While American enrollment in business schools in America seems to be very healthy given the poor state of the economy, it is not necessarily the case in India.  As seen in the Wall Street Journal article titled “Student Scarcity Is a Major Concern for India’s Business Schools (Click Here),” the B-school attendance in India is dropping.  However, the question is more centered on whether supply has greatly increased, or if demand is actually dropping.  It seems that there has been a shift in the mentality of the government recently as they are quickly recognizing the need to train top business minds within India, instead of having them all pursue degrees internationally.  This has potentially caused a lapse in accreditation standards, as many new schools have been recently certified, as well as many existing institutions to allow more students into their programs.  There is an unintended consequence to this situation of inflated openings as the students who might have previously attended a less respected institution because there was not enough space, can now attend the more prestigious schools.  This drastically drops the enrollment figures of the lower echelon schools.  This means that there is a potentially large amount of funds being wasted on empty seats at many schools.

As with everything in India, rapid expansion needs to done under control, and with the highest of standards in mind.  If India wants to be respected as more than just a manufacturing powerhouse, they must keep this philosophy in mind.

The curious case of Indian business students continues in America, as American business schools have seen a sizable decline in enrollment from Indian students  by 13% (Click Here).  Indian students don’t necessarily see the benefit of the huge cost of attending business schools in America as they once did.  It is important that American business schools maintain a strong international presence on their campuses because many future business leaders will need to interact with people from all over the world.

It seems as though there is a competition for Indian business students both at home and in America, and both seem to be losing the battle.  What do you guys think?  Where are all the students going?

–Michael Minasian

Professor Carr post:

I hope each of you as a graduate student regularly read business news in outlets such as the Wall Street Journal, Financial Times, The Economist, etc.  If I owned a company and you interviewed with me, one of the first questions I would ask you to verify if you were truly interested and passionate about business in general (versus a technician just picking up a graduate degree) would be a current events type of a question along the lines of, “It’s great to be able to interview you.  What have you been reading about in the Wall Street Journal or Financial Times or other that has peeked your interest?  How does that relate to my company and industry and/or what you studied in your MBA program?”

If you were silent, stumbled or babbled … not good … and I might move on the the other five people I brought in to interview for the position.  Don’t shoot the messenger, and on that note …

Please see/read this week’s Wall Street Journal article, Expanding Abroad?  Avoid Cultural Gaffes.  A nice article that will come to life even more when you visit China (or India).  But also be thinking above and beyond the “don’t look like a fool” issue that this article raises.    That is, ask yourself, “What business opportunities do I see not being met or satisfied that exist due the cultural differences I am seeing?  Could I build a business around them?  If so, how?”   This is not an meaningless academic exercise.  Many of you will work for firms that do or one day will do business in or with markets like China, India, Brazil, Russia, etc. have clients based there, work with colleagues or clients from those markets, etc.

“‘In my parents’ generation, they ended up buying a house in their forties and a car even later,’ Mr. Kadepurkar said. ‘When we were in college, I don’t think anyone dreamed we would be doing it so early in life.’ His salary rose to a princely $20,000 a year, then $40,000, and he marveled as those who joined (his employer) Infosys just a few years after him exuberantly cashed in their first paychecks to buy the latest cell phones. ‘They are unhesitatingly buying things like cars and motorbikes, and taking out loans to do it,’ he said. ‘They’ve not seen a lean period’ (Meredith 117-8).”

Much like Americans, Indians are choosing to spend their ever-growing paychecks on modern consumer goods. Indians like Mr. Stawan Kadepurkar are experiencing this new consumer culture firsthand.

But how did this desire to purchase the latest cell phones, shiny new cars, and bigger houses come about? People feel a biological need to differentiate themselves from one another, to create a pecking order. Modern people in egalitarian societies choose to differentiate themselves by purchasing luxury items to appear wealthier. This is by no means a modern phenomenon.

Like India, the origins of consumerism in the United States can be seen near its founding. Centuries ago, Europeans, and by extension Americans, distinguished themselves by social class. Those in the lowest classes could not rise up to become aristocracy; one was either born into nobility or not. But by breaking off from Great Britain and the king, the United States became an egalitarian society without social classes.

Consequently, as John Adams a founding father of the United States once described, Americans needed something to fill the void:

‘Hence arose, said Adams, an inevitable social division between the few and the many, between gentlemen and commoners, between ‘the rich and the poor, the laborious and idle, the learned and the ignorant,’ between those who had attained superiority and those who aspired to it. Grounded as it was in the irrational passions of people, this division could be neither stable nor secure. The struggle for superiority existed everywhere, even in egalitarian, republican America. Indeed, argued Adams, almost a half century before (Alexis de) Tocqueville made the same penetrating observation, Americans were more driven by passion for distinction, by the desire to set themselves from one another, than other peoples. In a republican society devoted to equality’there can be no subordination.’ A man would see his neighbor ‘whom he holds his equal’ with a better coach, house, or course. ‘He cannot bear it; he must and will be on a level with him.’ America, Adams concluded, had thus become ‘more Avaricious than any other Nation’ (Wood pg.214).”

