Can Russia’s business education segment adapt to new challenges?

Now self-regulating, the segment is held back by reliance on state clients. Source: Skolkovo

Now self-regulating, the segment is held back by reliance on state clients. Source: Skolkovo

RBTH talked to Russian business education specialists about the pros and cons of self-regulation, the particularities of doing business in Russia, and how the approach to staff training in large state-run corporations is beginning to resemble that of the Soviet Union.

Business education has become the first educational segment in Russia to become completely self-regulating. On Sept. 1, 2013, the government ceased to regulate (in other words, set standards and issue state diplomas) all further education, which includes business education.  

Now, instead of state accreditation, business schools receive public accreditation; for example, from the National Accreditation Council of Business Education, which was established in conjunction with large employers in 2011.

On the one hand, experts say, this step has eliminated the government as a regulator and made it easier for schools to create programs for their clients. On the other hand, the particularities of doing business in Russia and the country’s unique economic situation have kept business schools predominantly limited to the domestic market, where the state is a key client.

Self-regulation and government

The state’s withdrawal has precipitated both a wave of optimism and a degree of stagnation on the market for business education, according to Director of MBA Programs at the Moscow Business School Yekaterina Yadova. This has to do with the role of the government, which acted not only as a regulator, but also as a key client.

“The government as a client has not readjusted. Officials were required to acquire further education to state standards, and now it’s unclear how they can do that,” says Yadova.

According to Yadova, self-regulation has also partially hindered exports of educational products. “Prior to certain well-known events, Vietnam, Belarus, Kazakhstan, and Ukraine were very interested in getting state diplomas in Russia,” she says, hinting at the recent crisis in relations between Russia and Ukraine.

“The government was increasingly a regulator and should remain a regulator,” Provost of Electronic Education at the Moscow State University of Economics, Statistics, and Informatics Alexander Molchanov told RBTH. “After all, economic development rates are important for the government. (…) That means it is the government that can and should stimulate training for managers of various levels,” he said.

Editor-in-Chief of the Russian magazine Mir-MBA Yulia Zykova, meanwhile, sees no tragedy in the current stagnation. According to her, “the government rather hindered [business education]. There were state standards that restricted schools in creating their programs. (…) The market is emerging, and it will determine what business education will be like.”

Factoring in the Russian experience

Asked how Russian business education differs from its Western counterpart, Yekaterina Yadova says there are no fundamental differences. The only key difference is that the teaching takes Russian business conditions into account.

However, she points out that there are some significant differences between the Western and Russian business models when it comes to actually doing business in Russia: “For example, business owners are used to a high profit margin. Whereas 20-30 percent of profit is considered the norm for international businesses, it is 100-300 percent for Russia,” she says.

“There is also the nuance of accounting for the government component, but that is not part of the program. No one talks about corruption or ways to utilize it in lectures. There are simply realities in which the students and the teachers live and work. After all, the majority of them have businesses in Russia,” says Yadova.

According to Alexander Molchanov, business schools mostly take the specifics of Russia’s “not-so-classical market economy” into account, as a result of which “some [business] algorithms and models don’t work.”

A separate factor is the unpredictability of the Russian economy, Molchanov said. “Few businesspeople are in a condition to evaluate and assume what will happen to their company in one, two, or five years. When a person goes to get his MBA, he probably understands that his company may no longer be on the market by the time he finishes the course,” he said.

The future and competition

In addition to the complex situation on the domestic market, Russian business schools are being forced to adapt to more competitive conditions. According to Molchanov, the demand for “Western business education” is extremely high in Russia.

However, Maxim Kiselyov, director of Leadership Programs at the Skolkovo Institute of Science and Technology (Skoltech) in Moscow, told RBTH that influential business schools are unlikely to come to Russia.

“For example, the Yale School of Management will never come here. Why? Because Yale, Harvard, [and other schools] have weighed the reputational risks. For them, it would be highly risky in the reputational sense to enter the field of Russian business education,” he said.

So even though business schools have secured the freedom that goes with self-regulation, they are still locked into the domestic market, which Kiselyov said is experiencing the influence of two trends connected with the government.

The first trend is the nationalization of big business. “State-run corporations will change the formats of business education. For example, few people will sign up for two-year courses. Everyone will look at short-term programs because these things seem more feasible in terms of costs and resources (for example, taking employees away from their jobs),” he said.

The second trend is that large state-run corporations – for example, Sberbank, Rosatom, or RusHydro – are creating “huge corporate universities” that to some extent reproduce the system of sector-based technical colleges in the USSR. “That’s the trend,” Kiselyov said.

 

Read more: Why are Russia’s universities struggling in international ratings?

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