By Thami Ghorfi, Dean, ESCA Ecole de Management
June 1, 2016
The Middle East and North Africa (MENA) region offers a wide variety and disparity of cultures, geopolitical realities, and public policy contexts. Such variety unquestionably presents complicated social challenges for all countries in the region. The question for our industry, then, is how are the region’s business schools keeping pace? How can they work with their international peers? What should their role be in promoting positive change?
I think business schools in this region must focus on three main economic and social challenges:
Challenge No. 1—Unemployment. In the MENA region, we have one of the youngest populations in the world—one out of five inhabitants is between 15 and 24 years old. As a result, we have an immense need for job creation. It is estimated that, to meet the expectations of the coming waves of young people, the region must see the creation of around 50 million jobs in the next ten years. Unfortunately, pursuing entrepreneurship and starting new businesses are not yet part of the culture in the Arab world, in spite of the rare examples of prominent Arab CEOs and entrepreneurs. Far too many university graduates still expect the state to provide them with jobs—and far too few new businesses are started outside the informal sector.
In fact, for every 100 job seekers in the region, only 6.3 businesses are started every year, according to the World Bank Group report “Doing Business 2016: Measuring Regulatory Quality and Efficiency.” That’s compared to 42 new businesses per 100 job seekers in high-income countries. This number undoubtedly represents one of the poorest ratios in the world.
How can business schools meet this challenge? One way to stimulate new job creation is by encouraging entrepreneurial activities that drive either new business creation or new value creation within firms through innovation. Business schools must imbue an entrepreneurial spirit in their students, not just by including the topic in their classes, but also by making entrepreneurship a key part of extracurricular activities and campus life.
At ESCA Ecole de Management (ESCA EM), for example, we work to foster an entrepreneurial community in several ways. We ask entrepreneurs in the region to attend our conferences, speak in our courses, and act as mentors and role models for our students. We encourage debate on ways that businesses and entrepreneurial activity can thrive in hostile environments, and we share best practices in this emerging field. We also give startup activity and innovation a “pride of place” in our culture via formal innovation management courses, dedicated business games, and extracurricular learning experiences, many of which are student-run.
In addition, we engage faculty in research projects that focus on the personal journeys and characteristics of entrepreneurs. Our research teams have produced many books and case studies on entrepreneurship in Morocco.
In all of these efforts, at ESCA EM, our starting principle is straightforward: While technology is global, innovation is local, more often than not. We realize that we must adopt a local mindset if we are to support the development of new business organizations. At the same time, we know that young Moroccan entrepreneurs must build their self-confidence by drawing their inspiration from Moroccan-specific cultural traits, so our classrooms must reflect those traits.
Challenge No. 2—The private sector. Private businesses represent the strongest lever that policymakers can activate to address the challenges their countries face. State-owned enterprises still play major role in the MENA region. According to the World Bank, private investment rates represent only 15 percent of gross domestic product compared to rates in East Asia, where it reaches 30 percent. That discrepancy explains the lack of competitiveness of many MENA countries. In the 2015–2016 Global Competitiveness Index, for example, Jordan ranks only 64th out of 144 countries. Morocco comes in at 71; Algeria at 97; Tunisia at 92; and Egypt at 116.
To promote the development of private sector and take advantage from it, MENA governments must provide greater access to credit for entrepreneurs and stricter market regulation, and create an environment where businesses can compete freely. In the 2016 Doing Business ranking, which measures the ease of doing business in different nations, MENA countries also rank low—between 77 and 188.
They also have to tackle issues related to corruption and informal employment. On the Doing Business corruption index, most MENA countries fall below 40, indicating a high level of corruption. Also, the informal business sector is significant in the MENA region, representing around 27 percent of the GDP and including 67 percent nondeclared workforce. If all of these factors weren’t challenge enough, MENA countries also lack the necessary resources to develop their private sector.
"Our goal is for managers to see that someone must manage change, welcome new businesses to the market, and place customers at the heart of market processes."
How can business schools meet this challenge? I find that discussions of business ethics are useful for teaching the basic rules of healthy competition and educating managers to be positive forces for change in their companies. However, we cannot teach business ethics in Morocco, or anywhere in the Arab world, in the same way business schools in other countries teach it. Business schools in the MENA region must leave more room in case studies and simulations for debates about corruption issues. We cannot limit our discussions to the causes of major corruption scandals; we also must explore the negative impact that smaller unethical behaviors can have on the lives of citizens and the processes that will help put an end to such actions.
