Management mania: Will it assist economic growth and development?

The challenge that management studies must attempt to meet is to disseminate best management practices to every nook and corner of the economy.

By the Economist

Management is the magic word. It is the preferred option for undergraduate study. Engineers are turning to study management; other scientists and graduates in humanities and social sciences are doing postgraduate studies in management.

A majority of universities in the country are offering management studies at undergraduate level and at least four of them have postgraduate courses in management. Some universities have several facilities for business and management studies.

More and more undergraduates are following Management studies

Several universities have changed the names of their departments and incorporated the magic word management. Student preference for admission to universities is for management. There are a number of facilities to study management and allied fields and obtain qualifications from foreign universities. " International schools" for management are mushrooming.

Many go for undergraduate and postgraduate studies to foreign universities around the world. Management and business studies are money-spinners for universities here and abroad. The quality of teaching and standards vary, some are very good while others are of dubious quality. Will the explosion in management studies lead to higher levels of economic growth and development? The answer to this question may have been provided in the keynote address at the International Research Conference on "Management for Growth and Development" organized by the Faculty of Management and Finance of the University of Colombo. The keynote address at the conference emphasized the need to extend good management practices throughout the range of economic organizations small and big: from households to the state.

If good management practices were to be confined to big business and corporate bodies, then it was argued, their impact would be limited.

Good management begins at home by prudent management of household finances and the development of a culture of development from childhood. It was pointed out that household savings constitute the largest source of investment funds. Unless the country can increase these, there is little prospect of significant increases in investment that are vital for higher rates of growth. Sri Lanka with a higher per capita income saves less than India, while higher income countries of Asia save about one half of their GDP. This is one of the reasons for their high growth. We would also add that their efficacy of capital is much higher. This implies the need to save even more as productivity of investments is low.

Confining good management practices to the corporate sector, however important, is inadequate to propel the economy to greater heights. Small enterprises and small farms are important components of the economy. They are more significant to growth than corporate entities as their contribution to national income is much higher. The inefficiencies in these are a serious constraint to growth and development. The inefficient management of farming is seen in the low yields in many crops compared to other countries. The yield gap that exists in crops, like paddy, rubber and tea is partly due to poor management. Other constraints like credit; marketing and labour shortages are also constraints. Therefore, good management practices have to be extended to these for their robust growth and enhanced contribution to economic growth. Management must pervade the activities of small farmers too to achieve the best results from the resources used.

It was also brought out that a culture conducive to development has to be generated throughout society. The recognition of property rights, enforcement of law and order, time management at all levels and improvements in work ethics are essential to increase productivity and to generate higher growth. It was vital to build up such a development culture and management studies have a crucial role to play in such a development.

Then again, it was pointed out that management practices that ignored the country's culture were not likely to succeed. This is indeed a tricky area. On the one hand, management has to recognize dominant cultural values, while on the other hand, it has to adapt and change values that are inimical to efficiency and good management.

Just as management studies tend to focus heavily on corporate management and management efficiencies of firms, economists tend to focus on macro economic issues and talk about economic growth as if their pronouncements are what generate growth. The hard reality is that growth is the aggregate incremental output of numerous units of production, small, medium and large, the keynote emphasized. Therefore improvements in management of all enterprises have a contribution to make to growth.

Notwithstanding these observations of the keynote, most of the papers presented at the conference related to, or dwelt with, micro-studies. These research studies could contribute to efficiency in many areas.

No doubt improved efficiency in a large number of production units is needed, especially in an intensely competitive global context. Nonetheless it is necessary to reach out to small enterprises and inculcate in them positive approaches that improve efficiency and improve productivity.

There is a crying need for efficient management in all sectors and sub sectors of the economy. The challenge that management studies must attempt to meet is to disseminate best management practices to every nook and corner of the economy.