Breaking Barriers

How three business schools in emerging economies are promoting progress and advancing management education in their local markets.
Breaking Barriers
THE EVOLUTION OF THE WORLD’S poorest nations is well-reflected in the terms historically used to describe them. Political conflict and poverty granted them only “Third World” status in the mid-20th century, before they transitioned into more promising “developing countries” by century’s end. Only recently has their entrepreneurial and economic potential turned them into “emerging markets.”

Sergey Myasoedov of the Russian Presidential Academy of National Economy and Public Administration (RANEPA) in Moscow. In Eastern Europe, many choose instead to use the term “dynamic societies,” he notes. “We prefer that term because our countries aren’t always moving in the right direction. We’re still dealing with political and economic turbulence. We’re still caught between an older generation with one system of values and a younger generation with a different system of values.”

In at least one sense, however, “emerging” is an apt description. The word perfectly illustrates the nature of business education in these markets, where graduates with entrepreneurial and management training are in high demand. To meet that demand, business schools are enhancing their curricula, hiring faculty, producing region-specific research, and expanding their programs in entrepreneurship and social innovation.

Here, three educators at the center of such efforts share how their business schools are becoming instruments of change in the dynamic regions they serve. They include Myasoedov, dean of RANEPA’s Institute of Business Studies (IBS-Moscow); Vinika Rao, executive director of the INSEAD Emerging Markets Institute (EMI) in Singapore; and Ajit Rangnekar, dean of the Indian School of Business (ISB) in Hyderabad and Mohali. These three educators emphasize that, while emerging markets each have different needs and present different challenges, all share one thing in common—they’re relying on their business schools to train leaders who can spark transformational social change.

‘CATCH ON TO NEW IDEAS’

Business schools in Russia are working to move beyond several residual effects of the communist era, says Myasoedov. Only 25 years past the fall of the Soviet Union, Russian business is still heavily influenced by state concerns, and many business schools are still largely state-supported. Business curricula at many Russian schools still reflect the country’s communist history, when programs focused primarily on basic managerial training for small business owners rather than advanced management training for entrepreneurs or executives at large enterprises. In fact, managers at many of Russia’s largest industrial, and often state-sponsored, firms are engineers with no formal business training.

But these trends are changing. Many of the country’s top business schools have been retooling their programs to better serve and retrain senior executives in medium-sized and large enterprises, Myasoedov says.

And as Russian businesses globalize, Russian business schools are integrating international themes into their programs. Even so, many native students still view business through a Russian perspective. For instance, only 10 percent of students at IBS-Moscow choose to take courses in English. For that reason, the school now requires its undergraduates to study English, so that by their third year they are prepared to pursue one of five double-degree programs offered in partnership with schools in Europe and the U.S.

Government, while still heavily influential in Russia’s education market, recently has begun to push for educational reform—especially among business schools. IBS-Moscow and its faculty have been active in this process. Co-founded by Myasoedov and several other professors in 1988, IBS-Moscow is one of Russian’s first private business schools and unusual in that it does not receive state funding. It maintains control over its tuition revenue, retaining 70 percent and paying 30 percent to RANEPA to cover overhead costs.

Myasoedov’s interest in reforming Russian education has led him to join and become president of the Russian Association of Business Education (RABE). The organization regularly brings together business leaders, educators, and policymakers to discuss ways to influence social change and Russian management practice. These discussions often focus on the potential of Russia’s mid-sized companies.

“The largest companies in Russia, like Gazprom and Lukoil, are like little monopolies. They do not have the flexibility to react to change quickly,” says Myasoedov. “Emerging markets really need medium-sized companies—we call them the ‘middle champions’—that can move very fast and catch on to new ideas. That market is our ‘prime time.’ We have to help them succeed.”

The success of such “middle champions” will depend on the quality of Russian business schools, he emphasizes. That’s why, in 2011, Russia’s Ministry of Education asked RABE to help create what is now the National Board for Business Education Quality Assessment (NASDOBR), a new accreditation agency for MBA programs. NASDOBR’s accreditation standards are largely based on a review of international accreditations such as those of AACSB International, the European Foundation of Management Development (EFMD), and the Association of MBAs (AMBA). Chaired by Myosoedov, NASDOBR is overseen by representatives from RABE, the Chamber of Commerce, Business Russia, the Russian Association of Managers, the Association of Russian Banks, and the Russian Union of Industrialists and Entrepreneurs. So far, seven business schools have been NASDOBR-accredited.

