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Tuesday, 05 April 2011 14:15

Russia Boasts More Than 500 Business Schools

By Tai Adelaja

MOSCOW, April 4, 2011 (Russia Profile) — All Russian business schools long for success and international acclaim. Many have, in recent months, been fishing for compliments, hoping for some morale-booster in the latest MBA programs and business school rankings by some of the world’s reputable rating agencies.

 

However, there were no accomplishments or laurels to celebrate. Once again, the honor for excellence in training business managers eludes Russia, going instead to some of its rivals in the so-called BRIC countries (Brazil, Russia, India and China). The Hong Kong UST Business School and China Europe International Business School (CEIBS), both in China, as well as the Indian Institute of Management, Ahmedabad (IIMA) and the Indian School of Business are in the world’s top 20 business schools, according to the Financial Times Global MBA Rankings 2011 published in February.

 

After two decades of heady growth, this year’s lackluster performance by Russian business schools is not due to lack of trying. Since 1988, when the first business schools appeared, Russian business education has gone through a series of radical changes both to its enrolment system and the technologies of training. The structure of the country’s business education has been substantially advanced as a large number of new, private business schools that incorporate Western business education models and instruction materials have been established.

 

As new businesses sprouted up to capitalize on the growing need of the nascent market economy, so have fresh demands for skilled homegrown managers to run new private and state-owned enterprises. The result is the proliferation of both private and affiliated business schools, as well as specialized training centers offering diverse short-term courses in management for various businesses. The rank of the new business colleges was swelled by the country’s best economic and technical universities, which launched various business training departments of further management education and re-training.

 

Adding power and prestige to the trend are a number of business schools sponsored by famous economists and high-ranking politicians who actively use their influence to promote their schools and to get federal support. In 1992 the International University was created as a joint Soviet-American institution of higher learning. The school was headed by former Moscow Mayor Gavriil Popov, with former Higher Education Minister Gennady Yagodin as its rector. In November of the same year, Yevgeny Yasin, a former liberal economics minister under President Boris Yeltsin, organized the Higher School of Economics. Both schools are oriented toward elite business education and actively participate in retraining federal employees, using the contacts of their high-level proteges.

 

By the mid-1990s a multi-tier system of professional business and management education meant to fit the requirements of the transition economy had taken firm roots in Russia, according to the Global Guide to Management Education. As record-high world oil prices transformed the country overnight into a business haven in the early 2000s, demand for business professionals, especially those required by small businesses, like accountants and managers, skyrocketed. At the latest count (2007), there were well over 500 business schools in the country.

 

The burden of inexperience

 

However, the dynamic growth in the number of business schools has not been accompanied by an equally dynamic growth in the quality of business training. Most of the programs currently being offered by Russian business schools meet neither market demand nor customer requirements, resulting in students graduating with less knowledge and capability than similar students in the West, education specialists say.

 

Another shortcoming of Russian business education is that business schools have mostly failed to tailor their programs to the needs of their clients, leading potential employers to second-guess their graduates. As recently as January, the Vedomosti business daily reported that Russian employers have continued to assign little value to diplomas from Russian business schools and have instead given preference to job candidates with practical skills.

 

The recent global financial downturn dealt another blow to business education in Russia, exposing it as a sector that lacks practical perspective and is in dire need of modernization. Russia’s business education market was among the world’s worst hit in 2009, with schools attracting barely half as many new students as a year earlier and others dropping out after their first year. MBA graduates in Russia were fired by employers at the same rate as employees without MBA degrees, according to Russian analytical firm Begin Group. Among other factors, experts blame the heavily theoretical, classroom-based nature of business education in Russia for the low esteem in which it is held.

 

The financial crisis has also demonstrated that the Russian business education system is unprepared to cope with the twists, turns and tumbles of business life. Enrolment in business schools was down by 40 percent to 50 percent last spring, and some business schools actually moved the admission deadline to the fall due to the lack of applicants, said Yury Tazov, the president of the Russian MBA League and marketing director for the Graduate School of International Business at Moscow’s Academy of National Economy. The first to leave were students whose employers were paying for their classes, and they comprise about 35 percent of the overall number, according to Begin Group.

 

Russian business education, like the Russian economy, is an institution in transition. That was partly the conclusion of the University of Montevallo professors Alexander Mechitov and Helen Moshkovich, the authors of a research paper on the “Specifics and Dynamics of Russian Business Education.” “The Russian economy continues to be highly monopolized and highly corrupt, where the ‘right’ connections and proximity to federal agencies still play a much more important role than effective business plans or savvy marketing decisions,” the authors wrote.

 

Despite the recent changes, the Montevallo University professors said, higher business education institutions, especially elite ones, are still concentrated in large cities, especially in Moscow. “For Russia, with its great size and distances, such domination by any one city represents one of the reasons why economic growth is so uneven,” Mechitov and Moshkovich wrote. “Likely nowhere else can one find such a striking contrast between the high level of education and enormous wealth of natural resources and poverty of the majority of the population. Russian business schools must play a decisive role in the country’s modernization, making this contrast an element of the past.”

 

The modernization of business education in the country also remains a top priority for President Dmitry Medvedev, who has stressed that Russia’s chronic low labor efficiency can only be overcome through quality business education. In addition a number of important state programs, such as the modernization of the economy or the creation of a world financial center in Moscow, will inevitably require a quantum leap in the quality of business education, leading macro-economists Mikhail Khazin and Dmitry Tikhonov said in a recent paper. Business school students have also become more demanding and more discriminating in how to pursue their future careers, especially after the global economic recession. “Students want value for money, in other words, they want to profit from their investment in business education,” Khazin, who heads the Neokon consulting company, said.

