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Elite Business Schools: Building Boom

MBA News Barbara Bierach / 09-24-2010

U.S. Business Schools are constructing bigger and more-elaborate campuses to attract applicants and professors - and to climb higher in magazine rankings, reports “BusinessWeek”. The Yale School of Management for example is about to erect a 180 million dollar structure designed by the famous architect Lord Norman Foster.

"You can't be in a dump if everyone else is in a spectacular building," says Yale's dean Sharon M. Oster, in regards to the construction site. The remark refers to the riverfront campus in Boston housing Harvard Business School, which has a chapel, a health club, and its own art collection.

Yale is not alone. Last year, University of Michigan's Stephen M. Ross School of Business opened a new 145 million dollar building. This year the Massachusetts Institute of Technology's Sloan School of Management will open new facilities in Cambridge and Stanford's Business school will expand into a new building next year. Columbia University in New York and Northwestern University in Evanston are raising money for similar expansions.

Elite business schools in the U.S. are locked into their own kind of arms race, constructing bigger and better campuses to attract applicants and staff. New buildings mean more office space for the faculty - and more classrooms for profitable executive education programs. Larger schools can also enrol more students, who pay up to 80,000 dollar annually in tuition and room and board.

While shrinking endowments at universities across the country have forced many to cut back on construction, business schools have been immune from the retrenchment. "Graduates of business and law schools are often the wealthiest alumni," says Ronald Ehrenberg, an economist at Cornell University. "It is easy to raise funds from donors to those schools." To finance its new complex, for instance, Stanford Graduate School of Business secured 105 million dollars, the largest gift in its history, from alumnus and Nike founder Philip Knight.

The building boom for top management schools began in 2002, when the University of Pennsylvania's Wharton School celebrated its 140 million dollar Jon M. Huntsman Hall in Philadelphia. The Booth School of Business in Chicago began using its 125 million dollar Charles M. Harper Centre in 2004. It's a self-reinforcing pattern, argues "BusinessWeek": better buildings enhance student satisfaction, and that can spur future alumni donations, making management schools even richer and better able to build even more-impressive campuses.