CHAPTER 5

Research on Management in Developing Countries

Introduction

For decades the general consensus among Western policy makers involved with international economic development was that real progress was dependent on making sure that poorer countries implemented and followed “appropriate” fiscal, monetary, trade, and legal practices. While there is little dispute that national economic policies and rules are important for economic development, it has also been recognized that the managers in developing countries that have a hand in producing goods and services can have just as much impact on the pace of development.¹ It is, therefore, essential to study and understand management practices and styles in developing countries; however, while developing countries represent an overwhelmingly large percentage of the world’s population, the relatively small portion of global business activities in those countries, as well as other factors, has led to a small and spotty body of research on management practices and styles in those countries. One researcher lamented that while “[d]eveloping countries offer potentially some of the most important growth opportunities for companies both from the developing as the developing world  [reviews]  of empirical research grounded in institutional theory [have] found that most studies focused on developed countries and that only a small portion of the studies tried to test institutional theory in developed countries.”²

The field of management studies was conceived and developed predominantly in the United States, with some recent inputs coming from other industrialized countries in Europe and Asia (e.g., the tremendous interest in researching Japanese management practices in the 1980s and early 1990s). As such, most of management-related theories that have been produced and researched are based on circumstances in developed countries and thus include biases and assumptions that will likely make them inapplicable in developing countries. One of the problems with studying management in developing countries is that the landscape is tremendously diverse and includes countries of all sizes and from all continents and peoples who with unique histories that practice numerous religions, speak hundreds of different languages, and live in a breathtaking sweep of geographic conditions. All of this makes it difficult to formulate accurate and useful generalizations about “developing country management practices” and/or the attitudes and preferences of employees in all of those countries as to how they would like to be managed.

Applicability of Western Management Theories to Developing Countries

One of the long-running issues within the research community focusing on developing countries has been the extent to which management ­theories and practices with roots in the industrialized world could be understood and effectively applied by organizational managers in developing countries.³ Not surprisingly, there are several theories on this issue including the following⁴:

Proponents of the “divergence” perspective argue that cultural differences between societies such as those that have been identified by ­Hofstede and others make it difficult for Western management theories and practices to be effectively applied in non-Western societal cultures that are typically found in the developing world. Scholars holding this view also reject the notion of a universal theory of management on the grounds that cultural differences cannot be overcome.⁵

The “universal” perspective contrasts directly and sharply with the divergence perspective and holds that applicability of management theories and practices is not limited by culture and that certain similar management practices—universal practices—can be identified in organizations all around the world regardless of the level of economic development in the location where they are operating.⁶

The “convergence” perspective argues that applicability of management theories is correlated with the level of economic development and industrialization of a society and that the adoption of Western-style management theories by developing countries is a function of their ability to overcome technical and economic difficulties rather than cultural constraints.

The “situational” or “contingency” theory dismisses the claims of the proponents of the universal perspective and argues that applicability of management theories will depend on situational factors such as the personality of the manager, the ownership structure of the firm, hierarchy, and whether the firm is privately or publicly owned and operated.

One of the earliest formal studies of the applicability of Western-­style management theories to developing countries was conducted by ­Kiggundu et al. in the early 1980s and they concluded that those theories would only be applicable in situations where the organization in the developing country could behave as a closed system. In other words, when the theories related only to the core technology of an organization without reference to its external environment the theories tended to be applicable with conditions and results similar to those of organizations in developed countries; however, the theories would not be applicable in situations involving the external environment.⁷

In the decades following the publication of the Kiggundu et al. study, a growing number of researchers turned their attention to empirically studying the effectiveness of attempts to introduce and implement Western managerial practices in developing countries. For example, Wood and Caldas conducted extensive research on the successes and failures associated with attempts to adopt imported managerial expertise into Brazil.⁸ They posited a model, or framework, for understanding the integration of foreign managerial techniques in Brazil that began with various external, or contextual, factors such as the historical roots and cultural heritage of the country, particularly “plasticity” and “formalism”; contemporary external influences, including globalization and the sudden need for ­Brazil to transition from a feudal, agrarian economy into a player on the world economic stage; and low national competitiveness due to protectionist policies and underdeveloped productivity tools. Wood and Caldas emphasized that the two cultural traits—“plasticity” and “formalism”—significantly influenced the receptivity of Brazilians to foreign managerial techniques. On the one hand, plasticity, or an “openness and permeability to foreign influences,” triggered an apparent acceptance of foreign items; however, the formalism in Brazilian societal culture meant there was a “tendency to adopt façade behaviors resulting in a discrepancy between the formal and the real,” including behavior designed to deceive foreigners that alien practices were being adopted when, in fact, they were being resisted or only being partially adopted.⁹ The framework also included intermediate factors, including diffusion agents (e.g., Brazilian government and its agencies, business schools, business media, and consultancies), that drove the promotion, dissemination, and legitimization of new ideas. For example, Caldas and Wood noted that initiatives to adopt imported managerial practices such as the ISO 9000 system were often driven by government programs that provided incentives to firms if they pursued ISO certification.¹⁰

