Feature Article

Developing
the World

"No one knows what causes development, and all the aid programs in the developing world have achieved mixed results," Pfeffermann says.
By Sharon Shinn

Poor management perpetuates poverty. With those emphatic words, the Global Business School Network identifies one of the primary challenges it sees facing business today: how to strengthen management education in emerging economies. Founded in 2003 by the World Bank, the organization originally focused its efforts on Sub-Saharan Africa, but it has expanded its reach to Asia, Latin America, and other parts of the world. In November 2006, GBSN was spun off from the World Bank to become an independent nonprofit headquartered in Washington, D.C.

Largely conceived as a networking organization, GBSN facilitates relationships between member schools in developed and developing nations through an annual conference and other opportunities. Faculty at Western schools mentor their counterparts in developing nations. In return, schools in the West gain access to information and research in countries where previously they might have had few connections or little experience. Since 2003, membership has almost tripled, from 18 to 50 business schools.

In addition, GBSN also implements specific programs in emerging markets. In the past few years, the organization has launched five healthcare management initiatives in Africa, funded by entities such as the Gates Foundation's Global Health Program, Johnson & Johnson, and Nigeria's National Primary Healthcare Development Agency. These included a conference among African business schools that are teaching health management programs and a workshop for senior management professors who are engaged in training medical personnel.

From its inception, GBSN has been led by Guy Pfeffermann, a 40-year veteran of the World Bank and previously chief economist of its International Finance Corporation. He's passionate about the notion of management education as one of the most powerful tools to strengthen emerging economies.

"No one knows what causes development, and all the aid programs in the developing world have achieved mixed results," Pfeffermann says. "One factor no one has really tackled is poor management. Places like Uganda and Ghana not only deal with the problem of corruption, but also with the problem of having a tiny talent pool in terms of management and leadership." With the help of GBSN, he believes, all that could change.

While many business school deans would agree with the premise that well-trained managers are essential for the development of emerging nations, is there any research that supports the claim?

There has been little empirical research about what impact a management education has on business outcomes, but what evidence exists does show a relationship. For instance, Nick Bloom of Stanford University found that, in the U.K., there are much lower mortality rates at the hospitals where the managers have business degrees. He is also conducting a survey of Indian textile plants to measure the impact of skilled managers.

Even though there's little empirical evidence that better management leads to better outcomes, I believe it's intuitively obvious.

Membership in your organization costs US$5,000 for schools in high-income countries and about half that for schools in emerging nations. How does it benefit a business school to become a member?

At the conference we had last year in Mexico City, we asked the representatives of member schools what value they see in GBSN. The schools in advanced countries like Europe and the U.S. come for the networking. They want to find out how to run experiential student projects in developing countries, and they want to strike up relationships with schools that are trying new ideas. The ones from developing countries want help with faculty development.

But there's another important member benefit: Whenever we have the funding, we advertise consulting possibilities to our members. For instance, we recently helped set up the Karachi School for Business and Leadership in Pakistan. We let our members know that we wanted ten or 12 gurus, one for distance learning, one for curriculum design, and so on, and these were paid consulting positions.

We don't have a large number of these projects, but professors at our member schools know that there is the chance that one day they can sign on to a really intellectually satisfying assignment. Of course, they get paid far less than if they were consulting for a company like GE! My sense is that they're thrilled when GBSN opens the door to these opportunities. A professor from IMD recently did a case on an illegal bar in a slum in Nairobi. I mean, what could be more interesting?

What criteria do you look at when considering applications from schools that want to join the organization?

The official answer is that we want high-quality schools that are leaders in their countries. A school in Kenya will be nowhere near the level of a top school in Europe or the U.S., but it might be the best business school in its region.

My own answer is, we want people who have their hearts in the right place. We want people who don't just talk, but who do things—who are interested in collaborative research—who might want to team up with a professor in India to conduct research on microfinance. We want quality and engagement.

Slightly more than half of your current members are from Westernized nations; the rest are from emerging nations in Africa, Latin America, and Asia. Where would you like to see the most growth in membership?

I think we need to increase the membership in parts of the world where we're thin on the ground, such as Asia and Latin America. At the same time, we want diversification not just by geography, but by functional expertise. Ideally, I would say, we're looking for about 100 members.

As the head of GBSN, you have an opportunity to visit business schools all over the world. What do you see as the real keys to creating a global program?

So often, when I visit schools, they tell me how international they are. They show me the hall with the flags from 150 countries. They say that 37 percent of their MBA students are foreign. To me, that doesn't make them international.

