Abstract. Key words: Good governance, management, corporate relevance, MBA, Universities, Sri Lanka.

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1 Human Capital and Good Governance - How far the Master of Business Administration Degree Programs Relevant to Local Corporate Culture? A Case Study based on Sri Lanka Dr. S.W.S.B. Dasanayaka Ph.D. (Economics), Erasmus University of Rotterdam, The Netherlands, 1997 Dept. of Management of Technology, Faculty of Engineering University of Moratuwa, Moratuwa, Sri Lanka Tel: , Fax: , Sarathd@mot.mrt.ac.lk Abstract The main objective of this paper is to show how far the Sri Lankan MBA degree programmes are relevant with local corporate culture, students career and financial expectations. Finally it recommends strategies and policies for Sri Lankan MBAs to be more relevant for the changing corporate culture and clients (students, parents and employers) expectations within transparent and accountable framework. This article concludes by stating the importance of colonial Asia to think to start their own management training programmes with their own indigenous teaching and learning methods. Furthermore, more integrative approach should use rather separation of business functions to produce overall managers with high emotional intelligence and managerial mind setups with ethics and morals. This new management training approach may helps to produce achievement-oriented Asian managers with more responsibility and relevance for their corporate environment rather imposing unsuitable western management training models and methods on them. Key words: Good governance, management, corporate relevance, MBA, Universities, Sri Lanka. JEL Classification: I, K Introduction The Master of Business Administration (MBA) programmes, the main executive management training method in many parts of the world, have become popular among the Sri Lankan corporate sector during the last few decades due to variety of reasons. Therefore, the public sector Universities and foreign Universities affiliated local education institutions started to offer general, international business, niches and cooperative MBA programmes with various teaching and learning models such as traditional lecturing, cases, syndicates, field works, industry interaction and projects, etc. But most of these MBA programmes are blends of existing traditional American and Anglo-Saxon models of part-time, full-time to executive with more western knowledge bias without much local and ethical contents. But their overall relevance, transparency, accountability and suitability for this region is somewhat questionable. Especially their overall quality, affordability, entry qualifications, suitability for local corporate culture, academic and industry qualifications of faculty, facilities and students completion rates and heavy concentration on western cases with western management practices, etc are 1

2 very questionable. An interesting fact is that most of these MBAs are do not subject to any quality assurance, ranking or accreditation schemes but they have very many ambitious plans to link with foreign business schools and corporate world. Most of the MBA stakeholders in Sri Lankan case have emphasized the need of localization of these programmes with more practical teaching and learning methods and models to produce visionary, strategic thinking, achievement oriented and value added managers to lead and manage the South Asian businesses looking at the latest trends in the world s executive education and changes in the corporate world. At present MBAs are seen as easy cash generating machines for both Universities/private affiliates institutions, students and other stakeholders rather paying sufficient attention to local corporate needs and overall quality of the programmes. In this context, this paper explains the Sri Lankan case in context of good governance in MBA degree programmes. After brief introduction to Sri Lankan higher education system, this paper deals with objectives, methodology, analysis, discussion and conclusions. Brief on Sri Lankan Higher Education The Sri Lankan higher education is mainly provided by the government led public sector traditional Universities, Open University and some private affiliated Institutes. Still private sector Universities are not allowed to directly offer degrees except few special cases such as SLIIT and foreign Universities operating in Sri Lanka on affiliated and franchising basis due to political sensitivity of this subject. However during last few years private sector involvement in higher education specially on the basis of affiliated concepts shown an exponential growth. The total number of Universities, including Open University, stood at 15 at end of 2007 (See table.1 in appendix). The total number of undergraduate and post graduate students enrolled are around and annual intake around for all the degree programs in traditional Universities. The Sri Lankan Universities are not at all capable of providing places at least for 15% for those who qualify to enter Universities. For instance in 2006, Sri Lankan Universities were capable of absorbing only 15% of those who qualify (out of ) to enter University through nation-wide British model GCE (A/L) examination. According to the 2004 enrollment data, public sector Universities has 22% enrollment and 53% goes to private sector affiliated ones and professional courses such as CIMA, CIM and IT. Another 15% enroll with open University (very low completion rate) and 10% go to aboard for higher education. In 2003, around 1500 students went for UK for higher education. Average expenditure on higher education in terms of GNP is around 0.56% from and in terms of total government expenditure it stood at 1.51% for the same period. Higher education participation rate also very low in Sri Lanka. It is only 3.1% from the age group between years. When it comes to postgraduate education very many obstacles and shortages are visible and in some disciplines post graduate training are not available in locally. Objectives 1) To show the current status of the MBA degree programmes in Sri Lanka with respect to stakeholder perspectives. 2

