Ninth AIMS International Conference on Management

January 1-4, 2012

The Role of Management Education Institutions in Entrepreneurship Development in India Need of Era
Sunita Dhote Chandan Vichoray Rupesh Pais Deepak Titus dhote_sunita @yahoo.in vichoray@gmail.com rupesh.pais@rediffmail.com deepaktitus@yahoo.ca Shri Ramdeobaba College of Engineering and Management, Nagpur
Indias strength is availability of Intellect manpower, keeping our growing global aspirations in view. The relationship with the rest of the world can be expanded by a host of strategic issues like energy, access to market, technology and security. We can connect these aspirations by providing the Management Education with a focus to grow entrepreneurs. Business Schools should provide training to MBA Aspirants through entrepreneurial education to foster economic development. Imbibing entrepreneurial skills in business management students will develop an entrepreneurial culture in country, which will lead to balanced economy. Considering this issue, through a primary study the extent of percolation of entrepreneurship development in overall management education is analyzed. The growth of management education generally and entrepreneurship education specifically, is needed as a core activity for academic investigation and as practical activity in the private and public sectors. The issues pertaining to entrepreneurship, management, stakeholders, customer, personal and corporate governance will be taken up for analysis and also the pivotal role of business in environment, local cultures and society as a whole is examined. The study reveals a gap between trained business graduates and the requirement of the modern and globalized need of economy with respect to entrepreneurship development in our country. Keywords: Management Education, Entrepreneurship Development

1. Introduction
Management is a science or an art? The debate still rages on which is evident from the entrepreneurial trends in India. N R Narayanmurthy, Azim Premji, Ratan Tata, Mukesh Ambani are some of the entrepreneurs in India who have been able to make their businesses global. With the recent acquisitions of UK based companies like Jaguar and Land Rover, Tata has proven that there is no limit to Indian companies for doing business globally and living up to the international standards of operations and services. Indian IT industry has shown the way to others as far as exports are concerned. In fact now a major part of economy is driven by services, which makes the Indian economy less dependent on Agricultural produce although a majority of the economic growth still comes from Agriculture. That again brings us back to the question i.e. whether management is a science or an art. Following two questions can be raised. How many formally trained managers have gone on to be become successful entrepreneurs? How many entrepreneurs have received a formal training in management? Management education in India in recent times has achieved a lot of significance with the country being exposed to Liberalization, Privatization and Globalization. In other words the education in Management will be directly proportional to generation of business within the country. With globalization, lot of multinational companies set up their units in India thus generating more jobs in the process. All the jobs required skilled manpower which meant that the requirement for managers was also more so as to handle more employees. This created a need for institutes imparting quality education in India which included the management education also. Earlier there were only a few management schools like Indian Institute of Managements or IIMs, and a few private players in the field. With the demand of managers outstripping the supply, the need for more management institutes was felt and the Ministry of Human Resources came out with a policy of privatization in the field of management education.

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Two parameters became of prime importance while opening the new institutes. Quality of Students Supply of good quality faculty members. These parameters were from the perspective of the Government of India which was looking at the privatization of management education to supply good quality students. Some institutes lived up to the expectations of the Government of India but most of them looked at this opportunity from the profiteering point of view. In the process, many institutes lost the credibility while churning out more managers. From the students perspective, the Indian student is more attracted towards the MNC brands than starting their own ventures. (Deshpande, Vichoray and Dange, 2005). Deshpande, Vichoray and Dange (2005) suggested that the students associated themselves more closely with Dr. APJ Abdul Kalam, than N R Narayanmurthy, the erstwhile CEO of Infosys. In a way it may sound logical as the students joining these organizations are driven by the fact that they are inexperienced. Hence while looking at entrepreneurship, the criteria of experience is more profound. N R Narayanmurthy himself is an example. He was working for Patni Computer Services before he resigned and started his own venture. Even the likes of N R Narayanmurthy did not start the company as soon as they were out of college. Most of the new pass outs who become entrepreneurs are the second generation entrepreneurs who have well established family businesses. The case in point is Reliance Industries Ltd. wherein the Ambani brothers joined an already growing company. Their father Mr. Dhirubhai Ambani was the first generation entrepreneur and even he did not start his own venture without working somewhere. A lot of such examples are there wherein the second generation or third generation entrepreneurs join the family businesses immediately after their formal education.

2. The Management Institutes and Ground Realities

Management institutes who deliver management education in India are also faced with certain set of challenges: Availability of Quality manpower Trust of the general public as a whole Availability of funds to nurture ideas Lack of system to generate fresh ideas. A teacher has to be proactive in terms of disseminating education that is of use to the students. The proactiveness of the teacher is guided mostly by the approach of the institution towards the teachers readiness and willingness to undertake practical projects in industries. Contrary to the belief and expectations, it has been found that most institutions lack the will to even promote such activities, let alone even allowing teachers to undertake one. As a result no practical knowledge is achieved and therefore the knowledge horizons get limited, which is reflected in the quality of students passing out from that particular institution. Management necessarily means filed work and therefore it is imperative for the students to undertake field projects. This is only possible if the teacher who guides the student has a practical insight. Entrepreneurship rests solely on the practical applications and getting things done. Hence a wide exposure to field work during management education can be beneficial in creating a class of entrepreneurs directly passing out from the institution. A lot of institutions face problem of trust from the industry as well as public. In India the thrust is still on inhouse R&D rather than sourcing it from Academia. While this is true in most cases, some of the premier institutions in India like the IITs and the IIMs have been successful up to a certain extent. Compared to their western counterparts, where the institution gets financial aid for developing certain concepts and technologies, the companies in India lack the will to get involved in such type of activities. An excellence centre for development of knowledge is necessary, for that will not only create cheaper technologies and develop concepts, but will also expose the student to the state of the art equipment and fundamentals on which the companies thrive and grow. This itself motivates the student to undertake entrepreneurship. However lack of trust from the industry towards academia is one main reason that such funds do not get diverted to academia. Moreover there is a lack of stronger legal procedures as far as Intellectual Property is concerned and therefore proliferation of knowledge confidential to one organization seriously undermines the institutions integrity towards the contract. Funds are available abundant for right kind of work and ideas for new entrepreneurs to take up. Its the risk bearing ability of the entrepreneur that has to be in proportion to his idea generation. The sources of finance are loans from banks, venture capital funds, incubation centre, etc. 239

