Friday, July 20, 2012

The Need for Humanism in Management Across the World

Over the last weeks I spent my summer holidays travelling through northern and western Madagascar – a wonderful country with charismatic people, a variety of landscapes and unique flora and fauna. But this is not meant to be a travel report and to my delight I frequently stumbled across what is supposed to be the underlying subject matter of my research topic – microentrepreneurs or commercially active people living on a few bucks per day. For example, there was this artisan group of neighboring women producing gorgeous silk embroideries and selling them in a small shop on a veranda. In another village, there was a man crafting delicate artwork and articles for daily use out of polished cow horn with the help of an old washing machine’s engine. Like in every developing country, the majority of Malagasy people, however, were working on fields, planting rice and spices or farming cattle. Here and there, I spotted agencies of microfinance institutions (MFIs) in surrounding villages, indicating that financial services were potentially available for the aforementioned random acquaintances.

Back home, I found the report of the Microfinance Banana Skins Survey 2012 from the Center for the Study of Financial Innovation (CSFI) fresh from the press ( With the title ‘staying relevant’, this is the 4th edition of what can be regarded as the most comprehensive risk perception survey in the sector. According to this year’s report, the most pressing risk is - for market observers unsurprisingly - overindebtedness among microfinance borrowers. However, the overindebtedness problem is symptomatic of deeper difficulties in the industry - first of all the overemphasis on growth and profit at the expense of prudence and the lack of good governance, management skills and professionalism in local MFIs: “Corporate governance is widely perceived to be inadequate, failing to provide sufficiently strong leadership to keep MFIs on a healthy growth path. Management quality is also seen to be lacking in many markets…, including the quality of risk management which is seen to be low or nonexistent in some sectors” (p. 8).

Reflecting on my holiday experience with regard to the responsibility of business schools and research for establishing a new paradigm of leadership, this made me realize that it is clearly not only western, industrialized countries, for which a new generation of managers and leaders is needed, but certainly also developing countries. Although they weren’t directly liable for the recent crises in the global economy or necessarily affected by the numerous management scandals in multinational corporations, narrow-mined short-term thinking with a sole focus on profit-maximization there too takes its toll. The microfinance experience in developing countries shows again that economic progress and societal development cannot be sustainable without appropriate management education and responsible business leaders with a sense of solidarity for all their stakeholders. The humanistic mission of initiatives like “People for People” seems therefore equally important for fighting inequality across the world and the aspiration for prosperity of underdeveloped regions.

Marc Moser

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