3 2) To find out how far these MBA programmes are relevant to local corporate culture, students and employers expectation. 3) To recommend policies and strategies to these MBAs to be more customer and local corporate culture-oriented within transparent and accountable framework to improve their governance. Research Methodology The research methodology mainly adopted was an interview. The interviews were unstructured and open-ended as respondents needed to be given the opportunity to express their point of view. Each respondent was interviewed once only but when the need to clarify certain information arose the respective person was consequently approached. Questionnaires used are attached in appendix. The main responded MBA offering Universities are Postgraduate Institute of Management (PIM) attach to Siri Jayawaradanapura University, University of Colombo, University of Peradeniya, University of Ruhuna, University of Kelaniya, University of Rajarata and Moratuwa University. The respondents included MBA students, lecturers and employers. Respondents were chosen in the following manner. As the study focused on a comparison of MBA programs in Sri Lanka, lecturers were chosen from Universities that conducted an MBA program and who are also part of MBA programs in other Universities. Secondary sources of information were located through websites, brochures and other relevant documentation. Analysis 1, Discussion and Conclusions Acquiring a MBA has become a trend for graduates in the business field. MBA programs are facing a rise in demand because of this situation. The challenge faced by MBA programs is to ensure that they can ensure the recognition and value that was associated with a MBA in the past, remains so in the future as well. Employers of MBA graduates have expressed their concern about the limited focus on practical application in curriculums, low ethical contents and the relevance of course contents and case materials and delivery mechanism. They emphasized importance of use of group studies that involve on-site projects and incorporating recent research done within a Sri Lankan context. Then MBA programs can be made more applicable to the Sri Lankan business environment. MBA programs should be relevant with the changes that occur in the industry. MBA curriculums should incorporate case studies and business models drawn from the business environment in Sri Lanka. These will ensure that there is constant interaction with the industry. Especially, the teaching faculty s poor knowledge on the practical aspects of the industry is highlighted. 1 Detailed analysis of stakeholder interviews omitted from this paper due to space limitation but it can be obtained from Author. 3

4 MBA programs in Sri Lanka should try to be more innovative in their approach. They should seriously consider incorporating key features of the business environment in the South Asian region and the Asian region, particularly Asia Pacific rather following outdated western models. Sri Lanka is a South Asian country. Several Indian and Pakistani companies have invested in the country. Some Sri Lankan companies have set up business operations in India, Pakistan and Bangladesh. Therefore, the need to gain knowledge of the particular business environment and culture of these countries is critical. MBA programs in North American and British Universities have included the study of regional business environments as elective modules. The same approach can be applied to MBA programs in Sri Lanka. Universities should also look at the feasibility of linking with leading foreign business schools so that the recognition of the MBA goes beyond the territorial boundaries of Sri Lanka. Such collaborations will have long-term benefits not only for the MBA program but also for academics, post graduates as well as undergraduates in the University system. The advantage of such approach is that multi-national companies that operate in the region will value such MBA graduates. Students seem to have problems with the quality of lecturers and their poor delivery mechanism in general as well as inadequate library facilities. These problems seem to be common across MBA students in all Universities. Some MBA programmes introduced without proper home work and industry consultation. Each and every MBA program has incorporated the inputs from resource persons from the private sector. Although North American business models are heavily used, case studies from the Sri Lankan context did not use in the curriculum. Course Coordinators have accepted this weakness mainly due to non availability of good local business cases. All the MBA programs that were reviewed have distinct plans to expand in the future, be it in terms of student numbers, new electives or collaborations with foreign universities. This speaks volumes for the future of MBA programs in Sri Lanka. But most of these MBAs do not have any quality assurance, accreditation or ranking status. The most important point is most of the MBA offering Universities do not have any serious PhD holders in the faculty. Employers believe that MBA programs are more focused on theory rather than the practical implications of management. Thus, the need to refocus efforts toward a more practical orientation can be advocated in class rooms with innovative delivery mechanism. 4