 

Business as usual

 

The commercialization of business education has encouraged schools to provide their students with substantial classical training information which has no bearing for practical work, education experts say. Critics also claim that Russian business school curriculums are for the most part stuffed with hours of theoretical training, as schools try to squeeze money from their business students who pay per course hour. The fact that most business schools in Russia are still affiliated with Russian higher education institutions, where the norm is sometimes taking 70 to 80 hour-long courses, does not help matters.

 

“Brevity is not in the lexicon of many business schools—and this is understandable, because most business schools sell knowledge on an hourly basis,” Khazin and Tikhonov wrote. “In Russian business education supply certainly exceeds demand, but the supply basically takes the form of a huge number of training hours culminating in a diploma.”

 

The pursuit of profit has also widened the divide between Russian business schools, which provide academic training, and business training centers, which organize seminars and workshops. “The natural inclination of [business] educational institutions is to be competitive: they compete for student numbers and funding,” Igor Stolyarov, the City Hall head of staff training, told a roundtable conference in February.

 

But Mechitov and Moshkovich believe that some of the problems are rooted in the Soviet past. “The specialization tradition and the plan-oriented nature of Soviet society did not stimulate much cooperation between different institutions,” Mechitov and Moshkovich said. “Currently, a more entrepreneurial environment provides many new opportunities for cooperation between business schools and especially between universities and institutes of the Russian Academy of Sciences (RAN). Though there are already a few examples of such collaboration, there is still a long road to travel before the old-fashioned Soviet division between the research conducted at RAN and the teaching concentrated in universities can be eliminated.”

 

The gap between research and teaching in different business training institutions is widened further by the reluctance of Russian business school lecturers to share the contents of their academic research with their colleagues, Khazin and Tikhonov said. This sharply contrasts with the situation in Western academia, where college instructors are familiar with and often cite the work of their colleagues as teaching materials.

 

Margarita Ivanova, who operates a private business training program, blames this on the lack of requisite training for teamwork. “Sometimes graduates of business schools have to be re-trained to acquire the necessary skills for teamwork because the area has long been neglected,” Ivanova said. “Business schools need to enrich all subjects with tasks and activities that develop team-working skills, systematic thinking and the ability to envisage the final result.”

 

The irrational fear of exposure, that characterizes the Soviet academic system, still impacts the choice of subjects that business schools offer in Russia. Russian business programs are still overwhelmingly skewed in favor of classical economics and finance at the expense of other business areas, including the much needed accounting, management, and marketing disciplines, Mechitov and Moshkovich claim.

 

“Marketing represents the most difficult problem, as Russia was never active in promoting its products on foreign markets,” they wrote. “Oil and natural gas, which represent the bulk of Russian exports in the last 20 to 30 years, as well as caviar and vodka, have not required much promotion to be successfully sold, and it appears that Russian business schools so far do not consider marketing to be on a par with other business areas.”

 

The road to Skolkovo

 

The search for rigor and relevance in business education is perhaps the singular factor that led to the birth of the Skolkovo Moscow School of Management. The brainchild of Russian tycoon Ruben Vardanyan, Skolkovo is conceived as a business training institution worthy of the Harvard Business School. Bankrolled by Russia’s largest lender, Sberbank, Skolkovo is a joint project of Russian and international business leaders that boasts 18 founding partners, including representatives of major Russian and international companies.

 

With President Dmitry Medvedev chairing its International Advisory Board, the school looks destined to have an easier ride in its efforts to make a difference. In its almost four and a half years of existence, business students at Skolkovo have listened in rapture to speeches from an odd assortment of speakers, ranging from the Communist Party Leader Gennady Zyuganov, liberal economist Grigory Yavlinsky, former Terminator star and ex-California Governor Arnold Schwarzenegger and former Yukos Caretaker-Chairman and former Central Bank Chairman Viktor Gerashenko.

 

Unlike in many other business schools, Wilfried Vanhonacker, the dean of the Skolkovo Moscow School of Management said, the school has tried to promote a plurality of business opinions and is careful to stress that no subject is taboo. “We are preparing people for reality, so we’re not hiding anything,” Vanhonacker told the New York Times in October. “There are issues of corruption, there are issues of a lack of enforcement of the legal system, there are issues about government interference, there are issues about raiding, there’s a security issue, and so on. That’s the reality of Russia.”

 

The school launched its first Executive MBA (EMBA) program in January of 2009, a course the school says was “designed to perfect the leadership and entrepreneurial skills of young executives.” But the pride of the nascent business school is its specially conceived MBA program, which it says encourages students to focus on learning through participation in real projects.

 

The school has also managed to attract world-renowned professors and lecturers from leading international business schools such as the Harvard Business School, INSEAD, the MIT Sloan School of Management and the London Business School. In January of 2009 Skolkovo announced that it has entered into a strategic partnership with the New Economic School and the MIT Business School. Vanhonacker, an expert on China, recently announced that Skolkovo would shift the focus of its MBA program experiential learning—comprising four months of classroom-based study and a year spent on projects in companies and government departments—toward Russian’s BRIC peers, such as China and India. (END/2011)

 

 

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