Nitin Rao

Global Action, Local Responsibility: Is Development Through Enterprise a Western-Only Concept?

This year’s topic for the St. Gallen’s Symposium set me thinking…

Global Capitalism, Local Values
There has been much discussion about Bill Gates’ keynote address at the World Economic Forum in Davos, where he pushed for “a creative capitalism” that uses market forces to address the needs of the world’s poorest countries. In his keynote, Gates told the audience that, “We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.”Even as academics such as Prof. C. K. Prahalad at the University of Michigan and Prof. Kasturi Rangan at Harvard Business School write and research extensively on the opportunities at the base of the economic pyramid, does development through enterprise (DTE) remain by and large a Western concept? Is global capitalism a wave that originates from the West and trickles to the developed countries?

Clash in Values
Based largely upon my experiences in the development sector in India, I believe the success of global concepts (spawned in the West) ultimately lies in their implementation at a local level.

India, for one, is still influenced by decades of socialist rhetoric. Multiple government failures in terms of providing services have made Indians despondent, but have not taken away their socialist ideas on business. “Profit”, in development, remains a bad word. And the lack of active contributions from Indian academia (with some exceptions) to research on business aimed at the poor, makes Development Through Enterprise seemingly meaningless in the local Indian context.

This clash in values is stifling the growth of sectors such as education, which are key to? sustaining India’s recent GDP growth.

As such, I wonder: is this inertia and conservatism inherent in the Indian fabric? Perhaps, not.

Look at the Indian IT story. Outsourcing changed the world–and India. Suddenly, people spoke of a flat world and of being Bangalored. The private sector, with limited government participation, leveraged a new knowledge economy and created a sunrise sector. For hundreds of thousands of young graduates, an IT career presents a gateway to MNC work culture, and indeed–the world.

Compare this with the education sector. The government continues to mass-produce a poor quality of education services. Private entrepreneurs, meanwhile, are fobbed off with unrealistic regulation.

What drives the difference? To my mind, the Indian masses are conditioned to have one set of rules for the so-called mainstream sectors, and another for development. Teacher absence and inefficiency has not driven the masses to re-visit their archaic paradigm of education. People are uncomfortable with the idea of education being turned into a commodity. Excessive government subsidies have made it a norm to almost expect near-free education.

What’s worse, the price is almost becoming a justification for the quality of service. The IT success story demonstrates that Indians are capable of adapting–and accepting new paradigms. Over time, even the perception of the development sector can be changed.

Active Differentiation
It is time for academia — and local academia, in particular — to actively differentiate between sustainable startups and others. As distinct from the for-profit vs. non-profit debate, this measures the scalability of initiatives.

An entrepreneur recently pointed me to a well-publicized non-profit founded by alumni of a top school. The founder earns more, by way of an individual grant, than the total receipts of her organization. How do we interpret this?

When a group of us launched an initiative to attract top talent to the development sector, we actively differentiated and supported organizations which we believed were driven by sustainable models.

We need to adapt global visions to meet local needs–which we have demonstrated can be achieved.