Caldas and Wood found evidence that Brazilian managers perceived programs and projects based on ISO certification to be irrelevant and/or inappropriate and that efforts to develop ISO systems actually raised costs and contributed to organizational rigidity because the conditions that existed in Brazilian firms were not favorable to such systems (i.e., poorly skilled laborers, high power distance, and highly centralized decision-making processes). Reengineering programs launched in ­Brazil during the mid- and late-1990s also yielded minimal benefits, which Wood and Caldas blamed on a failure to take into account organizational culture, competencies, and strategies. Other unexpected and ­damaging consequences of reengineering in Brazil flowed from the tendency of firms to use the programs as an excuse for downsizing for its own sake, rather than enhancing productivity, and this led to “loss of leadership, deterioration of organizational climate, decrease of organizational ­memory, reduction of productivity and efficiency, decline of perceived product and/or service quality, and hammering of organizational reputation.” Finally, while the introduction of enterprise resource planning did result in some improvements with respect to integration and quality of information, gains in productivity and competitiveness were rare due to scope and planning mistakes and failure to customize the new systems to the specific organizational needs of Brazilian firms.

Wood and Caldas concluded that Brazilian firms often appeared to adopt foreign managerial practices in response to political, institutional, and substantive pressures but that cultural factors, notably formalism, and contemporary economic and social factors, such as poorly skilled workers, led to unsuccessful and unreasoned adoption of the practices with little added value.¹¹ Wood and Caldas had also cited the “level of critical reasoning” as an important factor in predicting the success of effectively adopting foreign managerial techniques, noting that higher levels of critical reasoning would allow local managers to critically analyze the techniques and adapt them to local conditions in a way that would increase the changes of effective integration. Wood and Callas noted that the significant political and institutional pressures in Brazil to appear to adopt foreign methods quickly deprived local managers of the time or incentive to critically analyze the proposed solutions and the result was that “most adoptions tend to be uncritical, and the results for firms may be quite harmful.”¹²

In 2005, Hafsi and Farashahi decided it was time to take a fresh look at the research that had been conducted since the Kiggundu et al. article and undertook a review of 170 articles that were published from 1983 through 2002 to test their hypothesis that, despite the findings of researchers such as Caldas and Wood, circumstances had changed and that Western-based concepts of general management and organizational theories had achieved widespread applicability in developing countries.¹³ Their review led them to conclude that the “[r]esearchers working on organizations in developing countries will find a managerial behaviour that is similar to what may be seen in the developed countries.” Hafsi and Frashahi suggested that their conclusions could be traced to a mix of environmental changes since the early 1980s as well as to extension of organizational theory to cover an increasing variety of circumstances and organizations.¹⁴ In their view, the key environmental changes included the following:

Major global political and economic institutions, such as the World Bank and the International Monetary Fund, imposed their structural adjustment framework on many emerging and developing economies.¹⁵ While this has not necessarily produced the economic growth that was anticipated and desired, it has been successful from a process perspective and, as a result, local institutions—governments that insisted on continuous intervention in the economy and commercial markets—have been pushed aside and replaced by growing influence of global institutions dominated by Western countries.¹⁶ While this has sometimes caused resentment in developing countries, it has also softened the view of Western management and organizational practices in those countries and they are now increasingly seen as being acceptable.¹⁷

A number of events and innovations have accelerated globalization of markets, industries, and firms including reduction of tariff and non-tariff barriers, creation of the World Trade Organization, and the emergence, growth, and maturation of large free trade areas (e.g., the European Union, ASEAN, and the North American Free Trade Agreement).¹⁸

Barriers to cross-border communication have been struck down by rapid and often astonishing technological innovations, thus facilitating the movement toward global uniformity of perceptions and understanding regarding fundamental financial and economic issues and potential solutions.¹⁹

Most emerging and developing countries have embraced and launched privatization programs and the processes and practices of privatization have become more uniform around the world.²⁰

The rapid global growth of industries based on the application of common and complex technologies has pushed developing and emerging countries to learn and adopt the managerial rules, norms, and theories associated with those industries. This has been particularly true in instances where globalization has been led by multinational firms as has been the cases in industries such as banking and automobiles. The standardization that so often accompanies globalization has often clashed with strong local tastes and cultural constraints including religious practices; however, even in those instances multinational firms have generally found a way to make reasonable accommodations for local preferences while implementing managerial practices and administrative techniques that are quite similar in most parts of the world (e.g., automobile manufacturers use the same standards to manage production and train workers in every country where they build their products).

