Management Education and the Asian Century
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Most major American business schools now appreciate Asia's remarkable economic vitality and are aggressively pursuing educational opportunities in the region. They are competing for the regions top students, for partnerships with the best business schools, for close relationships with the most prestigious Asian companies, and for the wealthiest donors. Although several top American business schools have been working in Asia for more than a decade, there is a growing sense of urgency as business schools throughout the world, including those based in the UK, Australia, New Zealand, and throughout Asia itself, devote greater resources to the region. The trend parallels the change in attitude in American business, which has learned that comprehensive, long-term strategies are needed for Asia because of its enormous complexity, the vast number of business opportunities available, and the intense competition within most industries.
For the majority of Americans and American businesses, Asia is still more of an economic threat than an opportunity. The first widespread evidence of Asia's economic power came during the oil crisis of 1973, when rising gasoline prices created an explosion in demand for fuel-efficient Japanese cars. The real shock came later, however, when the Japanese retained their share of the American market during the 1970s and 1980s through a combination of superior design and quality. While the initial reaction was to attribute Japans success to lower labor costs and government subsidies, there finally came the grudging acknowledgement that the Japanese were simply more skilled at designing and building cars. Detroit has since bounced back admirably, using many Japanese management techniques to lower costs and improve quality. Nevertheless, most Americans continue to believe that Asia's most important economic role is as a producer of cheap imports that endanger American jobs.
While Japan is still responsible for roughly half of Asia's gross national product, there are eleven other major economies in Asia, most of which are growing rapidly. The focus of current business interest is China, which has one of the highest growth rates in the world. India is undergoing an unprecedented program of economic liberalization. Korea, already Asia's fourth largest economy, continues to grow rapidly. The ethnic Chinese regions of Hong Kong, Singapore, and Taiwan all wield economic power far out of proportion to their combined population of only thirty million. In Southeast Asia, Indonesia, Malaysia, and Thailand all have booming economies, with the Philippines and Vietnam both showing a resurgence after extended periods of economic malaise.
Despite immense variations in language, culture, history, and climate, Asia's economies have taken remarkably similar development paths. Most have had authoritarian governments whose pro-growth policies were strongly supported by their populations; most adopted trade policies that protected domestic businesses from foreign competition; all followed economic policies that promoted export-led growth. A major factor in their success was the United States, which promoted political stability in the region and offered a vast, largely unprotected market for Asian manufacturers.
Last year, the Michigan Business School became the first top-tier American business school to develop a written strategic plan for Asia. Dean Joe White initiated the process with a series of small meetings with Asia specialists within the school, which eventually grew to include more than thirty faculty and staff from throughout the Universitys Asian studies community. One of the first steps was to map our existing resources for each of Asia's twelve major economies in such areas as faculty expertise, curriculum content, and alumni networks. The final document addresses four major areasfaculty development, curriculum, executive education, and student and alumni relationsand includes a specific action plan for each.
The business schools expertise on Asia is already substantial compared to other American business schools, but it resides in a small minority of faculty. If one defines an area specialist as someone with language fluency, an active program of field research, and an extensive network of business and academic contacts in the region, then the business school has three area specialists on Japan, three on India, one on Southeast Asia, and one on China. One component of our Asia strategy is designed to improve the research and teaching productivity of our Asia specialists and to facilitate their interaction with other business school faculty interested in Asia.
The strategy also creates more opportunities for business school faculty who are not Asia specialists to learn about Asia through travel, teaching overseas, and research collaboration with faculty at Michigan and in Asia. A major part of this effort is a pair of partnerships with Cathay Pacific Airways in Hong Kong and Daewoo in South Korea. Each provides an in-house MBA program for company executives through a combination of classroom study and distance learning. These projects will provide faculty with many opportunities to teach in Korea and Hong Kong over the next several years. Another opportunity for faculty to visit Asia is through the William Davidson Institute, where faculty serve as advisors to student research projects conducted at three different sites in China.
