Business Education in Emerging Market Economies

Rajiv K. SinhaLonnie Ostrom Chair in Business

W.P. Carey School of BusinessArizona State University

Business Education in IndiaBusiness Education in India THE HYPE THE HYPE

1250 approved business 1250 approved business schoolsschools

1600 accredited by AICTE1600 accredited by AICTE

1,250,000 full time MBAs1,250,000 full time MBAs

1,000,000 online MBAs1,000,000 online MBAs

13 IIMs13 IIMs

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Business EducationBusiness Education THE CRISIS THE CRISIS

QUALITY OF GRADUATESQUALITY OF GRADUATES____________________________________________________________

FACULTY TRAININGFACULTY TRAINING

RESEARCHRESEARCH

CURRICULUMCURRICULUM

FACULTY DEVELOPMENTFACULTY DEVELOPMENT

EXECUTIVE EDUCATIONEXECUTIVE EDUCATION

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IIM-SHILLONG, INDORE IIM-SHILLONG, INDORE ETCETC..

Value of Business EducationValue of Business EducationValue For Whom?Value For Whom?

StudentsStudents

AlumniAlumni

Employers Employers

EducatorsEducators

MediaMedia

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SocietySociety

Re-think FundamentalsRe-think Fundamentals Shareholder valueShareholder value Profit and loss accountProfit and loss account People accountPeople account Planet accountPlanet account Beyond lip serviceBeyond lip service

How do we achieve this?How do we achieve this?

““BUSINESS HAS TWO BASIC FUNCTIONS: BUSINESS HAS TWO BASIC FUNCTIONS: MARKETING AND INNOVATION. MARKETING AND INNOVATION.

MARKETING AND INNOVATION PRODUCE MARKETING AND INNOVATION PRODUCE RESULTS. ALL THE REST ARE COSTS.” RESULTS. ALL THE REST ARE COSTS.”

(PETER (PETER DRUCKER)DRUCKER)

RE-DEFINE BUSINESSESRE-DEFINE BUSINESSES

Greatest potential in Biodiversity and Greatest potential in Biodiversity and

Ecosystem services: water,Ecosystem services: water,  agriculture, forest agriculture, forest

products…..products…..

2050 PLAN : $970 BILLION IN US ALONE2050 PLAN : $970 BILLION IN US ALONE

Sustainable products and services that Sustainable products and services that

provide provide socialsocial and and economic economic benefits over benefits over

their their entire commercial cycleentire commercial cycle, from the , from the

extraction of raw materials to final extraction of raw materials to final

disposition, while preserving public health, disposition, while preserving public health,

societal welfare and the environment.societal welfare and the environment.

FUTURE OF INNOVATION AND FUTURE OF INNOVATION AND MARKETINGMARKETING

Big Issues : GeneralBig Issues : General

What constitutes What constitutes social value HEREsocial value HERE? ?

VIRGINIA SLIMS: YOU’VE COME A LONG WAY VIRGINIA SLIMS: YOU’VE COME A LONG WAY

BABY? BABY? Better routes to Emancipation: TARUBetter routes to Emancipation: TARU What is the What is the role of consumersrole of consumers in driving socially in driving socially

responsible behavior?)responsible behavior?) How can they be motivated to care about the How can they be motivated to care about the

social and environmental characteristicssocial and environmental characteristics of the of the

products/services they buy and use? products/services they buy and use? How do we get managers to incorporate this in How do we get managers to incorporate this in

their vision for the products and services they their vision for the products and services they

market?market?

Big Issues: SpecificBig Issues: Specific

How do we change management How do we change management

education to reflect this?education to reflect this?

New tools, different paradigmsNew tools, different paradigms

Bihar AIDS projectBihar AIDS project

CemexCemex

Global ResolveGlobal Resolve

Re-defining Product Re-defining Product MarketsMarkets

The results are:

1.New products that improve lives for

communities at the base of the pyramid

2.New business ventures to build village

economies

3.Life-changing educational experiences for

students

GlobalResolve builds partnerships to create technological and economic solutions for villages in the developing world.

GlobalResolveGlobalResolve

The GlobalResolve The GlobalResolve MethodMethod

The GlobalResolve The GlobalResolve MethodMethodThe GlobalResolve The GlobalResolve MethodMethod

The GlobalResolve The GlobalResolve MethodMethodThe GlobalResolve The GlobalResolve MethodMethod

The GlobalResolve The GlobalResolve MethodMethodThe GlobalResolve The GlobalResolve MethodMethod

The GlobalResolve The GlobalResolve MethodMethodThe GlobalResolve The GlobalResolve MethodMethod

The GlobalResolve The GlobalResolve MethodMethodThe GlobalResolve The GlobalResolve MethodMethod

The GlobalResolve The GlobalResolve MethodMethodThe GlobalResolve The GlobalResolve MethodMethod

The Problem:How can a supply chain model help make these ventures successful?

The Problem:How can a supply chain model help make these ventures successful?

Case Study

Cooking Fuel Pollution

Smokeless Cooking Fuel: Gelled Ethanol

Case Study

Cooking Fuel Pollution

Smokeless Cooking Fuel: Gelled Ethanol

And a Matching Gel Fuel Stove

Green Accounting for Indian States and Union Territories Project ( “GAISP” )Green Accounting for Indian States and Union Territories Project ( “GAISP” )

Business Education must address poverty alleviationBusiness Education must address poverty alleviation

Eco-Systems, Markets and Poverty

Breaking the Vicious Cycle : A Case Study from India

The ‘Vicious Cycle’ of Poverty and The ‘Vicious Cycle’ of Poverty and Environmental DegradationEnvironmental Degradation

Low assets → low income → no surpluses

→ consuming natural capital in which they

are stake-holders → even lower assets

The Backdrop : The Backdrop : lack of markets in public goods / externalities lack of markets in public goods / externalities pricing … eco-system conservation benefits all, but hits the resident pricing … eco-system conservation benefits all, but hits the resident poor with disproportional opportunity costs of conservation ..poor with disproportional opportunity costs of conservation ..