More and more firms headquartered in countries around the world have adopted and implemented global growth strategies that has resulted in wider and freer access to markets, capital, human resources, and other assets and facilitated the transfer of managerial theories through actual practice in developing and emerging countries.²¹ Multinational firms, in particular, have taken the lead in introducing and popularizing effective management practices that other firms, including many in developing countries, want to emulate. The practice of multinational firms of entering into joint ventures and other strategic alliances with local partners in developing countries is another way in which these firms are leading the push toward convergence in management practices.²²

Managing training has become more uniform and standardized around the world and developing countries in particular has experienced substantial growth in the number of formal management training programs and business schools sponsored and staffed by Western-based organizations such as the Association to Advance Collegiate Schools of Business and the Association of MBAs.²³ The result has been that managers being trained today in developing countries are more likely to be exposed to, and adopt, techniques, behavioral norms, and values that are substantially similar to those being introduced to their colleagues in the United States and other Western countries.²⁴

Hafsi and Farashahi argued that, taken together, the changes listed earlier had led to the development and dissemination of shared knowledge and technical language among managers around the world regardless of the level of development of the countries in which they are practicing. They also noted that the global environment for business activities had been transformed by advances in technology and elimination of trade barriers that allowed great mobility of capital, labor, and other resources and wider and freer access to markets around the world. In addition, Hafsi and Farashahi felt that these trends had reduced the traditional ability of governments in developing countries to exercise inordinate amounts of control over their local economies and had forced public officials in those countries to begin acting in the same way as their colleagues in the industrialized world and adopt policies, such as privatization, that turned responsibility for commerce and innovation over to managers in the private sector. In their words: “To restate the obvious, we claim that an important process of institutional diffusion has taken place in the last decades. It has been pushed by international agencies’ regulatory processes; by powerful normative processes that have defined good economic practices and determined the behaviour of economists and managers all over the world; and by dominant cultural-cognitive processes whereby western civilization mostly economic values take over traditional values (citations omitted).”²⁵

Impact of Emergence of Global Competitors from Developing Countries

Interest in management outside of the United States, Europe, Japan, and other Asian countries such as Korea was fueled by the emergence of new global competitors such as the so-called BRIC countries: Brazil, Russia, India, and China, and it is now increasingly common to see articles and books comparing management practices in those countries to those used in the United States and other developed countries. In many instances, however, the primary thread of inquiry is on how US-based management practices, particularly in the human resources area, can be transferred to these developing economies, often with the anticipation that US multinationals will be establishing a large presence in those countries and are interested in importing their own management techniques as opposed to learning and applying indigenous practices. Many developing countries have their own body of research on local management practices compiled and recorded by academics, consultants, and policy makers in those countries—India is a particularly good example of a developing country with a substantial body of indigenous management literature; however, these materials are often difficult to access and may not have been translated to make it useful for interested parties from outside those countries.

The dichotomy between developed and developing countries, and the members of each of those groups, has a long history and has become deeply engrained in the minds of many scholars, policy makers, and ordinary citizens around the world. However, there is evidence of significant changes, which, if taken to their seemingly logical conclusion, will disrupt orthodox thinking about the sources of best practices for managers and will generate new ideas among scholars researching management in developing countries. Already we are seeing large enterprises from countries still classified as “developing,” such as Brazil, China, and India, involved in battles to assume ownership and managerial control over valuable economic assets in industrialized countries—and sometimes the only serious bidders are firms from the developing countries. In addition, industrialized countries are seeing progressively higher levels of inbound foreign investment from developing countries, often accompanied by a transfer of managers and their own managerial styles and practices from the investing country. Observing these events, Punnett has commented:

What literature there is on management interactions between developing and developed countries implicitly assumes that managers from developed countries will be adapting to the environment in developing countries. The reverse may be more and more the reality of the management challenges of the 21st century.²⁶

Developing Countries as Testing Grounds for New Management Theories

There is no question that introduction and transfer of “foreign” management theories and practices into developing countries has been a long and challenging process that is far from ending and which has been complicated by various factors including the importance of history, values and unwritten rules, norms, and related practices that cannot be easily identified and understood by outsiders. However, globalization generally, as well as the specific factors emphasized by Hafsi and Frashahi, have become sources of change for values and institutions in developing countries and recent years have seen countries such as China, India, Korea, and Turkey willingly seek out and adapt various Western management practices in a way rarely thought to be possible in the past. As a result, Hafsi and Frashahi posited the somewhat radical suggestion that “the question, whether Western-based theoretical development is applicable to developing countries, may have become irrelevant,” and then went on to explain that if one does concede that Western management theories can be effectively applied in many ways in developing countries then it was time to include those countries as part of “normal” scientific development that simply expands the diversity of contexts and circumstances in which discoveries regarding organizational structures and management can be made.

Hafsi and Frashahi predicted that developing countries may, in the future, provide novel and interesting ideas for managers in more industrialized countries, particularly as managers in the United States and Western Europe struggle to compete in fast changing and relatively unstable environments that have long been the norm in developing countries. Hafsi and Farashahi noted: “What is discovered in organizations in Texas, France or Saudi Arabia may or may not apply to organizations in ­Bangladesh, California or the UK; but we can at least relate the reasons to well-known concepts and theories, in particular to developments that recognize the importance of perceptions, values, beliefs and other soft influences on decision-makers’ behaviour.”²⁷ What this means is that in order for organizational management theory and research to be robust, timely, and useful in the future it should include study of practices in all of the aforementioned geographical locations coupled with rejection of the historical notion of management practices in developing countries being a degraded, or poor, form of management.

