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Monday, Oct 12, 2009
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The New Manager
Industry & Economy - Education
India, an attractive destination for US B-schools
Robert F. Bruner: The developed economies do not have a monopoly on wisdom.
The recovery in India and China seems to have shored up the sagging morale of the global economies, battered by the financial sector mayhem that shook the world in September 2008.
Though a concrete solution seems to be eluding economists and policy makers debating various stratagies to prevent another onslaught on the modern economic system, a liberal economist and Dean of the Darden School of Business, University of Virginia, Robert F. Bruner, says that the crisis offers business schools an opportunity to play a crucial role in shaping a model that understands the complexity of the system and evolves strategies to prevent the exploitative tendencies of economic actors.
The New Manager caught up with Bruner during his recent visit to Bangalore. Excerpts from the interaction:
The new education policy plans to allow foreign universities to set up their establishments in India. Is the Darden School of Business planning an entry?
The Darden School of Business has had an abiding interest in India for years. Coming at a crucial point of time when the global economies are groping for new direction in the wake of the devastation wrought by the US financial sector’s collapse, the Education Ministry’s proposal is an important aspect of the trend of global integration. India is one of the most attractive arenas for our contribution, in serving students and the business profession. The entry into India is highly attractive for American business schools.
Is the Darden School planning to set up its brand here? In what shape will it enter India?
We are in conversation ... I will let you know when we reach a stage with a definite thinking … We have a relationship with XLRI, Jamshedpur, and ISB, Hyderabad, which are among the 15 alliances that Darden has by way of exchange programmes with schools around the world.
With ISB, we have a joint case-writing venture. Our school teaches the case methods. We believe in developing cases in partnership with indigenous schools for the obvious reason that someone who lives in the middle of the market would have a far better understanding of it as compared to an American who lives 12,000 miles away.
Post-crisis, the credibility of the Western economic model is on test. Do you see a role for India and China who have come in for praise for their management of the crisis, in shaping the future of the global economy?
The perception in the US following the recent crisis is that the old rules are changing and that the old assumptions must be re-examined. Also, the players are changing position in important ways. Translated into the famous words of Jeffrey Immelt, CEO of General Electric, this is a ‘reset’ moment. It is like pressing the reset button on your cell phone that spurs everything to reboot and the conditions to be realigned from the start.
What will be the role of case studies in the changed economic environment, particularly at a time when the emerging economies are asserting their own models and the US’ influence in the global economy is losing steam?
Your comment about China and India inventing models is very provocative. I mean that in a good sense. We need to draw ideas from everywhere. I don’t think that the developed economies necessarily have a monopoly on wisdom. I would hope the G20 process contributes to this liberalisation of reflection in thinking worldwide.
Teaching cases is a highly flexible method. For instance, as the crisis began unfolding a year ago, we began developing absolutely fresh cases that captured the lessons from the meltdown.
We made simulations about bank panics and the difficulties of financing in emerging countries as a result of the crisis. Courses on industrial management that actually require students to execute investment strategies in the context of crisis conditions were drawn up. And all of this has been made possible by drawing points that reflect the world as we know it today.
Do you see the flexibility of cases throwing up new ideas for a composite thinking on the world economy?
I believe it will and in any event it must. Back to the notion of economic reset where the voice of larger emerging economies now is gaining strength to shape the world that emerges after the crisis. Our cases must reflect the dimension and those practices. The old laissez faire liberalism is tarnished and accused by many as the underlying cause of this crisis. For example, it is clear that the Government will intervene in the economy and business practices in a different way than before the recent crisis.
My reaction to the bail-out concept is cautious in as much as it is useful at times of crisis like this. But a critical question is: Up to what extent should the stimulus concept be pursued? The larger question is: What should be the natural limits of Government intervention?
How should managers be trained to anticipate the intervention and reaction of Government officials? This is the first big aspect in which the business schools could bring changes in the future. The second important theme is of ethics. It is important that the new generation of managers understand the broader social implications so that their response levels are consistent with the common good. It is also important to equip new managers with knowledge of the complex financial system to help them design tools for financial engineering with the objective of finding solutions and prevent their misuse (like the sub-prime situation).
We also need integration into better economic theories, research insights from psychology, anthropology and sociology. It helps in understanding how human behaviour deviates from the models of rational economic man.
Do you agree with the assumption of the global economy resettling by the end of 2010?
Yes. But recovery is perceived differently by different people.
For India, it is the recovery of the export market. But if international demand were to surge, these economies could face trouble balancing their domestic and export demand …
As globalisation is an inexorable phenomenon, I don’t think the right strategy for emerging economies like India would be to ‘decouple’. They should build a vigorous base of domestic demand and supply as a counterbalance and continue to grow the export economy.
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