What I find more compelling is when a school like ESSEC wants students to speak three languages by the time they graduate from the MBA program. Or when a place like the Moore School of Business at the University of South Carolina sends every student—graduate or undergraduate—overseas for a minimum of several months. When you visit its campus, you find all these people who spent two years in Hong Kong or Spain or South Africa. They speak the language perfectly, they understand the culture, they can function in that country. To me, that is real internationalization.

What obstacles do Western schools face in their quests to build truly international programs?

was, for an unfortunate nine months at the World Bank, the head of a research division, and my mandate was to get researchers to support World Bank operations. It was a total failure. None of the professors I contacted were interested in going to Ecuador to help with an agricultural project, for instance. All they cared about was publishing articles in refereed journals. One of the obstacles to a school becoming truly international, to be very cynical, is that professors teach what they know, and the curricula often haven't changed in 50 years.

The U.S. invented business schools about 100 years ago, and anything that's been around that long becomes institutionalized. There's something to be said for starting out with a blank slate. Take Japan and Germany after World War II—they had to reconstruct themselves from scratch, and they became much more modern than England and America.

I don't think there's any school of quality in Africa, outside of South Africa, that is more than ten or 15 years old. So these schools are embryonic, and like all embryos, they have much more freedom to innovate. It's much harder to do that if you have 700 professors who have been at the school for 30 years.

But that's changing now. I see more professors writing cases on business in emerging nations. And those cases are fascinating.

What do you think it will take to make Western schools more interested in getting involved in emerging economies?

One of my pet ideas is that we should change how the media rankings are structured and what they measure. If a student graduates from business school and goes to work for the Red Cross or Oxfam, his salary is going to be miserable compared to what he could make on Wall Street. And that will hurt the school's rating, because some rankings only measure salaries. I think if the rankings could be relaxed, more schools might be comfortable teaching nontraditional business courses.

Of course, some schools, such as MIT Sloan and the Tuck School of Business at Dartmouth, are doing a lot in the developing world already. Most of these efforts are quite costly, so one issue is to find models that are more affordable, such as the one used by the Thunderbird School of Global Management.

In the end, it comes down to individuals. If the deans are committed to getting their schools involved in emerging markets, I think it will happen. I think it's the deans and the students who are doing the pushing in this direction, and the professors are the ones who are being pushed.

In fact, the students might be a powerful factor! We frequently hear that students are the ones who lobby for schools to offer more programs in areas like sustainability, corporate social responsibility, and social enterprise.

Yes! Many young people will pick a business school because it offers the opportunity to do worthwhile work in a developing country.

My colleague Nora Brown organized a video contest called "Can an MBA Change the World?" We invited students to send us five-minute videos showing work they had done in developing countries. What came in was absolutely fantastic—the enthusiasm and intelligence these students showed was beyond belief.

As a prize, the leader of the team that made the winning film was invited to our conference in Mexico. The winner was from the Haas School at the University of California in Berkeley—but students from three other schools also secured their own funding to come to Mexico and show their videos. They were all wonderful.

Once Western business schools decide to enter emerging markets, what key challenges do they face? What factors might trip them up if they're not prepared in advance?

They have the choice of entering the market on their own or partnering with local institutions, but there are obstacles in either case. When schools go in on their own, sometimes the local universities feel like they're being invaded, so there can be some hostility.

But if a Western school partners with a local institution, there can be no assurance that each partner will perform adequately. There are also cultural issues that sometimes make it very difficult for schools to run joint programs.

In addition, there are brand and reputational issues. For instance, the IMD case that I mentioned earlier about the illegal bar in Nairobi was jointly branded with Jomo Kenyatta University of Agriculture and Technology in Kenya. But very few top schools would be happy publishing a case presented like this.

What parts of the world do you think business schools should set their sights on next?

I think it's worthwhile to look at the size of markets in other countries, and to consider if these are economies that need more business schools. Turkey is doing extraordinarily well, and it only has a handful of top notch business schools. Brazil is also flourishing but is facing a huge shortage of management talent. Colombia, Peru, Ghana, Kenya—they're all doing quite well. But local employers say that growth has outstripped the supply of local management talent and that the gap is growing.

Many of our member schools are looking for relationships with schools in less well-known places. At our conference in Nairobi, participants from the University of North Carolina in Chapel Hill met with participants from Nairobi's Africa Nazarene University, and the next thing you knew they were involved in a capacity-building exchange. This is what makes my life worth living.

GBSN's seventh annual conference will be held June 11 through 13 in New Delhi, India. The second MBA Challenge Video Contest was held earlier this year, and the organization plans to make the competition an annual event; student videos will be posted its Web site. More details on both initiatives can be found at www. gbsnonline.org.