A. de Waal also expressed high hopes for the value of management studies in developing countries and argued that it could reasonably be assumed that the “highly dynamic environment  [in these countries]  is a good testing ground for new theory, techniques and concepts of business and management.”²⁸ He was more cautious than Hafsi and Frashahi about the efficacy of Western management practices in emerging ­markets due to significant cultural differences, but pointed out that if such ­practices could not be easily transferred then it was imperative for management scholars all over the world to seek out new solutions to managerial issues that would suit the specific cultural, economic, and political conditions found in developing countries. It does appear that interest in this type of research is increasing with the initial work focusing primarily on topics such as human resources management, new public management, and management control and information systems.²⁹

Challenges for Managers in Developing Countries

The environment for business activities in developing countries—economic, political, and social conditions—generally varies significantly from the environment confronting managers in developed countries and this imposes significant and unique challenges for managers in developing countries as they attempt to set and execute their operational plans and strategies for their enterprises. For example, managers in developing countries are typically faced with production difficulties, poor infrastructure conditions, market uncertainties and disruptions, unstable and turbulent macroeconomic conditions, financial restrictions, governmental controls, and unstable and underdeveloped political systems and institutions, inadequate access to reliable information, relatively primitive technology levels, and a lack of skilled and trained human capital. Managers in developing countries must also pay particular attention to the health and development of the natural resources sector in their countries since natural resources continue to play an important role in the economies of many of those countries as they embark on a transition toward greater reliance on jobs and economic activities in the manufacturing and ­services sectors. In addition, the opportunities and pressures of globalization raise difficult and emotional issues of business ethics and corporate social responsibility. Finally, like managers all around the world, managers in developing countries must understand how elements of societal culture may impact the efficacy of the managerial practices and styles that they attempt to employ.

Management Processes in Developing Countries

Most of the popular models of managerial activities focus on certain key functions. In the early 2000s, Jones et al. referred to management as “the process of using an organization’s resources to achieve specific goals through the functions of planning, organizing, leading and controlling”³⁰; however, long before that Henri Fayol pioneered the notion of “functions of management” in his 1916 book Administration Industrielle et ­Generale in which he identified and described five functions of managers—planning, organizing, commanding, coordinating, and controlling—that he believed were universal and required of all managers as they went about performing their day-to-day activities regardless of whether they were operating in the business environment or overseeing the activities of governmental, military, religious, or philanthropic organizations. In 1937 Gulick and Urwick added two additional items to Fayol’s original list: reporting and budgeting.³¹ Other management theorists working and writing during the 1950s and 1960s also embraced what has become known as the “process school of management” based on the notion that management should be viewed as a linear process that included an identifiable set of several interdependent functions. For example, Koontz et al. identified the following five activities as “major management functions”: planning, organizing, staffing, directing, and controlling.³²

While the process school of management, and the accompanying similar lists of five to seven managerial functions, has remained a dominant analytical framework, others have criticized this approach. Perhaps the most well-known opposition came from Mintzberg and his suggestion of an alternative descriptive model of the ten core “roles,” or organized sets of behaviors, that could be identified with a managerial position. Mintzberg divided these roles into three groups: interpersonal roles (i.e., figure-head, leader, and liaison offer), informational roles (i.e., monitors, disseminators, spokespeople) and decisional roles (i.e., entrepreneurs, disturbance handlers, resource allocators, and negotiators).³³ Mintzberg’s work generated a fair amount of debate regarding the validity of the process school of management since it questioned the linearity of managerial activities and suggested that the manager’s life is more realistically viewed as a continuously changing set of roles that demanded different skills.

When studying management practices and styles in developing countries a threshold question is whether or not such a model of the management process, which was created by Western researchers working in largely developed and industrialized economies, is applicable and useful for understanding how managers operate in those countries. ­Punnett cautioned that the model had certain “Western biases” that must be accounted for when it is used for analysis of actions in developing countries. For example, she pointed out that “the process in the model is based on a sequential, logical, rational set of discrete activities” and also “assumes control over the environment so that making plans, designing structures, choosing people for specific jobs, and measuring outcomes are all reasonable activities.” While all of this is consistent with a Western view of the world, Punnett argued that non-Western developing countries “do not see the world in the same straight, sequenced pattern” and that the efficacy of the model in those countries may be undermined by different perspectives regarding time orientation and the role of fate and the degree of control that people actually have over their environment.³⁴ To the extent that there is truth in Punnett’s words, which are supported by a good deal of empirical evidence on world views of managers and subordinates in many developing countries, it may well be that Mintzberg’s family of roles would be a better reference point for developing country managers looking to identify the skills they might need to carry out the full scope of their jobs.