Another aspect of the strategy creates mechanisms for greater involvement by the Universitys Asian studies community in the business school. The business schools location in a major research university, with strengths in both Asian studies and the social sciences, has already placed us in the unique position of being strong in both the traditional functional areas of international business and in the area-focused, comparative approach to research and teaching. Currently, faculty from psychology, sociology, political science, economics, and four foreign language departments are involved in international teaching and research in the business school.
Collaboration with colleagues outside of the business school has been greatly aided by three major grantsone to study how the Japanese manage technology, one to promote the integration of area studies into international business teaching and research, and the other to establish the William Davidson Institute, which is devoted to teaching and research on transitional economies. In each case, however, the funds were awarded because the University could already show significant progress in and commitment to interdisciplinary collaboration. Moreover, the existence of a major research university is clearly not sufficient to guarantee interdisciplinary collaboration in international business, as demonstrated by the frustrations voiced by our colleagues on other campuses.
One of the most interesting areas of collaboration between the business school and the area studies community has been on the question of how Asian and American business organizations learn from one other. With the help of a federal grant to study Japanese technology management, Michigan faculty are studying how Japanese management methods are transferred to American companies. The nature of these studies are highly interdisciplinary, with teams of faculty from business, engineering, sociology, and political science involved. Under the particularly close investigation are Japanese automakers with factories based in the United States, which have transferred to American managers and workers many of the skills that have made Japanese factories among the most efficient and defect-free in the world. American automakers have adopted these skills so successfully that they are now transferring them to their factories in Europe. Another team of business school and psychology department faculty are studying Chinese-American joint ventures in collaboration with a research institute based in China.
Another fertile area for University-wide collaboration has been in the field of political economy. A pair of faculty from political science and the business school have conducted a detailed study of the relationship between firm performance and ownership patterns in India, contrasting firms with different levels of government, private, and foreign control. The Center for International Business Education, a Title VI national resource center based at the business school, has funded this project and others focusing on Asia, with several grants going to doctoral students in political science who are writing dissertations on Asian political economy. Recently the Business School and the Department of Political Science submitted a proposal to the International Institute to create a new joint faculty position in Korean political economy, which would be the first of its kind in the United States. The new faculty position would be part of a major effort at the university level, coordinated by the International Institute, to develop a comprehensive program in Korean studies. Several business school faculty were also instrumental in securing the recent $2 million grant from the Korea Foundation to create an endowed professorship in Korean studies.
While collaboration with area studies faculty is critically important for developing the business schools expertise in Asian business, it is by no means sufficient. Faculty from disciplines outside the business school provide critically important expertise and insights into political, economic, social, and cultural environments, but they rarely have the research and teaching interests that enable them to develop expertise in operational business problems at the firm level. The ideal research environment will include a strong cohort of area studies faculty with an interest in Asian business, an independent group of Asia specialists in the business school, and numerous opportunities for collaboration within and between the two groups.
Business schools have long been under considerable pressure from students, alumni, and accrediting agencies to internationalize their curricula. At most schools, this has meant a broadening of traditional disciplines such as accounting, finance, and marketing to include an international dimension. This is an approach that gives students a broad overview of international business that is close to ideal for their typical work environmentthe multinational corporation based in the United States. While this method often comes studded with many specific examples, case studies, and anecdotes from all over the world, including Asia, it does not actually teach our students how to manage within the confines of business systems other than our own.
Most business schools and their constituencies have been satisfied with this approach, and for good reason. When American managers have been forced to confront different cultures and business systems directly, it has often been in Europe, with its linguistic and cultural similarities to North America. In non-European business environments, American managers have usually been able to delegate the task of intercultural negotiation to foreign nationals who are fluent in English, often through living and studying in the United States. The economic emergence of Asia, however, has brought all of this into question. To quote an American executive with extensive experience in China: China isnt just a different country. China is a different world. It is impossible, for example, to understand the climate for foreign investment in China without first appreciating the long and paradoxical relationship that China has had with the West. Nor can the nature of business in Southeast Asia be appreciated unless the there is some understanding of the history of ethnic Chinese populations in the regions business centers. There are also serious shortages of managerial talent in virtually all of the major business centers of Asia outside of India, with the result that salaries for local managers are rising rapidly and that job-hopping has become common in such cities as Hong Kong and Singapore. Americans and other expatriates often have to be used to provide some continuity, with the result that they are forced to negotiate with the local culture without intermediaries.