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January 1-4, 2012

3. Business Entrepreneurship
All ideas cannot be economically viable nor can they be practical. Its the thinking that goes into the conversion of such ideas to products that is important. There have been schemes of PMRY or Pradhan Mantri Rojgar Yojana, where the young pass outs were granted one lakh rupees for starting a new venture. The government had set targets for every nationalized bank to propagate this scheme. However lot of beneficiaries had bad loans on their hand as the distribution of the loans was a mindless activity as the banks were more interested in meeting the targets than checking the viability of the business for which the loan was being given. In colleges, the government has mooted the idea of Incubation centre which is promoted by Ministry of Micro, Small and Medium Enterprises (MSME), wherein the institution can receive a grant of up to 64 lakhs. This incubation centre is aimed at promoting students as entrepreneurs. Any student with a sound idea can submit a proposal to the college. A committee first reviews the viability of the idea and then forwards the proposal to MSME, which again goes through the project report for finer details. After accepting the proposal, funds are provided to the student in the form of soft loan. MSME also takes up the responsibility of promoting the idea to general public through its public contacts and supports the student till the business becomes self reliant.

4. The Role of Management Institutions

Entrepreneurship in its basic form would mean risk bearing. This is akin to doing a job wherein responsibilities are accepted. However the similarity ends in operations. It is the financial implication that makes jobs more favourite than entrepreneurship. In jobs the income being fixed, financial planning can be made from day one. However in entrepreneurship, this may not be the case. It is here that the role of management institutions can be well defined. They are expected to carry out the following functions to support a students entrepreneurial endeavor: Help the student in identifying a business idea Support the idea through critical evaluation Use of expertise and contacts to support the students venture Provide financial support in the form of soft loans Provide emotional support to the student entrepreneur in all forms Help the student build his venture through all stages for at least 1000 days which is considered to be the incubation period for any business Considering the faculty members working for management institutes to be experts in their subject, almost every faculty member can easily identify a workable business idea. The business idea can also be generated through brainstorming sessions in classes wherein other students can contribute their intellectual inputs. Once an idea has been zeroed upon, a critical evaluation should be done in two ways: Technical Feasibility Financial Feasibility The technical feasibility will talk about the operational modalities of the idea and will ensure that all aspects of operating a business are taken care of. This includes even technological feasibility, if the idea involves use of technology. Sourcing of resources like man, machine, material, market is another area where critical evaluation will be needed. Competition analysis coupled with market analysis will add to more credibility to the data. The financial feasibility will take into consideration the sources of finance, the requirement of fixed and working capital, the breakeven analysis and the expectations of business volumes in the form of revenue and financial turnover. Faculty members and institutional champions can further the cause of such student through use of their contacts and expertise to get the hands on information regarding the feasibility of the idea. This then can be included in the feasibility study, which can then be presented to the financers, while sourcing the finance. The institution can set up a corpus fund for supporting such ideas and can forward funds to the student in the form of soft loans. The faculty members can also support the student by providing security to the student through this corpus to get the fund from banks or other financial institutions. This corpus created can be through the contribution of students and also an initial development fund to be constituted for the use of such ideas. In return the institution gets interest returns from the student. Also the institution can come up with a proposal to source the intellectual property generated through such ventures. This intellectual property can then be licensed to the student and a royalty can be charged from the student once his business is settled. The royalties and interests can further increase the corpus fund ensuring more capital adequacy for such ideas. All businesses face ups and downs and it is during the downs that the entrepreneurs require emotional support as they face losses. The institution in such a case can infuse more capital in the venture subject to the idea being 240

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January 1-4, 2012

feasible in the long run and till the time is ripe for the idea to take off. There is a downfall for this support also. In case if the students operational skills are a problem, then execution of the best of the best ideas can be troublesome. Hence a closely monitored mentoring may be done to ensure that the student does not take the institution for granted and the funds are not easily available to him. So also if the student is not able to flourish in a span of 1000 days, then change of management can also be done to make the idea workable. However extreme caution has to be exercised in arriving at a conclusion regarding the nature of returns as it may take the best ideas out of the students hand and leave him with nothing, thus spoiling his career.

5. Conclusion
The Management Institutes can play a vital role in shaping up more entrepreneurs. It is here that they can exercise their available expertise to incubate a good idea making it a very profitable business. The Management Institution is not only a catalyst but is also a father, mother and friend to the student in times of his development. Nurturing the seed of entrepreneurship to see it grown in a tree and blooming full will not only further establish the faith in the mind of the student but will also make the institution proud of its achievement. This in itself can be an encouragement to furthering the cause of more job creators, in the process ensuring 100% placements. Not all ventures will be successful. In fact it may follow the Pareto principle of 80-20 wherein 80% of returns may come from 20% of nurtured ideas and the rest 20% can come from 80% ideas. But this is the premium that this task asks for, for promoting a healthy entrepreneurship development programme.

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