Models of the management process in various countries must also take into account the impact of societal culture. This is true regardless of whether countries are developed and industrialized or developing. Generalizing about the profile of societal cultures for developing countries is difficult and problematic; however, it is probably fair to say that the cultural characteristics of many developing countries differ from those found in the United States and other industrialized Western countries and these differences will be reflected in how managers in developed countries approach activities such as planning, leading, and controlling. Punnett observed that “[d]eveloping countries have generally been found to be somewhat more collective than developed countries, somewhat more accepting of power differentials, somewhat more averse to uncertainty, and more fatalistic.” She also noted that in developing countries the “need for achievement” was generally lower and gender roles were more firmly delineated, a situation that often led to discrimination against women with respect to property rights (e.g., land ownership and inheritance rights), educational opportunities, and income.³⁵

Punnett argued that the collection of societal culture characteristics described earlier tended to push managers in developing countries toward a “Theory X” management style that featured rigid hierarchies; direction from the top down, albeit with modest levels of input from subordinates and a touch of paternalism and parental benevolence; and tight controls and rare challenges to managerial instructions by subordinates. Punnett suggested that the cultural context in developing countries raised serious questions about how managers in those countries should approach the most commonly mentioned managerial functions and activities. For example, she questioned whether planning really necessary if events are predetermined, what good were organizational charts if power and responsibilities are based on personal influence and relationships, and were control systems irrelevant when subordinates are culturally conditioned to unquestionably act upon the instructions of their superiors?

In attempting to explain the foundation for the characteristics of societal culture in developing countries and attitudes in those countries toward various business-related activities, Punnett and others have emphasized the impact of the long periods of colonial occupation by European countries, many of which continue to play a strong role in the political and economic affairs of their former colonies even after independence. Punnett noted that the colonies were in subordinate positions in relation to their “colonial masters” from Europe and thus were dependent on European officials with respect to a wide array of decisions relating to politics, economic, and business. She suggested that this dependence has survived in the form of a lingering tendency among Africans to look to others for decisions and to unquestionably accept those decisions when they come from persons perceived to have legitimate authority in African culture. Remnants of the “top down” colonial authority structure, with little input from the local level, can also be found in the high power distance and tall organizational hierarchies that remain prevalent in post-­independence African businesses. Another interesting observation is that the relative lack of marketing acumen among African businesses can be traced to the fact that colonies were generally exclusive producers for their overlords and thus there was no need to develop skills in business-related functions outside of production.³⁶

Many continue to believe that Western models of managerial functions and activities may not be totally applicable to developing countries and the study of managerial processes in developing countries must certainly take into account the unique challenges confronting managers in those countries. However, in spite of those limitations, managerial processes in developing countries are often discussed by reference to dimensions familiar to scholars from the West: planning, organizing, staffing, leading, and coordinating. Whether or not these dimensions are “universal” remains a matter for debate.³⁷ Moreover, even if one can reasonably assume that managers in developing countries must devote some amount of their time and resources to planning, coordinating, and other activities previously listed, they will necessarily bring a different perspective to due to factors such as societal culture, the level of training of their subordinates, their own prior exposure to managerial training and technology, and, finally, the local institutional influences on business activities (i.e., national business systems). For example, Farashahi suggested that managers in developing countries have less sensitivity, or sometimes even no response, to competition and economic objectives given the reality that firms in developing countries remain so dependent on central governments that strictly control the allocation of resources and dictate plans to both public and private sector enterprises.³⁸ Farashashi also suggested that managers in developing countries are very sensitive to social relations and political objectives, which may impact staffing policies and decisions, and that they are less used to making and implementing decisions.

Management Training in Developing Countries

Managers in all parts of the world, including developing countries, can be expected to be most effective when they possess certain fundamental skills—technical, human, conceptual and design—that are necessary and appropriate for their particular managerial level and scope of responsibilities. It is reasonable and useful to think of managerial training in developing countries as having the important objective of building “management capacity” in those countries, both at the national level and within specific enterprises. A useful definition of management capacity has been provided by the European Commission, albeit in a different context: research and policy advice regarding support for the creation and growth of small and medium-sized enterprises (SMEs) in the European Union. In a report on “management capacity building,” the European Commission noted that “management capacity building has been understood broadly as encompassing all the means through which a startup enterprise or an existing SME gathers and strengthens its knowledge and competencies in four main areas having an impact on a firm’s profitability: (1) strategic and management knowledge aspects (including human resource management, accounting, financing, marketing, strategy, and organizational issues, such as production and information and technology aspects); (2) understanding the running of the business and of the potential opportunities or threats (including visions for further development of activities, current and prospective marketing aspects); (3) willingness to question and maybe review the established patterns (innovation, organizational aspects); and (4) attitudes toward investing time in management development or other needed competencies.”³⁹ The report also identified three main categories of means that can be used to acquire the needed managerial skills, including training, advice from professionals and/or consultants, and “knowledge sharing” activities, such as networking and Internet research, aimed at finding out applicable information.⁴⁰

Training and skills building programs have frequently been offered in developing countries through international aid organizations, and it has been observed that “training constitutes an important part of both developing country budgets and overseas development assistance.”⁴¹ In fact, international organizations have invested significant amounts in various types of “technical cooperation,” which includes training, equipment, and advice. Unfortunately, methodological and data problems have made it difficult to accurately compute the “return” on these investments and “most evaluations of training in a development context is that it has proved less effective than expected.”⁴²