The business schools reaction to this trend has been to place more emphasis on Asia in its curriculum. Two electives focus specifically on Asia business, with two more to follow in the next year. Other courses in corporate strategy, technology management, finance, accounting, and marketing all have a strong Asia focus. For students who are committed to becoming Asia specialists, there is a joint degree program that enables students to earn both an MBA and an MA degree in Asian studies over three years. Another aspect of the business schools Asia strategy is to significantly expand the size of this program through more publicity, additional fellowship funds, and closer relationships with recruiting companies.
There are obvious limitations to how much a student can learn about Asian business by sitting in a classroom in Ann Arbor. Students can spend time working and studying in Asia through internships sponsored by the Center for International Business Education and the Japan Technology Management Program, through participation in field research projects sponsored by the William Davidson Institute, and through study abroad at one of several Asian universities. The business school and CIBE also sponsor an annual two-week tour to Asia where students can visit local businesses, business schools, and government agencies.
The chronic shortage of managerial talent in most Asian business centers presents a unique opportunity for American business schools. One response to the shortage has been an explosion in demand for management training and development, both as a means to prepare managers for more responsibility and as a retention strategy. As a result, hundreds of business schools from all over the world are now offering courses and degree programs in the region. There is particularly strong demand for courses that will help companies develop coherent long-range strategies in marketing and human resources: many companies have been growing so fast that they are using business practices and structures that are inappropriate for their size and complexity.
One of the unique strengths of the Michigan Business School is its strong emphasis on continuing education. Our executive education center is the largest in the world in terms of annual participants (over 5,000) and currently holds about 13% of the world market for university-based executive education. Courses vary in length from a single day to four weeks and are often taught by teams of business school faculty. A major part of our Asia strategy is to use this strength to become the premier provider of executive education in the region.
There is strong demand in Asia for executive courses that deliver content that is very similar to what is taught to American executives in Ann Arbor. English is widely spoken in Hong Kong, Singapore, Kuala Lumpur, and Bangkok, and throughout India. American business schools have a reputation in Asia for exceptional teaching quality, and many firms would prefer an untailored product that is well-taught and well-organized to a local product that may have more relevance to the local environment. In addition, many Asian executives prefer to determine the relevance of these courses themselves rather than entrust the tailoring process to American academics. Nevertheless, there is also rapidly growing demand for executive courses that have been carefully tailored to the needs of the local market. In this sector, only business schools that have substantial expertise in Asian business will be successful, since these courses must reflect national and regional business environments, use local examples and case studies, and use instructors who have credibility with local managers. The business school is one of the few institutions in the United States in a position to address the needs of this market.
Students and Alumni
Many American business schools recruit aggressively in Asia, particularly for their MBA programs. A major part of our Asia strategy is to increase the quality and quantity of degree program applicants from all Asian countries. A strong cohort of students from Asia has many advantages, including the eventual strengthening of our alumni network in the region and the integration of regional experience and cultural insights into classroom teaching. Admissions staff will spend more time in Asia and are currently developing publicity materials designed for Asian applicants.
Most of the American business schools that are currently well-known in Asia can attribute their visibility and success to strong alumni support. Loyal and dedicated alumni recruit students, provide important contacts in industry and government, contribute funds for new programs, and enhance the visibility of the school. Like many other parts of the university, we lag behind our private peer institutions in alumni relations. In the past year, however, Business School Dean Joe White has visited alumni clubs in Bangkok and Singapore, and later this year will visit alumni groups in Seoul, Tokyo and Hong Kong.
Just as American business now seems to have firmly grasped the significance of Asia's economic power, American business schools realize that Asia must be a significant part of their long-term strategies for faculty development, curriculum enrichment, continuing education, student recruiting, and alumni relations. Those who remain doubtful should revisit the experience of U.S. automakers in the 1970s, who ignored the Asian challenge until it was nearly too late.
Bradley Farnsworth is the Director of the Center for International Business Education at the School of Business Administration.