The article, the first of a two-part series, takes a look at the external environment facing business schools today. Major factors considered include the global landscape and related populism, funding shortfalls, increasing regulatory burdens, increased competition, and artificial intelligence. This combination of challenges, together with factors that are internal to business schools and universities and will be examined in an article later in the year, means that it is not an easy time to be the dean of a business school. Protecting present income streams, developing new sources of funds, and being agile are all paramount.
There is a postcard on the wall above the writing desk of one of our co-authors. The postcard features a line drawing of two Edwardian boys in pinstripe suits and little woollen caps. One of them says to the other “Errors have been made. Others will be blamed.”
Within the business school landscape, we are not dissimilar to the Edwardian boys. In this nested pair of articles, we will look at the challenges we collectively currently face. This first article will look at the external factors that have significantly complicated our environment; running a business school in 2025 requires guts and determination. The second article, which will appear later in the year, is probably more contentious. It suggests that while “others can be blamed” for many of the concerns that we face, we as business school and university communities are not entirely blameless. For years, many problems have been swept under the carpet. In the good years, these problems did not make a discernible difference. However, given the present challenging external environment, they now need to be addressed.
Where are we today?
As authors, we have been tracking the business school landscape for many years. We’ve written extensively in Global Focus1 about how we continually fail to act with speed and precision regarding obviously visible factors. Clearly, at present, there are myriad factors at play:
The Global Landscape and Populism
Globalisation has always been at the heart of the business school community. We value an international perspective and welcome international students into our institutions for their insights and their tuition fees, which in many cases are significantly higher than fees for local students. Writing from a UK perspective, at a minimum they are double what local students pay. Alas, many of the governments in countries hosting business schools do not see it this way. The major importing student countries: the US, the UK, Canada and Australia have all declared that there are too many international students, and that many of them are simply ‘visa dodgers’ who will take advantage of their student status to purloin loans and subsequently remain as ‘migrants’. To this end, high barriers to obtaining a visa have been thrown up which are more difficult and costly for students to navigate.
The UK is a good example of what has been happening. It recently removed the right for students’ partners to accompany them during their studies. This has led to a significant reduction in older students, generally studying for Masters degrees. There has also been a lot of talk about removing the post-study work visa programme whereby international students can work for two years after their studies. While this has not yet materialised, the visa allocation has been reduced to 18 months and many international students view this possibility with trepidation and are uncertain about whether to come to the UK. Presently (May 2025), news reports suggest that the UK is publishing a white paper considering the restriction of student visas to those from Nigeria, Pakistan and Sri Lanka as they have been identified as at risk of overstaying their visa allowances. And, of course, the extraordinary own goal that was Brexit decimated the European student population almost completely with access to the student loan programme terminated and international student fees implemented.
While British levels of hostility are one thing, as observers we are carefully monitoring the outright hostility manifesting itself in the United States. At the time of writing (May 2025), international student demand to study in the US starting in September is down by about 40% and will surely reduce dramatically with the announcement of the cessation of interviews for international students. The US is not as dependent on international students as the other major student-importing countries are, but clearly this will hurt.
Funding
While a considerable portion of regulatory disdain for international students comes from nationalism and populism, a significant factor is also due to wildly varying degrees of funding in higher education within different sectors. In some countries, the funding burden is left entirely to the students’ ability to pay, in other markets universities are subsidised extensively by the government. In these latter markets, governments have drawn the line at ever-increasing university costs. Student loan levels in the UK had been frozen at £9,250 per annum for many years, which effectively decreased funding levels for local students by a quarter to a third between 2017-2018 and 2024-20252
Regulatory Burdens
We have noted the challenge to business schools created by increasingly tough visa regimes in many countries. These are just the tip of the iceberg. Apologies for another UK example, it’s simply the market we are most familiar with. Behind the visa regime is also the regulatory infrastructure of the Office for Students and the Research Excellence Framework. The former requires reporting about everything from student attendance to progression rates and ‘good outcomes’. It is effectively an offshoot of the Home Office which looks at immigration and the Treasury which seeks to spend as little as possible on universities. The OfS, as it is affectionately known, is also increasingly interested in franchising, validation, and all aspects of transnational education to ‘safeguard educational quality’.
The latter, the REF, looks at research quality output as well as the actual impact of research in the ‘real world’, beyond academia. While it is burdensome, it is largely benevolent. It has, however, led to a research race among all of the traditional business schools even when common sense would indicate that not every institution has the means or skills to perform well in this exercise. More on this in the coming article about the internal environment.
In parallel, performing well in research is largely dependent on performing well in accessing research grants. Whether it is because of Brexit and the UK’s difficulties in accessing EU funding, or sadly in the bonfire of research money currently underway in the US, life is becoming more difficult for all but the richest institutions.