5 A large number of students undertake degrees in core areas related to management such as accounting, marketing and economics, etc. However, business organisations prefer those who have a broader knowledge of fields related to management to occupy middle management positions. Middle managers in contrast to junior managers oversee several functional areas in a business and have more authority and responsibility delegated to them. The choice between a general MBA and a niche MBA which focuses on a specific area within management should be decided by considering the particular needs of the student such as his/her goals and career aspirations. In specific industries such as IT, most software engineers are not adequately equipped with managerial skills required to undertake activities related to project management. Thus, an MBA which focuses on such students is a timely measure and caters to the needs of the industry. Apart from IT management, certain MBAs focus on mathematics and economics, and this type of MBAs are suited for those who are more interested in pursuing careers in economics or finance. Executive MBAs are being introduced in several Universities across the world. These target those aspiring for senior management positions in organisations. Due to the heavy workload of the targeted population, some European Universities have designed Executive MBAs that are conducted in short breaks, each consisting of six weeks full time. Some European Universities collaborate with several leading business schools in Europe and students are thus given a wider exposure to various culture and work practices in different business organisations. Organisation strategy has changed from that in the early 90 s and nowadays, business focus on core products rather than diversification. This entails the need to improve knowledge in specific functional areas. Therefore, the niche MBAs will prove to be desirable to business organisations in the present business environment rather than general MBAs. In the Sri Lankan business environment, there is a mix of both strategies, while small and medium organisations concentrate on core products; the larger organisations have diversified their production lines. Despite this, MBA students have found good employment opportunities and they emphasize that an MBA is essential for career progression. At presents employment opportunities for niche MBA students are more compared with general MBAs. However, given the necessity of management skills in the IT, Technology and infrastructure fields, it s possible that all MBA graduates will find gainful employment or progression in the existing ones in Sri Lanka and aboard. Few of them already migrated to other soft countries as this degree counts some marks and some have enrolled for Ph.Ds and DBAs in other western countries. 5

6 A notable trend in several MBA programs in Sri Lanka is the attempt to foster links with foreign Universities. This increases the recognition and prestige of the MBA programs offered by respective Universities while also enhancing the diversity of the curriculum. All MBA programs of Universities in Sri Lanka should be governed by a quality assurance authority comprising of eminent foreign academics. This will ensure that all MBA programs meet the necessary standards, as certain MBA programs that commenced recently seem to lack proper guidelines of ensuring that quality standards are properly maintained. Some MBA coordinators have tried with western accreditation bodies but they said it is very expensive to afford and their programmes do not have the necessary basics to apply. During the process of research, it was revealed that certain Universities have not included proper guidelines for evaluation of the programs and modules. This is a vital factor for further development of the respective programs. The use of information and communication technologies as an effective source of teaching should also be considered as most students find lecture hours inconvenient for them and modern ICT facilities are not available for their study. The use of western business models was observed in many MBA programs offered by the Universities in Sri Lanka. Only one or two institutions incorporated Sri Lankan case studies and even fewer referred to text books written by Sri Lankan academics. This does not augur well for the development of curriculums based on a Sri Lankan context. Western business models were developed based on the contextual variables that are prevalent in their own environment and cannot be applied to the Sri Lankan business environment without taking into consideration the impact of culture, the different organisational working methods and political and socio-legal settings. Perhaps the biggest problem many Sri Lankan MBAs is that the course is competed in 12 to 24 months and there is very little time to inculcate values or the traditions of ethics and morals. Most of the Sri Lankan MBA stakeholders emphasized that MBAs teach a wide range of managerial skills to use in all kinds of organizations, many of them do not teach a set of values that promote good business or corporate citizenship. Especially business leaders said that a business that makes nothing but money is a poor kind of business. In overall, the Sri Lankan MBA programmes need very many check and balances with integrated framework for the improvement of their governance. This new framework should address all aspects such as student entry qualification to staff qualification and industry experience, course curriculum and its delivery mechanism and local cases and industry consultation, etc. 6

