Adapting Management Education in Post-Soviet Countries-The Case of Ukraine
Hawrylyshyn, Bohdan, Khassan-Bek, Lina, European Business Forum
As the first of the post-Soviet countries to have its own MBA, the Ukraine has realised the need to import Western-style management techniques. The challenge for business schools is finding people who can integrate their knowledge of open market economies into a Ukranian context.
In the centrally planned, state-administered economies of the Soviet era there were no managers in the sense that Westerners understand the term. There were heads of production enterprises, who were given plans from the central planning authority on what and how much to produce, but they had no responsibility for strategy formulation, finance, marketing, or purchasing and only partial responsibility for people.
The heads of distributing enterprises and the universal stores also had narrowly defined roles. And given the fact that, for most of the Soviet period, consumer goods were in short supply and of limited assortment, they did not even have a real marketing function.
Following the collapse of the Soviet Union the need to educate people for a full spectrum of responsibilities was, therefore, particularly urgent. New managers had to learn how to formulate strategies of what to produce for whom, create a capital structure, make investment decisions, market their products, establish a chain of suppliers, and train personnel. All this needed to be done while the existing economic system was disintegrating, and the semblance of a market system was painfully emerging.
The first management school to be established was the International Management Institute (IMI-Kyiv) in Ukraine. It was founded in 1988/1989 in anticipation of the disintegration of the Soviet Union and the expected emergence of independent countries. It was done as a joint venture between the then International Management Institute--Geneva (later merged with IMEDE in Lausanne and now known as IMD) and the Academy of Sciences of Ukraine. The first post-graduate, post-experience, MBA programme began on 2nd January 1990, nearly two years before Ukraine became an independent country.
Because the school was the first to be established on Soviet territory and a model for others created later in Ukraine, Russia and other Newly Independent States, this article draws heavily on IMI-Kyiv's experience.
Adapting Western management education to Ukraine's conditions
There are two broad categories of management know-how: the universally valid and the 'culturally' conditioned. Double entry bookkeeping, invented in Florence centuries ago, is an example of a technique that can be used anywhere. "Culturally" conditioned know-how, meanwhile, is that part which is influenced, indeed moulded, by political, legislative, juridical, economic systems, and specific business conditions. In dealing with the management of people, for instance, it is the traditions, the dominant values in a society, the typical behaviour of people that determine the effectiveness of a management style. Applicants to MBA programmes in Ukraine do not have sufficient understanding of religious, philosophical, and ethical concepts of an open society with the result that the curriculum had to be much broader than in Western business schools.
Unlike the graduates of Western business schools, two thirds of whom (according to a survey published in the ESCP-EAP News--No. 3, 2002) are hired by companies employing 2,000 people or more. IMI-Kyiv graduates follow different paths. Some are already owners of small companies, others set out to create new companies, still others work for joint ventures and foreign companies operating in Ukraine. MBA programmes thus need to focus on entrepreneurial issues and on how to start, to adopt and to develop a business in an unstable environment.
There has been little predictability in Ukraine over the past decade. It is going through a transformation of its political, economic and social systems, which implies changes, reversals, incompatibilities. There is, therefore, no certainty about the direction of government economic policies. Another problem is that legislation is incomplete and in some cases laws are incompatible with each other. The judicial system is weak and bureaucratic procedures and hurdles for establishing and running business are numerous. This, in turn, leads to corruption. Starting a business, aside from bureaucratic hurdles, involves other difficulties such as the non-availability of venture capital, the high cost and short terms of bank loans, and the narrowness of the stock market.
Defining the responsibilities, specific role, the composition, internal organisation and functioning of a board, meanwhile, is hard enough even in some free enterprise countries. In accordance with current Ukrainian legislation there should be a two-tier board with a supervisory board, consisting of shareholders only, and a management board. In most of the privatised companies, however, there are thousands of shareholders who own small blocks of shares, while two or three investors often have 70-80 per cent of shareholders' equity. In such conditions, the board only protects the rights of this small group of people and minority rights are often violated. On a more positive note Ukraine's economy has been growing between 6 to 9 per cent over the last three years (following eight years of decline). Given the above, including a course on Corporate Governance in IMI-Kyiv's MBA programme was vitally important.