RABE and NASDOBR now are developing new accreditation standards for specialized MBA and DBA programs in response to quickly increasing demand for part-time specialized programs among Russian professionals.

The next step for some Russian business schools is to pursue international accreditation. For example, IBS-Moscow, which is accredited by AMBA and NASDOBR, is working toward achieving AACSB and EFMD accreditations. Currently, no business school in Russia holds AACSB Accreditation, and not all are ready to pursue international credentials, says Myasoedov. That’s why he is a vocal proponent for the creation of AACSB certifications that recognize continuous improvement, designed specifically for business schools in emerging markets. “This is a very good idea for business schools in Russia,” he says. “Many don’t yet have the ‘muscle’ to move into the accreditation process, but they can work toward that goal step by step.”

‘WHERE THE GROWTH IS’

While Russia’s biggest business education challenges involve its transition from communist values to capitalist practices, Asia’s often involve its transition from a reliance on Western business models to a realization that its businesses need training tailored to local cultures and contexts.

“We find that the single biggest impediment to doing business in emerging markets is the lack of credible, timely, and consistent information on which leaders can base strategic business decisions,” says Rao. “It’s important to teach leaders how to do business in emerging markets by using case studies and real examples from these countries, because the business realities of these nations differ significantly from those in the developed world.” One of EMI’s primary objectives is to develop cases about successful and failed ventures in emerging economies—it soon will open an Emerging Markets Case Study Center to further support that effort.

INSEAD is addressing the shortage of training opportunities through a variety of shorter modules that target professionals in Asia and the Middle East. For instance, the school recently launched a three-month, four-module certificate in business acumen for managers in emerging markets. It recently began offering an online certificate program in leadership effectiveness for Indian professionals; it’s designed so that they can take the courses from their workplaces.

The school also has created shortterm executive education programs that are delivered fully online. For example, the school offers a two-week program to help executives understand the challenges of managing within Asian contexts, and a six-day “Market Entry Strategy for India” program. In February, INSEAD announced that it would begin offering customized online education for companies, which can be targeted to a specific regional context. These short online formats allow students to remain at their jobs, study from their home countries, and focus quickly on the skills they need just as they need them.

With this growing demand for training comes the need for more faculty, especially those native to particular regions. In the past, business schools in emerging markets have struggled to hire and retain locally born and trained faculty, because the most promising scholars often left to study and teach overseas. But the good news, says Rao, is that as emerging economies grow more globally prominent, more of these faculty are returning to teach either in their home countries or in regional hubs, like Singapore. Many are helping their schools facilitate international partnerships, attract a more globally diverse student base, and pursue international accreditations and ranking.

In addition, more students are interested in studying at schools in emerging markets because they’re interested in working in these regions after graduation. That has led to more local business leaders coming to campus to mentor these students—many of whom they later recruit and hire.

This trend is creating a widening virtuous circle that links business programs to real-world business needs, says Rao. “Emerging markets are where the real growth is now. That has led to increased demand for better business education.”

‘A WIDE VARIETY OF ISSUES’

India’s challenges might be the most daunting of any emerging nation. As the world’s second-most populous country, India faces mounting problems related to poverty, infrastructure, education, healthcare, and pollution. Climate change also is expected to take its toll—the World Bank predicts that a warming climate could lead to changing monsoon patterns, more frequent droughts, and rising sea levels in many regions of India, potentially displacing millions of people. Many of the displaced are likely to move to the country’s urban centers, which are on pace to grow by more than 400 million people by 2050, according to the United Nations.

To address these issues, last year Narendra Modi, India’s prime minister, announced an ambitious goal: to build 100 “smart cities” to support the country’s increasing urban population. Smart cities are characterized by sustainable energy use and water management, efficient traffic and transportation systems, integrated technological infrastructure, thoughtful urban planning, balance with natural elements, and strong governance practices—cities such as Barcelona and Copenhagen are often cited as examples of smart cities at their best. Many view smart city development as a way not only to support urban growth, but also to generate opportunities for entrepreneurial activity and global investment.