New Competition
In 1999, the Bologna Declaration streamlined European higher education systems by introducing the three-step Bachelors / Masters / Doctoral system. At the time, it became obvious that to attract international students to European campuses, many more programmes would be launched in English. By now, it is possible to study in nearly every European country in English. To that can be added the possibility of studying in English in the rest of the world.
Two other trends are clearly visible concerning new(er) entrants to the business school landscape: private providers and tech companies. The range of private providers is extensive. Many are entirely legitimate and filling gaps in educational provision where the public sector is unable to fulfil demand. This is the case in many mid-tier markets. There are also, however, private providers that do not have the same levels of integrity but are nevertheless siphoning off student demand from more traditional providers, often doing this through lower prices, innovative scheduling, or offering more obscure subjects. In many cases, traditional providers, for better or worse, are validating these programmes, in some cases leading to scrutiny from educational regulators.
Artificial Intelligence
No doubt many readers will have an opinion regarding artificial intelligence. From our perspective, there are several angles to consider. First, some studies suggest that over 90% of students are using AI to write their assignments and it is currently impossible to check whether authorship is genuine or tech-driven. Surely, we need to face this challenge in a thoughtful way by abandoning the historic practice of essay writing as the primary assessment. The positive side of the assignment revolution is that AI is excellent at grading and giving feedback to students.
More usefully, AI is effective at everything from literature searches to qualitative data analysis and many other requirements for students and faculty members. We need to embrace the upsides as AI is with us to stay. As someone wise once said, “anything invented before you were born is normal, anything developed before you are 30 is progress, and anything invented after that is the work of the devil.”
Any Other Business
Two last factors deserve attention. The first concerns student housing. This is related to the general atmosphere of animosity towards students in general and international students in particular. In many cities, there is simply not enough accommodation to meet demand and there is a perception that students are driving up prices for private accommodation and thus driving out local residents.
The second, this is after all an article for the EFMD, is that the responses manifested in the business school environment to these challenges, especially in those business schools that are rooted within universities, are becoming dislodged from accreditation expectations of the strategic autonomy of business schools. Many are no longer directly in managerial control of significant processes ranging from student recruitment and admissions, through to professional services including programme design and programme validation. More on this later.
In summary, trends we have seen coalesce over the years have created a challenging environment for business schools. Money is tight. Many schools are retrenching and laying off large numbers of staff while they search for new income streams. Some may well end up turning to mergers to alleviate their problems. It is not an easy time for Deans and Directors and their colleagues.
Notes
1Peters, K and Thomas, H., (2011) “A sustainable model for business schools” Global Focus, 5(2) pp 24-27; Peters, K., R. Smith and H. Thomas (2018). Rethinking the Business Models of Business Schools: A Critical Review and Change Agenda for the Future. Bradford: Emerald Publishing; Peters, K., H. Thomas and R. Smith (2021) The Business of Business Schools reprint as one of the best 25 of 500 articles in EFMD Global Focus, 15th Anniversary Edition 2006-2021
2Institute for Fiscal Studies (2023) ‘Higher Education funding in England’; Russell Group (2023) ‘The case for increasing the undergraduate tuition fee cap’; Bank of England Inflation calculator.
Kai Peters is the interim Strategic Portfolio Lead for Education at Harper Adams University. Previous roles included Pro Vice-Chancellor for Business and Law at Coventry University; Chief Academic Officer at Hult, Chief Executive Officer at Ashridge and Dean at Erasmus University’s Rotterdam School of Management.
Howard Thomas is an Emeritus Professor of Strategic Management and Management Education at Singapore Management University (SMU) and former dean at leading business schools, including SMU, Warwick Business School (UK) and the College of Business at UIUC (Illinois, USA). As a highly respected consultant, author and scholar he has been awarded fellowships by the Academy of Management (AOM, USA), the Strategic Management Society (SMS, USA), the British Academy of Management (BAM), the European Academy of Management (EURAM), the Academy of Social Sciences (AcSS, UK), the Institute of Directors, (UK) and, most importantly, the Learned Society of Wales (LSW). He was also President of SMS while dean at Illinois. He has chaired leading professional educational organisations such as AACSB (USA), GMAC (USA), and CABS (UK). He has also received Lifetime Achievement Awards from BAM (UK) and the European Foundation of Management Education (EFMD), and a number of honorary doctoral degrees during his distinguished academic career. He is currently a senior advisor to the President and managing director of EFMD.
Michael J Thomas is the founder of DARWIN™ Works and a Cambridge University-accredited leadership coach who helps founders and senior leaders gain clarity, communicate with confidence, and unlock their next stage of growth. Through his work - and through his IWON podcast (It Wasn’t Over Night), he shines a light on the mindset, story, and strategy shifts that power meaningful success for leaders in tech, business and life.