While work needs to be done on uncovering and analyzing empirical evidence, there is a general impression that a handful of “favorable conditions” need to be present in order for training and skills building programs in developing countries to be effective. For example, it is recommended that “capacity development  be integrated in a country-led development strategy,” ⁴³ which means avoiding one-off training events and minimizing activities that primarily benefit individuals and focusing on initiatives that can support needed institutional and organizational changes. In addition, to the extent possible training programs should be designed and implemented in ways that do not get caught up in local politics. In many cases, donor countries create and use training programs as a way to favor and support their own institutes, universities, and consultants. For their part, governments in developing countries often hand out opportunities to participate in training junkets as political favors. In that same vein, it is recommended that the organizations in developing countries benefitting from the training take ownership of the results of the programs, thus providing incentives for those organizations to take the programs seriously and commit their most valuable resources (i.e., people, time, and capital) to making sure that the programs are effective and successful. Finally, both sides of the training equation—donors and recipients—must commit to setting benchmarks for success before the programs begin and continuously measuring performance toward those benchmarks once the training has been delivered.⁴⁴

Improvement of local business education institutions has also been a priority among efforts to enhance capacity building in developing countries. For example, the Global Business School Network (GBSN) is an international non-profit organization focusing on the improvement of management education in emerging markets. The GBSN has undertaken a number of initiatives to build competencies within business schools in developing countries including strengthening and expanding existing curricula; facilitating faculty training, mentoring, and developing; creating entrepreneurship modules; researching, writing, and disseminating local case studies and other instructional materials; and creating networks for the dissemination of knowledge, best practices, and “lessons learned.” In addition, the GBSN acts as a hub for connecting program schools in developing countries with organizational partners, including business schools in developed countries, to foster communication and the flow of resources to the program schools. For further discussion, see the GBSN website. In addition, the World Federal of Engineers, a nongovernmental international organization that brings together national engineering organizations from over 90 nations and represents some 8,000,000 engineers from around the world, has led several programs designed to improve engineering education and practice in developing countries.⁴⁵

Training through business education at universities and colleges in developing countries is an important topic and there are various issues that often must be addressed simultaneously and on an ongoing basis as the needs of developing countries change and evolve. In many cases, business schools in developing countries begin by imitating the curriculum offered in the United States and other developed countries; however, it soon becomes apparent that modifications are needed to meet the needs of the local communities. Accounting and finance are fundamental subjects for developing countries as they transition toward market-­oriented economies and the curriculum must also address marketing, particularly international marketing of consumer products, planning, and distribution. While training for “general manager” positions is needed in developing countries there is a rapidly increasing need for development of specialists such as professional marketers, project managers, and controllers. The “demand” for certain skills varies from country-to-country. For example, students in many countries need more coursework in computer skills, oral communications and foreign language, and leadership and interpersonal communications skills. Other issues of interest include the creating and offering of advanced degrees, such as MBAs; incorporating distance learning techniques, particularly in larger countries where it is difficult for all students to travel to a central training hub; providing ­education to local instructors on how to teach the new business topics; building research capacity to support the expansion of specific scholarly work on management in developing countries; and, finally, ­academic–industry collaboration to improve worker skills and transfer scientific knowledge and technology from the university laboratory to the factory floor.⁴⁶

Additional research on management skills acquisition in developing countries has focused on knowledge transfer methods and the ability of developing countries to retain qualified managers once they have been trained, either locally or overseas. For example, Beudry and Francois suggested that continuously observing other competent managers (“learning by seeing”) may actually be a more effective means for acquisition of managerial skills than the traditional “learning by doing” that emphasizes repetitive practice of new skills.⁴⁷ The same researchers also cautioned that hopes that managers sent abroad for training would return home to help disseminate their knowledge locally and support development might be misplaced. Specifically, they observed that “the incentive for managers to migrate from a more developed country (where managerial knowledge is abundant) to a less developed country (where it is scarce) is  very weak and possibly non-existent” an observation that they noted “has the potential to help understand the persistence of under-development.”⁴⁸

¹ For an early discussion of the debate regarding the importance of “economists” versus “businesspeople” in fostering economic development, see Heller, F. 1968. “The Role of Management in Economic Development.” Management International Review 8, no. 6, pp. 63–70.

² de Waal, A. 2007. “Is Performance Management Applicable in Developing Countries?: The case of a Tanzanian College.” International Journal of Emerging Markets 2, no. 1, pp. 68–83, 68 (citing Farashahi, M., T. Hafso, and R. Molz. 2005. “Institutionalized Norms of Conducting Research and Social Realities: A Research Synthesis of Empirical Works from 1983 to 2002.” International ­Journal of Management Review 7, no. 1, pp. 1–24).

³ Hoskisson, R., L. Eden, C. Ming Lau, and M. Wright. 2000. “Strategy in Emerging Economies.” Academy of Management Journal 43, no. 3, pp. 249–67.

⁴ Derived from Hafsi, T., and M. Farashahi. October 1, 2005. “Applicability of Management Theories to Developing Countries: A Synthesis.” The Free Library http://thefreelibrary.com/Applicability of management theories to developing countries: a...-a0141092760

⁵ See Hofstede, G. 1994. “Cultural Constraints in Management Theories.” International Review of Strategic Management 5, pp. 27–49; Jaeger, A. 1990. “The Applicability of Western Management Techniques in Developing Countries: A Cultural Perspective.” In Management in Developing Countries, eds. A. Jaeger and R. Kanungo, London: Routlege, pp. 131–45.

