According to Santiago Íñiguez de Onzoño, dean of Madrid’s Instituto de Empresa (IE) Business School, “While we have never depended on financial shortcuts and tricks, it would irresponsible to say that business schools don’t share some of the blame for the [current economic] crisis.” Responsibility for recent financial excesses must be shared among regulators, public and private institutions and those who were looking to “make a dollar on every penny,” he says.

In an interview with business daily Expansion and Universia Knowledge at Wharton, Íñiguez offered his own mea culpa because the work of business schools is to promote “the entrepreneurial spirit” that has been implicated in some aspects of the financial meltdown. Still, “the businessman is not the enemy, but the solution to the crisis,” he says. There is a danger of “losing the creative entrepreneurial culture” if people insist on setting up obstacles to the creation of new businesses by imposing “excessive regulation.” Nevertheless, Íñiguez is optimistic. He agrees with those who argue that “after any crisis, the economy and the business sector of a country emerge stronger.” Although many of those who caused the financial meltdown have attended the most prestigious schools in the world, “those who are getting us out of the crisis have also passed through business schools.”  

The challenge now, he says, is “to create more bridges between the business world and academia” in order to design new financial tools, and to weigh risks more effectively. This is an opportunity for European business schools to take the lead over American schools, whose academic foundations in areas like finance have been shaken. While educational institutions in Europe have focused their attention on the need to create value for various stakeholders – such as public administrators, customers and suppliers – American schools “have focused on maximizing profitability for shareholders,” he notes. Grave doubts have been cast on that paradigm since the outbreak of the financial crisis.

Europe vs. the U.S.

When it comes to ownership structure and financial results, the European business school model also appears to be more solid than the U.S. model, which is very dependent on private corporate donations that have been drastically reduced this year. Some of the most prestigious educational institutions in America “have had to cut their expenses and start doing without some teaching staff and researchers.” According to Íñiguez, “In times of crisis, European schools are better prepared [than U.S. schools] because they depend more on the marketplace.” That is to say, they depend more on the number of students who pay tuition. The results are often anti-cyclical, since people are more likely to educate themselves whenever things are worse, he notes. Excluding its revenues from the IE University, the IE Business School took in 71 million euros in 2008. Current forecasts for this year call for growth of 31%, to 93 million euros. In Europe, private donations barely represent 15% of the revenues of business schools that have opted for a mixed system of financing. That’s because “neither the fiscal nor cultural conditions exist” that would allow the American model to prevail, Íñiguez says, despite the fact that the Bologna Plan — which aims to standardize education across the European Union — seeks a convergence of the two systems.   

A stronger corporate presence in the academic world has been a source of controversy between those in favor of the Bologna Plan and those opposed to it. All educational materials must be adapted to the Bologna initiative by next year. The IE Business School has been obliged to buy a university in order to comply with the European Union-wide criteria. Even so, Íñiguez has no doubts about his position in favor of the Plan. “We need [this] more than ever,” he says.

“I don’t know what [critics] mean when they say that [the Bologna Plan] would lead to the commercialization of the university,” he says. “The university must not be a factory for the unemployed.” Nowadays, many degrees “offer no job opportunities.” If creating bridges between the corporation and the university means adapting careers to the real world, then such a change “is good.” Another controversy about the Bologna proposal is that it would mean the extinction of diplomas in the social sciences. Íñiguez says this is a “fallacy…. Not only are they not going to disappear, but on the contrary, there will be a supply of global-quality degrees.” As for those who think that the Plan will mean higher tuitions, Íñiguez recalls that the central government is promoting a system of scholarships. Nevertheless, he adds, “they need to adjust the rates to the real costs.” He favors “tying scholarship grants to academic merit” by establishing a mechanism for reimbursing assistance whenever a student doesn’t pass his or her course.

According to Íñiguez, “Bologna is an opportunity for students to study in world-quality universities when they deserve to do so,” as well as to increase possibilities for faculty mobility and to “improve the competitiveness of the continent” with the goal of creating “the United States of Europe.”

