Good management not only for the corporate sector

Good management should not be confined to the corporate sector if management is to have an impact on economic growth and development, according to eminent economist Dr. Nimal Sanderatne.

In a keynote address at the International Research Conference on "Management for Growth and Development", organised by the Faculty of Management and Finance of the University of Colombo, he said confining good management practices to the corporate sector, however important, was 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.

He emphasised the need to extend good management practices throughout the range of economic organisations small and big; from households to the state. If good management practices were to be confined to big business and corporate bodies, then, he argued their impact would be limited.

Just as management studies tended to focus heavily on corporate management and management efficiencies of firms, economists, he said focus on macro economic issues. The hard reality is that growth is the aggregate incremental output of numerous units of production, small, medium and large, he emphasised. Therefore improvements in management of all enterprises have a contribution to make to growth.

"Good management begins at home by the prudent management of household finances and the development of a culture of development from childhood." Dr Sanderatne pointed out that household savings constitute the largest source of investment funds. Unless the country can increase these, he said, there is little prospect of significant increases in investment that are vital for higher rates of growth. He observed that though Sri Lanka had a higher per capita income than India, that 'we' save less. Higher income countries of Asia, such as Malaysia and Singapore save about one half of their GDP.

Good management practices have to be extended to agriculture, small farms and small enterprises if the economy for these must make an enhanced contribution to economic growth.

Dr. Sanderatne said 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, he said, were 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.

He also pointed out that management practices that ignored the country's culture were not likely to succeed.

On the one hand, management has to recognise dominant cultural values, while on the other hand, it has to adapt and change values that are inimical to efficiency and good management. This, he said was an enormous challenge facing management scientists.

Professor T. Hettiarachhi, Vice Chancellor of the University of Colombo was the Chief Guest. Professor Gunapala Nanayakkara, Vice Chairman of the University Grants Commission was the Guest of Honour.