⁶ See Mintzberg, H. 1973. The Nature of Managerial Work. New York, NY: Harper & Row; Mintzberg, H. July-August 1975. “The Manager’s Job--Folklore and Fact.” Harvard Business Review 53, no. 4, p. 49; and Lubatkin, M., M. ­Ndiaye, and R. Vengroff. 1997. “The Nature of Managerial Work in Developing Countries: A Limited Test of the Universalist Hypothesis.” Journal of ­International Business Studies 28, no. 4, pp. 711–33.

⁷ Hafsi, T., and M. Farashahi. October 1, 2005. “Applicability of Management Theories to Developing Countries: A Synthesis.” The Free Library http://thefreelibrary.com/Applicability of management theories to developing countries: a...-a0141092760

⁸ See Wood, T., and M. Caldas. 2002. “Adopting Imported Managerial Expertise in Developing Countries: The Brazilian Experience.” Academy of Management Executive 16, no. 2, pp. 18–32. The description of Brazilian experiences with ISO 9000, reengineering and enterprise resource planning in the following paragraph is adapted from a discussion on page 19 of the cited article. See also Caldas, M., and T. Wood. 1997. ‘“For the English to See’: The Importation of Managerial Technology in Late 20th Century Brazil.” Organization 4, no. 4, pp. 517–34.

⁹ Wood, T., and M. Caldas. 2002. “‘Adopting Imported Managerial Expertise in Developing Countries: The Brazilian Experience.” Academy of Management Executive 16, no. 2, pp. 18–32, 22.

¹⁰ Id. at 23.

¹¹ Id. at 21 and 25.

¹² Id. at 21.

¹³ Hafsi, T., and M. Farashahi. October 1, 2005. “Applicability of Management Theories to Developing Countries: A Synthesis.” The Free Library http://thefreelibrary.com/Applicability of management theories to developing countries: a...-a0141092760

¹⁴ Farashahi, M., T. Hafsi, and R. Molz. 2005. “Institutionalized Norms of Conducting Research and Social Realities: A Research Synthesis of Empirical Works From 1983-2002.” International Journal of Management Reviews 7, no. 1.

¹⁵ Kamarck, A.M. 1996. “The World Bank: Challenges and Creative Responses.” In The Bretton Woods-GATT system: Retrospect and Prospect After Fifty Years, ed. O. Kirshner, 106–27. London: M.E, Sharpe.; Knoop, C.I., and G.C. Lodge. 1996. “World Bank (A): Under Siege.” Harvard Business School Case, 9–797. Boston: Harvard Business School Press.; Rich, B. 1994. Mortgaging the Earth: The World Bank, Environmental Impoverishment, and the Crisis of Development. Boston: Beacon Press; and Wapenhans, W. 1995. What’s Ahead For the World Bank? Flint, MI: Charles Stewart Mott Foundation Publications.

¹⁶ With regard to how interaction between local institutions and global ones have influenced regulators, firms and markets in developing countries, see Carney, M., and M. Farashahi. 2006. “Transnational Institutions in Developing Countries: The Case of Iranian Civil Aviation.” Organization Studies 27, no. 1, pp. 53–77. In general, developing countries looking to build and enhance their own capabilities in a complex and technology-driven area such as commercial airlines must be prepared to recognize and follow global regulatory schemes and managerial, technical and security norms dictated by manufacturers and investors from Western countries.

¹⁷ Lubatkin, M., M. Ndiaye, and R. Vengroff. 1997. “The Nature of Managerial Work in Developing Countries: A Limited Test of the Universalist Hypothesis.” Journal of International Business Studies 28, no. 4, pp. 711–33.

¹⁸ Doz, Y. 1990. Strategic Management in Multinational Companies. Oxford: Pergamon; and Porter, M. 1990. The Competitive Advantage of Nations. London: Macmillan.

¹⁹ Eisenmann, T. 2003. “High Definition TV: The Grand Alliance.” ­Harvard Business School Case 9-804-103, Boston: Harvard Business School Press; and Henderson, R., and D. Yoffie. 2004. “Nokia and MIT’s project Oxygen.” ­Harvard Business School Case 9-704-474, Boston: Harvard Business School Press.

²⁰ World Bank Group. 2003. Washington, D.C.: World Development Report, 1999-2003.

²¹ Doz, Y. 1986. Strategic Management in Multinational Companies. Oxford: ­Pergamon; and Marnet, O. 2005. “Economic Governance in the Age of Globalization.” Journal of Economic Issues 39, no. 1, pp. 282–85.

²² See J. Lee, T. Roehl, and S. Choe. 2000. “What Makes Management Style Similar and Distinct Across Borders? Growth, Experience and Culture in Korean and Japanese Firms.” Journal of International Business Studies 31, no. 4,
pp. 631–52.

²³ Venezia, G. 2005. “Impact of Globalization of Public Administration Practices on Hofstede’s Cultural Indices.” Journal of American Academy of Business 6, no. 2, p. 344.

