Management in India and MNCs

India has emerged as one of the strongest and growing economies of the world. Indian economy can boast about its most populous democracy, vibrant markets, diverse cultures, and large segments of consumers with size and purchasing power equal to that of any advanced nation in the world. India is home to some of the world's oldest corporate organizations and finest state-of-the-art technocratic ventures. Several multinational corporations of European origin have been integral to the Indian economy ever since they entered India during the Colonial era.

With the advent of radical liberalization of the Indian economy from the early 1990s and the expedited progress toward globalization, many multinational firms from various parts of the globe have gained a significant presence in the Indian market. Some companies, however, have not fully realized their business mission nor taking advantage yet of the size and growth potential of India. Although the Indian economy has been growing at the rate of 7 percent annually for the past 10 years, new multi-national entrants into India, however, have been realizing only half of that growth. Often multinational businesses are given to thinking that modern India is not quite different from other advanced nations and their success in global markets can be easily replicated in India.

Businesses trying to reprint the global business models or strategies that worked in places like China or Latin America into India will experience formidable challenges. Doing business in India requires total management commitment, long-term investment allocation, immersed learning, adapting the business to local customs, capabilities to handle the rich tapestry of diverse cultures and linguistic groups, and establishing deeper connections with bureaucracy and political system. Even companies native to India with long experience have not fully mastered the rough political and cultural terrains unique to India. Motorola, McDonald’s, Coca-Cola, Nokia, Vodafone, and Walmart have all experienced daunting business environments in India, and some have vacated very soon due to the lack of adaptability and agility to operate in India. Recently, General Motors has shrugged its shoulders not able to realize its sales targets and called it quits on Indian operations, While Ford is going steady posting impressive results. It is yet to be seen, whether newer entrants like IKEA and Boeing will rise to the challenge.

Right from the entry stage to managing the joint venture or customizing the products and services for Indian market conditions, firms require a local mindset without losing sight of the global ideals. Notwithstanding the fact a ‘flat world’ of high-income consumer segments (flat world refers to the emerging homogeneity of consumers across the world) is growing rapidly in India, however, yet, a large, diverse population with moderate-income is the reality-space in which businesses need to operate. While the 'flat world' of India can offer as much as 20% of the global market share for most of the durable and technology goods and services, but reaching it requires adapting to the local culture, language, and traditions.

MNCs need to scale-up the investment, Indianize the organization and management style, groom the local talents, and train them to play the interface effectively between the local office and foreign counterpart. A ‘Glocal’ management strategy is required to reap the benefits of economies of scale, competence transfer, product/brand adaptation, and to interplay the relations smoothly between the ethnocentric markets and global organization. 

Business educators across the globe, on the other hand, are quite curious to learn about the state of affairs in Indian management practices? Foremost, there are nagging questions about whether India should just pursue, as China and other emerging economies did, the western economic models, fiscal policies and labor management practices. Clarity on this will set the foreground for companies to shape their strategy and organization to match the domestic environment. On the same note, one can contemplate whether companies can replicate the business and organization models that have worked well in other parts of the globe, or develop their own unique management styles echoing the Indian ethos and value system.

While Indian managers expect the MNCs to localize the strategies and styles, concurrently there is a need to profile the time-tested configuration of effective Indian management practices. Management training in India must be explicit about the original native management styles, ethos, cultural priorities, and idiosyncrasies of India's consumers, employees, and investors so that there can be better alignment and adaptation to global MNC expectations. As MNCs must seek 'Glocalization', Indian Management approaches ought to be 'dovetailed' into the multinational corporate organization to play the global game effectively.

Just to initiate a discussion in this forum on management education and research in India, I am presenting the following critique. These views are not backed by any data or study but based on my experience of living and working in India.  

Following are probing questions on management in India and would like to invite the Indian management professionals and researchers to do some soul-searching about the extant principles and practices. a) Are Indian management systems or management education/training adding value to the Indian corporate performance, consumer world, and Indian society at large? b) Are Indian managers/management graduates’ cognitive and emotional domains adequately prepared to handle the strategic, operational and behavioral challenges of the Indian market, manufacturing, and economic environments? c) Does Indian business academia have indigenous constructs on consumers, employees, managers, and organizations to better understand the Indian consumer markets and organizational behaviors? As a management scholar with two decades of academic experience in both India and United States, I am concerned about these issues and following are my rationale.  