Modi’s goal has inspired ISB to place issues related to smart city development and climate change high on its agenda, Rangnekar notes. He points to studies conducted by ISB’s Centre for Emerging Market Solutions (CEMS) about the impact of green building on low-income housing. “We’ve worked with private developers to help them build townships for the poor, a precursor to building ‘smart cities’ in a developing nation,” says Rangnekar. “We did these projects to demonstrate to government, private developers, funders, and the end users that it’s possible to build affordable and fundable homes for the poor.” Now, some developers have begun similar affordable housing projects in the western states of Gujarat and Maharashtra based on their work with the center.

In 2011, the CEMS also set up its Climate Policy Initiative, which generates research to help policymakers understand the best ways to reduce India’s carbon emissions through cost-effective use of renewable energy. Its first paper, “Meeting India’s Renewable Energy Targets: The Financing Challenge,” led to ongoing work between researchers and India’s Ministry of Finance and Ministry of New and Renewable Energy.

ISB recently branched out into other areas related to emerging market challenges—so many that its initiatives have grown beyond the capacity of a single center. “CEMS was originally created as an omnibus center to deal with a wide variety of emerging economy issues and explore market-based solutions,” explains Rangnekar. But now that the school has received additional funding, it has created several topic-specific institutes and distributed the center’s work and faculty among them.

For instance, the Punj Lloyd Institute for Infrastructure Management at ISB’s newly opened Mohali campus will focus on urbanization and infrastructure. The Bharti Institute for Public Policy will work in areas such as food distribution and climate change. The Max Institute for Healthcare Management will focus on the country’s need for efficient healthcare systems. ISB has other institutes planned as funds become available, including one for entrepreneurship.

Within these institutes, ISB has launched programs tailored to the specific needs of executives in emerging markets. For instance, its one-year program in public policy consists of three 17-week terms and is delivered primarily online; students attend intense face-to-face residencies twice during each term, alternating between ISB’s Hyderabad and Mohali campuses. ISB offers similar programs in manufacturing and business analytics, with those in healthcare management and infrastructure management almost ready to launch. The school is recruiting more faculty so that it can design MBA-level and executive education programs in areas such as supply chain management and digital technology.

These kinds of programs—focused on skills related to infrastructure and public services—are in great demand, says Rangnekar, not only across India but in many emerging markets. ISB has begun working with various state governments in India to deliver these programs to their personnel and provide better service to the community. After these programs have been tested in India, ISB plans to contact governments in Africa to gauge their interest in delivering them to their own staff.

'A MORE EQUITABLE WORLD'

While business schools everywhere are concerned about their impact on their communities, the idea of impact has special resonance for schools in emerging markets. They know that their training, research, and business innovations have the potential to rebuild economies, uplift communities, and save millions of lives.

Rangnekar notes that even though the work of the CEMS now has been absorbed into various institutes, its philosophy of “making an impact on society” has been deeply integrated into ISB’s larger vision. That vision has translated into the development of more than 120 India-centric cases for business schools, as well as an internship program for undergraduate engineers focused on finding market-based solutions for emerging economies. It also has inspired the school’s iDiya National Social Venture Competition in which only Indian working professionals not currently enrolled full-time at any educational institution are eligible to compete. In 2014, the competition attracted 106 team entries from more than 400 participants.

The school wants to inspire ideas anywhere and everywhere, says Rangnekar. “The iDiya competition is our effort to help working professionals create impact in the social sustainability space,” he says. “We focus on impact in everything we do.”

The same is true at INSEAD, says Rao. She points to the EMI’s participation in the U.N.’s Business Schools for Impact Initiative (see “Impact Project” below). “We are committed to educating MBAs on the need to factor in ‘impact,’ as well as ‘risk and return,’ as they make their future career choices,” she says.

Going forward, all business schools must work to create inclusive models of business education that incorporate both global and local concerns, stresses Myasoedov of IBS-Moscow. “We must acknowledge that there are peculiarities when it comes to implementing management principles in different parts of the world. We must train future leaders and entrepreneurs to be more adaptive and work more effectively. They should know that different cultures have very different problems.”

Whether these markets truly are emerging, dynamic, or something in between, Myasoedov, Rangnekar, and Rao remain optimistic about their futures. Says Rao, “We may just be moving toward a more equitable world where education breaks the barriers of affluence and class.” And business schools, in many instances, will be the ones leading the charge.