There has been considerable debate and controversy about Indian Institutes of Management (IIMs) setting up campuses abroad. The Prime Minister of Singapore set the cat among the pigeons by inviting IIMB to set up a campus in Singapore.
Naturally the IIMB authorities felt flattered, but Arjun Singh pricked their bubble, then the government reconsidered. This article will try to analyse the advantages and disadvantages of IIMs setting up campuses abroad.
Taking the advantages first, one major advantage will be the enhancement in reputation of the IIMs and hence their ability to levy adequate fees, resulting in financial gains to the institutions.
This will simultaneously benefit the faculty, who will get consulting assignments abroad for which they can charge fees on an international scale. A second major advantage is that the faculty will gain more experience of how business is conducted in other parts of the world.
They can do more research in this field and advise companies on how they can function more effectively in markets outside their home countries. Such upgrade of faculty knowledge and experience will further enhance the standing of the IIMs. A third advantage is that IIMs will themselves be directly exposed to the phenomenon of globalisation, which they have to teach about. They can build up worthwhile case histories on this phenomenon.
Now to the disadvantages--which are not necessarily those which Arjun Singh might have identified in coming to his initial conclusion.
First of all, there will be an inevitable dilution of efforts of the faculty because they will be distracted to some extent to ensure that the overseas campus functions reputably.
Secondly, any setbacks, including those which cannot be attributed to the faculty, could dilute the brand equity. For example, there could be cultural issues, difference in political stances between India and the host nations, and other such extraneous matters.
Thirdly, the IIMs will have to employ some local staff who may not measure up to the high standards expected from them. This could lead to friction and conflicts with the host country, which could be played up by the local media. This could feed into the inevitable current of local hostility to a foreign institution in that country.
Fourthly, there could be conflicts and charges of discrimination among faculty members because of the inevitable disparities between the salary of those faculty members deputed to serve overseas and the others who continue to serve in India.
Lastly, as faculty members are exposed to greener pastures abroad, some of them may be tempted to join other institutes or companies, especially since their international exposure would have enhanced their attractiveness.
On balance, it would appear that the disadvantages outweigh the advantages from a purely Indian national point of view. If we look at the leading business schools in the US (viz. Harvard, Stanford, MIT), they have not set up their own campuses in foreign countries. What they have done is to collaborate with management institutes in other countries, in return for a fee. Perhaps that is what our IIMs should do.
We should also not assume that just because the Singapore Prime Minister invited IIMB to set up shop in Singapore, our IIMs are or will continue to be world-class. One of the major reasons for the outstanding performance of the IIMs is the quality of students that they are able to attract. A majority of the students are graduates from the IITs, which themselves select the cream of our youth, or from some of the best universities in the country. With such raw material being available in India, it is not surprising that IIMs have earned their reputation.
Furthermore, it is also not that an MBA is necessarily the only best start for a manager. In fact, an MBA degree can in some cases act as a handicap because of the arrogance that is induced into some of the candidates through the case study method of teaching.
In the case study method, the student is assigned the role of a director or CEO of a company and assumes the power to take decisions. Some of the students mistakenly believe that such "virtual" roles give them the experience that is equal to that of real roles! This can lead to serious problems of inflated egos being bruised or grossly deflated when they meet with real life veterans in a company.
However, most IIM graduates have by now realised with humility that real learning comes with experience at the coal face.
When the first two IIMs were set up, in Ahmedabad and Calcutta, they were headed by two senior people with real experience in industry, viz. Ravi Mathai from the Tatas and K T Chandy from Hindustan Lever. Both of them were motivated by their nationalism and a keen desire to do something for India.
Since then, IIMs have not been very successful in attracting people of the same calibre from industry--people who combine national pride with real industrial experience and an ability to teach and inspire young people. This may be due to several reasons--increasing opportunities for senior corporate managers to set up business of their own; the deputation of Indian senior managers by their companies to attractive positions abroad; IIMs being seen as government-directed institutions, etc.
Perhaps the government should once again approach the leading, professionally-managed industrial firms to encourage and facilitate a few of their directors to head the IIMs for periods of five to seven years before they retire from active life. This has to be done on a selective basis and may involve negotiation with the individuals concerned.
When such people from reputable companies can be induced to head the IIMs, it should be possible for them to attract some faculty members from US business schools to come and join IIMs. It will enhance their own exposure and help to advance their careers in the US academia.
Perhaps one of the things our government should ask from the US government is to help the leading business schools in the US to make it more attractive for their faculty to have a spell on deputation in India. Such a guest faculty could act as a catalyst in maintaining and uplifting the quality of management education in India.
They can also prepare more case studies on doing business in India and therefore make India better known. It will not cost anything to the government. As business schools in the US have significant influence among the top managers of leading companies, it will help to make India a more attractive destination for investment and collaboration by US companies. IIMs could then become a strong bridge between India and the US.