the business schools from the different areas should avoid internationalization to the USA, Canada, and Europe due to the lack of country of origin advantages. To overcome this barrier, business schools from Other Regions can address the internationalization and innovation issues in academic partnerships, alliances, and consortia with other programs

References

Evodio Kaltenecker & Kingsley Okoye (2021) Are innovation and internationalization intertwined? The impact of country of origin and the types of programs in elite business schools, Journal of Education for Business, DOI: 10.1080/08832323.2021.1972277

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