²⁴ The spread of Western management techniques to developing countries has corresponded to the evolution of management toward more of a science than an art, a phenomenon which has led to global training practices supported by what Hafsi and Farashahi referred to as the “strong homogenizing effect of certification associations and agencies.” See also Wright, P., and G. Geroy. 2003. “Is it Time for ISO-9000 Managers?” Management Research News 26, no. 1, pp. 41–54.

²⁵ Hafsi, T., and M. Farashahi. October 1, 2005. “Applicability of Management Theories to Developing Countries: A Synthesis.” The Free Library http://thefreelibrary.com/Applicability of management theories to developing countries: a...-a0141092760

²⁶ Punnett, B. “Management in Developing Countries.” http://cavehill-uwi.academia.edu/BettyJanePunnett/Papers/181413/Managing_in_Developing_­Countries

²⁷ Hafsi, T., and M. Farashahi. October 1, 2005. “Applicability of Management Theories to Developing Countries: A Synthesis.” The Free Library http://thefreelibrary.com/Applicability of management theories to developing countries: a...-a0141092760

²⁸ de Waal, A. 2007. “Is Performance Management Applicable in Developing Countries?: The Case of a Tanzanian College.” International Journal of Emerging Markets 2, no. 1, pp. 68–83, 68. (citing Pacek, N., and D. Thorniley. 2004. Emerging Markets, Lessons for Business Success and the Outlook for Different ­Markets. London: The Economist).

²⁹ Design and implementation of management accounting systems, for example, has been frequently studied by researchers. See, e.g., Anderson, S.W., and W. Lanen. 1999. “Economic Transition, Strategy and the Evolution of Management Accounting Practices: The Case of India.” Accounting, Organisations and Society 24, nos. 5–6, pp. 379–412; and Waweru, N., Z. Hoque, and E. ­Uliana. 2004. “Management Accounting Change in South Africa, Case Studies from Retail Services.” Accounting, Auditing and Accountability Journal 17, no. 5, pp. 675–704.

³⁰ Jones, G., J. George, and C. Hill. 2000. Contemporary Management, 2nd ed. New York, NY: Irwin/McGraw-Hill.

³¹ Description derived from Unit 8 Classical Approach: Luther Gulick and ­Lyndall Urwick, http://egyankosh.ac.in/bitstream/123456789/25509/1/Unit-8.pdf The model proposed by Gulick and Urwick first appeared in Gulick, L., and L. Urwick., eds. 1937. Papers on the Science of Administration. New York, NY: Institute of Public Administration.

³² Koontz, H., C. O’Donnell, and H. Weihrich. 1970. Management, 7th ed. New York, NY: McGraw-Hill.

³³ See Mintzberg, H. July–August 1975. “The Manager’s Job: Folklore and Fact.” Harvard Business Review 53, no. 4, pp. 49–61.

³⁴ Punnett, B. n.d. “Management in Developing Countries.” http://cavehill-uwi.academia.edu/BettyJanePunnett/Papers/181413/Managing_in_Developing_Countries

³⁵ Id.

³⁶ Id.

³⁷ See, e.g., Lubatkin, M.H., M. Ndiaye, and R. Vengroff. 1997. “The Nature of Managerial Work in Developing Countries: A Limited Test of the Universalist Hypothesis.” Journal of International Business Studies 28, no. 4, pp. 711–33.

³⁸ Farashahi, M. “Management Systems in Developing Countries.” http://sba.muohio.edu/abas/1999/farashme.pdf

³⁹ European Commission. September 2006. “Final Report of the Expert Group on Building Management Capacity.” Brussels: Directorate-General for Enterprise and Industry of the European Commission, p. 6.

⁴⁰ Id.

⁴¹ Nelson, M. February 2006. Does Training Work? Re-Examining Donor-Sponsored Training Programs in Developing Countries. World Bank Institute: Capacity Development Briefs.

⁴² Id.

⁴³ Id.

⁴⁴ Id.

⁴⁵ Jones, R. “Engineering Capacity Building in Developing Countries.” http://worldexpertise.com/Engineering_Capacity_Building_in_Developing_­Countries.htm

⁴⁶ For an interesting series of essays on business and management education in developing countries around the world, see McIntyre, J.R., and I. Alon., eds. 2005. Business and Management Education in Transitioning and Developing ­Countries. Armonk, NY: M.E. Sharpe.

⁴⁷ Beudry, P., and P. Francois. 2010. “Managerial Skills Acquisition and the Theory of Economic Development.” Review of Economic Studies 77, no. 1, pp. 90–126. Beudry and Francois explained that “‘learning by seeing’ is a process whereby, when working as an unskilled worker in production, some of the knowledge that is currently only held by a worker’s skilled counterparts is transmitted to the work through experience  [b]y working alongside (or as a subordinate to) the skilled, unskilled workers can succeed in picking up the skills required to fill skilled positions in the firm, or use that experience to themselves startup firms of their own that will replicate the product methods that they have learned.”

⁴⁸ Beudry, P., and P. Francois. 2005. “Managerial Skills Acquisition and the Theory of Economic Development.” Review of Economic Studies 77, no. 1, pp. 90–126.