Because it is an independent business school, IE has been obliged to buy a university in order to meet the standards set forth in the Bologna Plan. After evaluating various foreign alternatives, it decided to acquire SEK in the Spanish city of Segovia. Now known as IE University, it is offering courses in both Spanish and English. Íñiguez, who is also rector of the new institution, says that after evaluating locations in the Netherlands, he ultimately opted for Segovia because of its proximity to the IE Business School’s Madrid campus. However, he adds that there is “hyper-regulation” in Spain, which presents an obstacle for the free circulation of students and professionals on an international level. “Spain is one of those countries with a large amount of bureaucratic and administrative complexities for a master’s degree,” he says. “Education should be one of the most attractive sectors in Spain,” along with other leading sectors such as renewable energy and transportation. In fact, in some countries, attracting foreign students to universities has become a principal source of foreign exchange. Nevertheless, Íñiguez recognizes that without sufficient financial assistance, it is hard for this to happen because there is not enough demand within the Spanish domestic market for the entire supply of education that now exists.

The Bologna Plan is an opportunity for Spain because “it opens up one single [European Union-wide] market,” and “more American universities will enter the European arena.” How can Spain compete in this environment? Íñiguez is certain that the solution involves “converting Madrid into an educational hub, much like London and Boston.” But for this to happen, three requirements must be met in Madrid: a significant corporate presence, the globalization of the city, and administrative deregulation. At the moment, the capital of Spain suffers from the absence of the last factor.

Madrid as an ‘Educational Hub’

Until now, Madrid’s educational institutions have focused on attracting Latin American students. “But we have to aspire to attract the rest of the world,” Íñiguez says, not only because business schools and universities need students, but also because “educational tourism is more profitable than sunshine and beaches.” Despite these administrative difficulties, Spain is the principal destination for citizens of the European Union who participate in the exchange program at the Netherlands’ Erasmus University Rotterdam. Spanish business schools are among the most diverse in the world when it comes to students’ countries of origin. “We have more French students here than there are Spaniards studying in France.”

Perhaps this interest in converting Madrid into an educational hub is the reason why the IE Business School has made no plans to open a campus outside the Spanish capital, and has committed itself to strategic alliances with other prestigious schools outside its borders. Although Íñiguez would “not rule out” the opening of a campus outside Madrid, that option is not being considered until the School finds a way of “replicating the model and the experience of the campus” that it operates in the center of Madrid. “It is not the same thing when you go to a branch campus,” says Íñiguez, who stresses the importance of in-person networking and relationships among students. Even when it comes to online training, he supports a hybrid system “in which students develop managerial skills and learn to be more diplomatic [in person], because when things are written down, they’re more likely to be offensive.”

Fifty-five percent of the IE Business School’s revenues comes from international activities such as courses provided outside of Spain for foreign students enrolled in the School’s programs. Next year, the Segovia campus will accommodate students of more than 30 nationalities, including the U.S., India, Germany, the United Arab Emirates, Australia, Canada, Indonesia, Hungary and Mexico. For some courses, such as business administration, more than 70% of the demand comes from foreign countries. The IE Business School also has just signed an agreement with Brown University to set up a joint Executive MBA program – the first in a series of programs planned for Brazil, China, India and perhaps the countries of the Persian Gulf region, notes Íñiguez.

After studying at the Complutense University in Madrid and Oxford University, Íñiguez earned a doctorate in law and an MBA at the IE Business School. He later became professor of strategic management at IE, and in 2004 he was appointed dean. Before taking that post, Íñiguez was IE’s general director of external relations and launched the School’s international initiatives. After the purchase of SEK University in Segovia, Íñiguez was named rector of the institution. Currently, he is not only dean of the Business School, but also occupies key positions on the boards of the European Foundation for Management Education, the Association of MBAs (located in the U.K.) and various Spanish institutions.