The advent of intensifying globalization and all-pervading economic liberalization since 1991, opened doors for Foreign Direct Investment (FDI) that has been steadily opened wide in Indian economy to facilitate the entry of Transnational Corporations (TNCs). TNC led FDI inflow, which started from the manufacturing industry is now spreading fast to diverse service sectors. Important fallout of this development has been a steadily increasing demand for locally trained management graduates. Accordingly, the number of Management Education (ME) institutions offering management programs has proliferated in our country in all directions.

This has resulted in the emergence of "monopolistic competition" in the job market for management graduates in India such as:

(i) Demand for management graduates emanates from diverse companies, both domestic firms and TNCs, which are of different sizes, operating in different sectors, offering different job profiles with different levels of remuneration packages.
(ii) Supply of management graduates is generated from diverse ME institutions, primarily domestic, which are of different sizes, operating in different locations (either as a chain or as stand-alone entities) aiming at different job profiles, at different levels of remuneration packages. Thus, the ME industry in our country is characterized by differentiated product demand, on one hand and differentiated product supply on the other. 

Today there is virtually free entry for industrial enterprises in Indian economy and therefore, with economic growth, the differentiated demand for management graduates will only grow. Similarly, there is virtually free entry for ME institutions and therefore with growing differentiated demand, differentiated supply is bound to grow. However, the real problem observed repeatedly is that differentiated product demand is hardly matched by differentiated product supply. This does not mean that there is a mismatch between demand and supply in the form of quantity of demand exceeding quantity of supply. Rather the problem lies in quality of demand far outstripping quality of supply. This implies that there is demand-supply quality gap and not demand-supply quantity gap. Ideally, market forces in the monopolistically competitive market should address this quality gap spontaneously. Unless conscious attempts are made to address the gap the phenomenon could not be understood. To understand this phenomenon, it is necessary to explore the factors responsible for the lack of quality in bulk of the management graduates who enter the job market. Those who establish ME institutions (particularly in the private sector) often think that initiating an institution means installing the necessary building infrastructure followed by acquiring the minimum required human resources including some core faculty, apart from some minimum library. Subsequently, to supplement, they hire industry employees/executives as "guest faculty" which serves their twin objectives:
(i) Faculty on permanent roll can be minimized and thereby minimize the periodic resource outflow (in the form of total employee remuneration), and
(ii) Build bridges with industry to enable the students gain (direct/indirect) industry exposure and facilitate their industry absorption. Hiring guest faculty from industry is both a necessity and a convenience for ME institution promoters. It is a necessity because highly qualified faculty (with research degrees in management) are hard and expensive to get and therefore, often less qualified faculty (with mere Post Graduate qualifications) is recruited with less remuneration, followed by supplementing them with guest faculty. It is convenient because apart from the twin objectives stated above it would serve the objective of profit maximization, at least in the short to medium run. However many of such institutions may not be able to survive in the long run.

The core issue concerning management education industry today is quality. A management student, irrespective of his/her quality while getting into a ME institution, must be facilitated to acquire conceptual clarity and analytical competence while graduating. It is here that the role of "in-house" faculty assumes importance. A management faculty with a research degree and engaged in research, other things remaining the same, is likely to be substantially better to bring in "live business examples" to the class and thereby enabling a student to understand the relationship between theory and practice. It is this learning complemented with "problem-solving," which nurtures the much desired conceptual clarity and analytical ability. What we see today is prospective management faculty with research degrees is in short supply. Therefore, the solution lies in promoting management research in our country. While public funded institutions such as IISc/IITs/IIMs/ICSSR institutions and University Departments promote management research on a continuous basis, the output generated by them is hardly sufficient to address the problem adequately. Therefore, ME institutions of repute in the private sector must initiate management research programs with attractive scholarships in a big way. At the first instance, they may not be able to attract quality students to their research programs. However, gradually and steadily, things would change. Over a range of a decade or two, private ME institutions along with public ME institutions should be able to address the "demand-supply quality gap" in the Management Education industry of our country. This would indirectly benefit the performance of industry and service enterprises by ensuring them a steady supply of high-quality personnel that would propel the country's efficiency in Management Education. 

Prof. M. H. Bala Subrahmanya

He is the Chairman of Department of Management Studies, Indian Institute of Science, Bangalore. His research interests spread across Industrial Economics covering the wide spectrum of industry: start-ups, micro firms, SMEs, large scale enterprises including TNCs, their structure and growth, industrial R&D and technological innovations, entrepreneurship, industrial energy consumption pattern and efficiency, industrial subcontracting, productivity and industrial performance.