The Challenge : The Challenge : finding alternative, sustainable, local, income finding alternative, sustainable, local, income models such that residents can earn a return on conservation . models such that residents can earn a return on conservation .

The Goal : The Goal : converting the accidental custodianship of forest-converting the accidental custodianship of forest-dwelling poor into purposeful stewardship … the ‘win-win’ solutiondwelling poor into purposeful stewardship … the ‘win-win’ solution

A Case Study from IndiaA Case Study from India

Nilgiris Biosphere Reserve

in the Western Ghats global biodiversity hot-spot , and home to the ancient Toda tribe and later Badaga tribals …

The Vicious Cycle : An Example from the The Vicious Cycle : An Example from the Nilgiri Biosphere ReserveNilgiri Biosphere Reserve

‘Shola’ (Reserve Forest Land)

Tea Estate ( Revenue Land )

land ‘patta’ allocated by local corporator from ‘Revenue Land’

clear felling by Tribals

lease to local farmer (INR 4,000- p.a. per acre)

cash crops or grain

seasonal employment to Tribals (INR 50 p.d.)

land goes fallow…

next ‘patta’ allocated ..

Tribal Family earns ~ INR 25 K p.ha.… & Natural Capital Lost = ?

The Capital Cost of this ‘Vicious Cycle’ is StaggeringThe Capital Cost of this ‘Vicious Cycle’ is Staggering

Values per Hectare Values per Hectare (INR)(INR)

Tamil Tamil NaduNadu

India India (Average)(Average)

Carbon Storage * Carbon Storage * 36,837 35,882

Non-Timber F.P. *Non-Timber F.P. * 5,950 10,763

Fodder *Fodder * 7,079 4,736

Bio-prospecting ¬Bio-prospecting ¬ 10,267 17,085

Eco-Tourism ¬Eco-Tourism ¬ 962,266 382,941

Water RechargeWater Recharge (t.b.c.) (t.b.c.)

Flood Damage Flood Damage Prevention Prevention

(t.b.c.) (t.b.c.)

Soil Erosion Soil Erosion Avoidance ¬Avoidance ¬

64,671 63,832

TOTAL (INR) TOTAL (INR) > 1 Mio > 1 Mio

Sources : * from GAISP, Monograph 1, Jan 05¬ from GAISP, work in progress

‘Shola’remnant

‘Shola’ cleared last year

‘Shola’ cleared two years ago

Lessons from PEP …. Seeing the Poor as Part of the SolutionLessons from PEP …. Seeing the Poor as Part of the Solution

“PEP’s work since 2001 has identified three broad lessons :

1 The environmental quality of growth matters to poor people. The poor depend more immediately on clean water, fertile soils, etc, than other groups. Ignoring the environmental sustainability of growth – even if it reaps short-run gains – can undermine growth itself and its effectiveness in reducing poverty.

2 Environmental management cannot be treated separately from other development concerns. Improving environmental management in ways that benefit poor people requires policy and institutional changes that cut across sectors. These lie mostly outside the control of environmental institutions.

3 Poor people must be seen as part of the solution rather than part of the problem. If environmental management is to contribute to sustainable growth and poverty reduction, it should reflect the priorities of the poor.”

"Certain environmental services, e.g. watershed protection, management of landscape beauty, and carbon sequestration, can be supplied competitively by poor groups and rural communities – given the labour- and land-intensive nature of such services."

Sustainable Income Models for Poverty Alleviation in Sustainable Income Models for Poverty Alleviation in Nilgiri Biosphere Reserve Nilgiri Biosphere Reserve

degraded local land

employable local labour

access to capital : (a) Govt of India (carved out of

“EGS” scheme INR 240 Bio, 100 days @ Min Wage)

(b) Institutional & Philanthropic (c) Microfinance

Local income models …Local income models …1.1. Eco-restorationEco-restoration2.2. Eco-tourismEco-tourism… … earn a tribal family 5%-8% on earn a tribal family 5%-8% on

conserved natural capitalconserved natural capital

Eco-Restoration Eco-Restoration isis a viable income model a viable income model

Rental of land @ INR 5,000 per acre OR… purchase @ INR 100 K per acre Removal of unharvestable Tea @ INR 10,000 per acre OR… De-weeding ( + +) Pitting, Planting, Watering, Weeding @ INR 65 per day (Tea Garden Rates ) Resident watchman wages @ INR 50 - 75 per day ( 1 x through the year ) Nursery Maintenance & Sapling preparation ( 1 x through the year) Tribal harvesting of medicinal plants & herbs, floriculture, and nursery sales 1 Hectare afforested with endemics @ low cost , and 3 tribals employed

Cultural / Eco-Tourism is a another sustainable Cultural / Eco-Tourism is a another sustainable income opportunity ..income opportunity ..

The Todas have a unique & complex ancient culture, a separate pantheon, an evolved mythology … a fascinating anthropological subject

Their unique, eco-friendly huts are a tourist experience

Income ModelIncome Model : : Five Huts “for tourists” maintained by one Five Huts “for tourists” maintained by one TodaToda village village

“ “Fair Trade” share of Tourist booking Incomes to the Fair Trade” share of Tourist booking Incomes to the TodaToda Tribals Tribals

The Key Point….The Key Point….

The Key Point….The Key Point….

… … is to understand is to understand their aspirations !their aspirations !