The British-American people thus turned to consumerism. Not just the gentry, but the growing “middle-class” as well. They purchased cloth, ceramics, tea, and cutlery on credit provided by Scottish and English merchants. These early Americans were not “the self-sufficient yeomen of Jeffersonian mythology (Breen pg.454).”

They purchased imported goods for social status:

“One English traveler discovered to her surprise that in rural North Carolina, women seldom bothered to produce soap. It was not a question of the availability of raw materials. Good ashes could be had at no expense. But these rural women were consumers, and they prefer to purchase Irish soap ‘at the store at a monstrous price’ (Breen pg.455).”

In India, the same cultural move towards consumerism is beginning to take place. As barriers between the various Indian castes fall, Indians purchase consumer goods to differentiate themselves. Car sales, for example, jumped in India “69 percent over the past four years to reach 1.1 million (Meredith pg.163).”

What do you think? From what you have seen and read, are Indians falling into the same consumerist trap as Americans? Will this process positively or negatively affect the Indian people? If consumerism is bad, can is there a way to stop or reverse it?

- Alex Thornton

Cited Works

1. Breen, T. H. “Consumption, Anglicization, and the Formation of American Identity.” Major Problems in American Colonial History. Boston, MA: Houghton Mifflin Company, 2000.

2. Meredith, Robyn. The Elephant and the Dragon.  New York: W.W. Norton & Co., Inc., 2007.

3. Wood, Gordon. Empire of Liberty. New York: Oxford University Press, Inc., 2009

I am a big fan of James Fallows, who now writes for The Atlantic.  Fallows has written some great stuff on China over the years (e.g., “Postcards from Tomorrow’s Square”), but his latest piece that I just came across, “How America Can Rise Again”, is one of his best works and well worth reading.  It applies to what you will see in emerging economies and emerging markets such as India and China.  Click HERE to read it.  The 6 minute video interview that accompanies the article is also worth watching.

What are your take-aways from this article?    Your trip to China/India is important, in that it will help you test some of Fallow’s arguments.  Can’t do that if you stay home and only read about it in a book, and never visit the business future in a places like the PRC or India.

Every year my family goes to Seattle for Christmas and stays at my Grandmother’s beach house. My grandmother is no longer with us, but many of her old books, papers, and magazines still are. Christmas morning I was anxiously awaiting our family ritual of breakfast and presents when I flipped open a Marie Claire Magazine from August 2007. In it, I found an article titled “Womb for Rent,” which highlighted a growing fad of outsourcing pregnancy to India.

My initial reaction was that outsourcing had gone too far and that this is just one more way to exploit women in developing countries. However, after reading further, this does not appear to be the case. A Doctor by name Nanya Patel belonging to Anand, a town of 150,000 in India’s Western State of Gujarat, has single handedly set up a surrogacy clinic in this rural-dairy community. Want-to-be mothers from all over the world come to the clinic to have a local Indian woman carry their child for the bargain price of $25,000-$30,000. This covers a fee for the surrogate, all doctor’s bills, flights, and excellent prenatal care for the surrogate in her months of pregnancy. In America the surrogacy process costs upwards of $70,000.

At the time of the article, Dr. Patel has had 45 successful births and is very picky about both her clients and her carriers. She will only take couples that are married and have tried to have children themselves. The women are ovulating and producing eggs normally, but had problems with their uterus, so carrying a child is out of the question. The surrogates must have all had children before so they know what to expect, and be willing themselves to carry another (not pressured by their husbands or in-laws). The carriers receive a fee of $5,500 or more (more than many could earn in 10 years) for the use of their uterus, and that money is held for them until they are ready to put it towards whatever they choose for. Education for their children and a new home that won’t corrode during the monsoon season are among the most common uses of the surrogacy money.

It sounds ok right? - Women helping women conceive children and women helping women raise the standard of living for children. So far, at Dr. Patel’s clinic, it’s been ok; however there are very few governmental restrictions/regulations regarding surrogacy in India and Dr. Patel believes this is a problem. While she has harbored a safe and empowering environment for the mothers and carriers at her clinic, in a growing industry many other doctors may not. There could very well be clinics that will offer poor and unsafe conditions and take advantage of both parties involved.The New York Times also covered Dr. Patel’s clinic in a March 2008 article that discusses many of the same sentiments and concerns for the surrogates (Click Here).

With an increasing amount of surrogate pregnancies in India, should there be more regulation to ensure protection for the surrogates? Is it really exploiting Indian women or empowering them? If it continues to grow, is there a chance that it could exploit Indian women? Is this an abuse of power and money, or a way to create a mutually beneficial relationship?

-Lindsay Leaver