As many economic sectors in this part of the world become more liberal, we must make managers realize that they now have more power to change attitudes and behaviors in companies that have enjoyed competitive monopolies for too long. Our goal is for managers to see that someone must manage change, welcome new businesses to the market, and place customers at the heart of market processes. Why not them? We want managers to admit that entrepreneurship will serve as a path to social advancement, and that their industries can only benefit from new and healthy competition.
In addition, MENA business schools can support the growth of businesses in their regions by ensuring the link between their graduates’ competencies and businesses’ needs. To achieve this goal, we must offer more opportunities for our students to work with international peers. At ESCA EM, we have more than 20 nationalities are represented in our campus. We have about 70 partner schools that help us diversify our students’ experiences through exchanges and study trips. These experiences allow students to share cultures, mindsets, and solutions, which will better prepare them to tackle the complex issues that the businesses in our region face.
Challenge No. 3—Women’s participation. Women in the Arab world often have free access to education. In fact, there are many MENA countries where women perform better in higher education than their male counterparts. However, the gate to employment is not nearly as open for them, and gender equality in the professional world is not guaranteed.
Morocco, for instance, is one of the rare countries to have passed anti-discrimination laws; but even so, practices take time to change. According to another World Bank Group report, “Women, Business and Law: 2016,” the ratio of women’s participation in the working population in the region averages about 25 percent. The report goes on to note that “gender gaps in women’s entrepreneurship and labor force participation account for estimated income losses of 27 percent in the Middle East and North Africa,” due to women’s poor participation in the workforce and entrepreneurship. A patriarchal culture leaves little space for women to advance, especially in countries where the private sector has yet to assert itself.
How can business schools meet this challenge? When it comes to the gender equality challenge, I think business schools must do more to support women throughout their educations and job searches. At ESCA Ecole de Management, women account for 51 percent of our student body, and over the last 20 years we’ve seen many more young women at the top of the dean’s list. When women take their career paths through our region’s business schools, they are presented with excellent opportunities to access gratifying and self-fulfilling employment.
In this sense, we want ESCA EM to be a change agent among its students and in the business community. When our students see the women on our faculty and among our guest speakers, it emphasizes women’s important contributions to business and academia. We encourage women students to participate in entrepreneurial activities and pursue international study opportunities, so they become more confident and ambitious in marketing their skills. We promote gender equity in our programs and code of conduct, so that our male students reconsider their perception of women’s participation in the business world. Finally, we emphasize the topic of women and entrepreneurship as an important area of research among our faculty and organize workshops and conferences on this issue.
Above, I’ve outlined several approaches business schools in the MENA region can take to have an impact on social and economic issues. However, these approaches will not be enough for business schools to address these challenges sufficiently. With stakes so high, business schools in MENA countries must invest more in research to analyze trends and identify best practices in all three areas—entrepreneurship, competition, and gender equality. Then, we must form new and stronger alliances with other business schools in the region. Through more joint programs and research projects, we can come together to tackle regional issues and foster knowledge transfer between different countries.
The region’s business schools also need to generate more internationally focused research, be more active at international conferences, participate more often in international academic bodies, and build partnerships with institutions from developed countries. Only by expanding our international reach can we improve our practices, extend the reach of our research, and promote growth in the private sector.
"With stakes so high, business schools in MENA countries must invest more in research to analyze trends and identify best practices in all three areas—entrepreneurship, competition, and gender equality."
For instance, at ESCA EM, we have long made attendance at international events a priority for our faculty; at the same time, we position our faculty as sources of knowledge about Morocco and the surrounding region. In addition, ESCA EM and our partner Grenoble Ecole de Management have built a regional network called INSEAM, which includes 14 business schools in French-speaking Africa. The network’s mission is dedicated to advancing issues important to Africa, such as entrepreneurship and sustainable development.
Another recent initiative has been launched by the MENA Affinity Group within AACSB International. The member schools in this group are collaborating on high-impact research projects on topics especially relevant to the region. This initiative places a priority on topics such as water management, energy disruption, entrepreneurship, innovation, family business, job creation, and business ethics. ESCA EM is leading the work on family business, with other schools taking the lead on other subjects.
As society’s expectations for business schools in the Arab world rise, it truly is the beginning of a new and fascinating era. It’s becoming increasingly clear that our institutions are no longer just schools of business—they are transforming into schools of business for society.
Thami Ghorfi is the dean of the ESCA Ecole de Management in Casablanca, Morocco.