1) Even 50 years after the establishment of Indian business and management education, the curriculum, courses, structure, and format of the business education in India are not really Indianized yet, and still continue to be a total replication of the management system invented elsewhere. Right from the textbooks through pedagogy to course methodology, format to accreditation standards, business schools have mostly replicated mostly what came from the west (Not even from Japan or Korea). Except for a few organizations like Tatas and L&T, the contribution of unique or best practices to the field of management by Indian companies is rare and not documented yet to model them for business education. The business schools have not developed or advocated a native indigenous Indian approach to management by taking into account the historical, cultural, ethnic, and linguistic topography of India. 

2) Although most of the elite MBAs are said to be employed by the multinationals of the western world or the Indian-aspirant MNCs, one cannot deny the fact that these managers/graduates still need to operate in Indian social, market, manufacturing and economic environments which are quite dissimilar in comparison to western industrial, corporate, market world. Given that with more than 1.25 billion people and a rich tapestry of cultures, ethnic markets, with a wide range of historical, political, religious experience and complex multifaceted demographic diversities, developing managers for Indian business cannot be a simplified task of importing models, theories, and management practices, if these imports would not have much relevance for managing employees, customers, and investors of India. For instance, I read a few case studies recently reporting 'employee appraisal/feedback systems' being perceived as a threat and insult by employees in some Indian organizations.

Indian business academia and management training thus far has been less synchronous with domestic realities. Management academia in India must concertedly work toward the new native synthesis on leadership, consumer behavior, employee-management relations, investor relations, and even the theory of the firm itself. For instance, even in modern India, the nomenclature 'company' is understood or misunderstood (sic) to be something 'colonial' among many sections of the Indian population. Whereas in recent times, untenable even for the mature industrialized western world, some global firms have evolved to take on a new nom-de-guerre of "racing horse" - which would be practically indigestible for most of investors and institutions in India, let alone employees. We know the story of what happened to "Vijay Mallya and his Kingfisher Airlines" for treating a company as a playground for trick and gimmick.

3) Part of the problem stems from the fact that Indian corporate world has forgotten its own native character. Because of the colonial rule for two hundred years and post-colonial industrialization dominated by corruption and malpractices, Indian businesses and markets have been suppressed of their original native ingenuity, entrepreneurial wisdom and business culture. Almost, for more than a century, the corporate powerhouses in India were functioning as trading posts of foreign capital, technology, and ideas without really searching the native roots for inspiration, ethics, and style, nor they have delved in deeply to understand the Indian consumers to develop technologies, products, and services designed or adapted to fit the Indian markets. 

Even if the Indian businesses rely on foreign capital or technology for certain capital-intensive, high-tech and emerging sectors of the businesses, had they built their businesses and management on domestic cultural environments as foundation, such practices could have developed into a kind of national competitive advantage that multinationals cannot easily break into without some form of association with local business houses. One can point to a few native entrepreneurial / business success stories such as Amul, Saravana Bhavan chain of restaurants, HCL, and Infosys; but they too still have a long march ahead to accomplish world-class standards in professionalism and performance in terms of innovation, market creation, employee relations, quality of work life, and customer responsiveness. At this juncture, one cannot understate the achievements of several Indian public (Governmental) sector enterprises such as BHEL, NTPC, ONGC, ISRO, and DRDO- showcasing the native characteristics - despite the oddities and anomalies of inefficiency, corruption, and political interference. In fact, Indian managers have a lot to learn from the public sector companies amidst the hues and cries for privatization of these units.

4) Managers trained by Indian business schools with the intent of employment in MNCs have little knowledge of native ethos, literature, culture, employee motives and the society at large - to the extent of denying the epistemological foundations of the socio-economic value system across the subcontinent. This attitude is often reflected even in the policy planning circles at the national, industrial and corporate levels. The real problem is not at the individual level -whether a manager or bureaucrat - adopting the tangible external variants such as jargons, vernacular speech, etiquette, and lifestyles, but about subscribing to the scheme of theories and premises that are either irrelevant or may have the adverse consequences in India - if adopted without testing their validity in the local context. For instance, a mortgage crisis, stock market collapse or melt-down (primarily attributed to high risk financial, investment and banking practices done in the western markets) may have far more serious consequences in India. Another major issue in this respect is that, we are not able to discern the value difference between technical acumen, professionalism, and the work ethic contributed by the western industrial world and the superficial management training without context-specificity, often they are Ivy-league driven, ivory-tower postures cheered by the new generation of MBAs and Engineers. Indian cinemas, and newspapers and the exuberant IT boom have been the sources of such biases. 