Coping with challenges of management education
At the outset of IMI-Kyiv one could find people to teach accounting and economics, but it was very difficult to find those who could teach strategy formulation, financial management, organisational behaviour, and (above all) marketing. Participative teaching through the case method, simulation exercises, role-playing and other techniques was poorly understood, while teaching material was in short supply.
How did IMI-Kyiv cope with these challenges? A Ukrainian professor who had worked for years with the Economic Commission for Europe of the United Nations in Geneva was appointed director, while some professors with mathematics and economics backgrounds were hired and sent for training at institutions such as Harvard Business School, London Business School, Louvain in Belgium, and IMD in Switzerland. It was also essential to have some foreign nationals of Ukrainian origin with management teaching experience in their respective countries and an ability to speak Ukrainian (which enabled them quickly to learn about the peculiarities of the business environment in Ukraine and adapt their teaching to it).
In some fields such as portfolio management, where the system developed by Carnegie Mellon School of Industrial Administration was used, there were co-operative projects. Relevant Western management know-how was acquired through study programmes to the US, Canada, Belgium, Switzerland, and the UK, while 15 participants attended a one-month module of the master's programme of the Kennedy School of Governance and Yale University Law School. The Ukrainian participants were not only able to improve their English--more importantly they started to understand the mentality and behaviour of people from the West. The foreigners learnt about Ukraine and in some cases worked on projects with Ukrainian governmental agencies and other types of organisations. Many ended up as experts on Ukraine in their respective government services.
Another method of acquiring expertise was to offer companies groups of three to five MBA participants to carry out, on a consulting basis, feasibility studies for establishing representative offices, distribution networks, or production facilities in Ukraine. Groups in question had to get the data, analyse them, then travel to headquarters of companies abroad to propose their recommendations to senior managers of companies concerned.
Learning management in Ukraine or abroad?
Experience has highlighted the advantages of management education in Ukraine. MBA participants with know-how of both the universally valid management techniques and of the Ukrainian context were immediately employable. Some found jobs in privatised enterprises, joint ventures, and foreign companies, while others became teachers of management, set up new business schools or created their own businesses. Typically, MBA graduates increased their salaries tenfold as compared to pre-programme levels. Between them they have created a critical mass of shared knowledge and a determination to do things differently, more effectively, more ethically.
Many Ukrainian university graduates, by contrast, were offered scholarships to study abroad and particularly in the US on the MBA or MPA (Master of Public Administration) programmes. A substantial proportion want to return to Ukraine but find that home based employers cannot meet their salary expectations or offer them the desired level of responsibility. Government and business enterprises are sometimes not sure how to integrate people who have been abroad for two years or more and are not in touch with contemporary Ukrainian reality. It brings to mind the experience of a Japanese who spent a year on an MBA programme in Geneva and who wrote six months after returning to his employer, Daichi Kangyo Bank: "My greatest challenge now is how to become a Japanese again".
Contrary to early thinking, there is not much of an opportunity for Western business schools in countries like Ukraine. Some have helped create business schools in Newly Independent States but setting up branches of their own schools runs into problems such as the high salaries of expatriate teachers, the need to learn about the peculiarities of a new country and to adapt their know-how.
That said, the impact of management education on graduates, on the businesses they create, on the organisations that they work in, and, ultimately, on the whole economy, is greater than in well established market system countries. Virtually everything has to be rethought, redone, restructured and remoulded. Eleanor Roosevelt once said at a student conference: "Young people, everything in this world is for you to change". To the young managers in Ukraine one could say "Everything in your economy is for you to change", with the challenge of business schools being to prepare them for this.
Bohdan Hawrylyshyn is Chairman of the Board of Directors. Lina Khassan-Bek is Professor and Director of MBA programmes in IMI-Kyiv.…
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Publication information: Article title: Adapting Management Education in Post-Soviet Countries-The Case of Ukraine. Contributors: Hawrylyshyn, Bohdan - Author, Khassan-Bek, Lina - Author. Magazine title: European Business Forum. Issue: 11 Publication date: Autumn 2002. Page number: 40+. © 2008 Caspian Publishing Ltd. COPYRIGHT 2002 Gale Group.
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