7 References Central Bank of Sri Lanka ( ) Annual Reports, Sri Lanka Quality Assurance Accreditation Council (2005), QAA News, Vol.1, Nov.2005 University of Moratuwa (2001/09), MBA Students Programme Handbooks and Lecturers Hand books, Sri Lanka University of Siri Jayawardanpura, PMI (2001/09), MBA Programme Hand books and Lectures Hand books, Sri Lanka University of Colombo (1998/09), MBA Programme Handbooks and Lectures Hand books, Sri Lanka University of Rajarata (2004/09), MBA Programme Handbook and Lectures Hand book, Sri Lanka University of Ruhuna (2004/09), MBA Programme Handbook and Lectures Hand book, Sri Lanka University of Kelaniya (2005/09), MBA Programme Handbook and Lectures Hand book, Sri Lanka APPENDIX General and University Education in Sri Lanka, Item General Education Total school Government schools(b) o/w National schools Other schools Private Pirivena Pupils ( 000) New admissions ( 000) Teachers ( 000) Pupil/Teacher ratio (government schools) Total expenditure on education (Rs. bn) (c) Current Capital 10,508 9, , ,501 9, , University Education 7

8 Universities Students (d) Lecturers (e) Number graduating Arts and Oriental studies Commerce & Management studies Law Engineering Medicine Science Other New admissions for first degrees 13 48,666 3,390 9,027 3,288 2, , , , ,801 3, , ,386 3, , Sources: Ministry of Education University Grants Commission Central Bank of Sri Lanka, (a) Provisional (b) Excluding non-functioning schools (c) Includes government expenditure on higher education (d) In all Universities, excluding the Open University of Sri Lanka (e) At the beginning of the year Questionnaire for Lecturers involved in the MBA program at Moratuwa University 1. Why were these particular areas of specialization selected? E.g. IT, MOT and Infrastructure 2. Is there a need to design an MBA especially for engineers? 3. How often is the curriculum updated? 4. How often are resource persons from the private sector invited for lectures? 5. Most MBAs teach western business models. Please explain the position taken by the department? 6. Does research influence the curriculum and the syllabus? 7. What is the nature of the feedback from the students? 8. How are quality standards maintained? 9. Why is the number of students limited? 10. Are there any plans to expand the program in the future? 11. What methods you used to quality aspects? Questionnaire for Lecturers from other Universities 1. Please explain how teaching is provided to students? E.g. assignments, case studies, tutorials 2. What is the percentage of male and female students? 3. How often is the curriculum updated? 4. How often are resource persons from the private sector invited for lectures? 5. Most MBAs teach western business models. Please explain the position taken by the department? 6. Does research influence the curriculum and the syllabus? 7. What is the nature of the feedback from the students? 8. How are quality standards maintained? 9. Why is the number of students limited? 8

9 10. Are there any plans to expand the program in the future? 11. Do you think an MBA is relevant? 12. How would you compare the Moratuwa MBA with other MBAs? Questionnaire for Employers of MBA students 1. Why do you think an MBA is relevant? 2. How do you evaluate MBAs of particular universities such as Colombo, PIM and Moratuwa? 3. Do you have any recommendations for any changes to be made in MBA programs? Questionnaire for MBA students 1. What is your particular MBA? Please specify. E.g. MBA in IT, General MBA 2. What are the benefits of studying for an MBA? 3. Why did you select the particular University to study for an MBA? 4. What are the benefits of studying for an MBA from this University? 5. What are the difficulties that you face? 6. Do you feel that the MBA provides knowledge that is relevant to the industry or organisation that you work? 7. Do you think an MBA will be an added advantage in relation to promotions? Please answer in relation to the long-term and short-term prospects. 8. Business schools in the US are giving more emphasis to soft skills such as team work, communication skills and leadership in their MBA programs. Do you think that these modules are covered adequately in the MBA program? Please explain your views. 9. Are books available in the library? Please state any problems that you face. 10. Is there any reference to the Sri Lankan business environment in the course? Is such reference minimal? Please explain. 11. Do you think that the staffs look favorably at suggestions made by students? 12. In your opinion what are the drawbacks of the program? 9