5) Every society creates a unique context and challenge to management. Whatever the field of management, be it finance, human resources, economics, marketing (consumer behavior), and industrial relations, the motives, theories, behaviors, and outcomes are all quite different across cultures. Along these lines, at this juncture, I need to point out that, Japanese, Germans, and Koreans or Chinese have emerged as economic and business powerhouses not by imitating western management and economic models. The differences are quite apparent; one does not have to be a rocket scientist to understand the contextual differences. The higher education, more specifically, management education and even academies for IAS, IPS etc. are far removed from the ground realities of the Indian society. Some years back, While I was talking to an entrepreneur, I asked him "How committed his employees are to their work?" He was responding "They are all quite loyal". Although commitment and loyalty are related, they are quite different in terms of implications for practice, rewards and competence building. Along the same lines, there are innumerable native constructs (e.g. karma; similarly hope, job satisfaction, faith, family, future, ambition, recognition, duty...all have the native version of their own) that are neither fully understood nor taken into account toward improving the management practice. 

Researchers need to study the people of India to develop theories and practices on various problems and issues. Academies have to search Indian ethos and history to figure out the underlying paradigms and archetypes. Nothing wrong in learning from other contexts, but before applying models developed in other contexts practitioner has to exercise caution. Many scholars have expressed that the elite stratum of the Indian society has been responsible for the corruption and malaise that are witnessed across India’s economic, business and political landscape. The prescription to search the roots and study the people of India for ideas, innovation, and management style does not mean that we should not be critical about the dysfunctional practices fostered in the historical past. I know, there is a danger in such prescriptions because one may again start idealizing defunct methods and means which really had created the extant problems still affecting progress. Neither feudal management styles nor caste networks would be appropriate to run the large public businesses, nor is it desirable to have managers espousing jargons without recognizing the native ethos and desires. 

Managers, employees, and businesses need to take on new Indian identities – neither their traditional clans/castes nor modern MNC titles – but identities which emphasize “truly professional, principled, trustworthy, generous, transcending, and socially responsible” with affinity to and with a deeper understanding of the Indian ethos, people, culture, values. Like Mahatma Gandhi, Subhas Chandra Bose, Motilal Nehru, and Kamaraj provided a new synthesis of leadership in the political landscape for diverse and conflict-ridden India, managers are expected to define new standards and role models grounded in the realities of India. Abdul Kalam, Verghese Kurien, and JRD Tata were some luminaries who had played a notable role in shaping unique management schools of thought quite apt for India.

Certainly, there is scope for a middle ground, and there is a necessity for a comparative and blended approach in education, training, and corporate management. For any field and level of management, we should develop comparative schema on human motives, socio-management principles, and decision contexts/situations of different regions. These comparative schemata should help contrast the advantages and disadvantages of the models, theories, and practices of various nations/cultures in comparison with that of India.

Be it “ethical/social responsibility issues, product design, pricing decisions, intellectual property/patent rights, scale and scope decisions, financial payback periods and capital budgeting decisions, communications and advertising, customer responsiveness, human resource management, pay and incentive structure, leadership / managerial selections, and organization structure & culture design”, managers need to be aware of the differences in practices, their advantages, and disadvantages, and weigh the consequences before adopting any new style, theory or practice. The essence of the argument here is "managers and researchers should be Cognizant of the socio-cultural-political ramifications of the modern management practices or economic models, and their relative merit within the Indian context”. The above views are equally relevant for Indian political and bureaucratic organizations too. 

For recent studies on this topic:

“The Office” goes to India: by Nicholas Bloom, Aprajit Mahajan, David McKenzie, John Roberts, 13 April 2011

https://voxeu.org/article/office-goes-india-how-bad-management-keeps-india-poor