Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

The Decline of B-School Summers


To a student of management, corporate internship or summers as is popularly known is an unforgettable moment. The roots can be traced to the early days of management teaching in the US and other Western countries. When a course was introduced on Masters in Business Administration or MBA in popular lingo, it was perceived to be course with practical hands on knowledge to complement the theoretical aspects taught in the class. In fact case study method of teaching, a derivative from the law school, was developed and fostered to build better models and pedagogy to teach the concepts of business decision making. A student would be taught basis foundation skill sets and concepts of business management in the first year. There was to be time for reflection before the student moved on  to the second year.

Instead of holidays between the first and second year of course study, the business school culture developed the concept of summer internship. The students were expected to land up an internship in a corporate where they would use the concepts ingrained during the first year of study to frame a solution for a corporate problem. It was a big hit and ensured students would have some corporate exposure as they graduated into the second year of study. As the tentacles of the business school expanded globally, summers also became an integrated and perhaps sacrosanct part of the curriculum.

In countries like India, students would take up the MBA course immediately after graduation.  In some countries like New Zealand, the students were expected to have a mandatory work experience before opting for MBA. Yet in the India, given the education timelines and culture, students would perhaps have virtually zero corporate exposure as they took admission to MBA course even in prestigious colleges. In such a scenario, summers became an integral part of muddying the hands in the fields. In other words, students should have a feel of corporate life before they graduated out of the course to understand the dynamics of decision making better.

In the early days of management education, very few colleges offered the course. The numbers of students too would be restricted to around 60 and in few cases 120. Mostly apart from the IIMs, it was the universities that offered MBA. Very few private colleges affiliated to universities or otherwise offered the courses in business administration. However, the scenario completely changed post liberalization in 1991.

In 1991, India opened up to the private sector and saw a number of firms entering into the market. It was not just domestic firms but multinationals too made a beeline into the Indian market. The increase in the reach of the private sector also opened up the jobs for the students of business studies. This led to opening up of new B-Schools on a larger scale. To circumvent the barriers of the entry in University system, many autonomous colleges emerged offering the course of Post Graduate Diploma in Management. The summers remained an integral part of these courses. Yet with the increase in the intake coupled with increase in the number of colleges, the number of internship offerings began to shrink.

 The students however as part of their course outline had to undertake a couple of months of corporate internship. Given the number of offerings being reduced, the quality of internships too began to deteriorate.  For many firms, having an intern meant an extra burden If they have to be paid stipends. So paid internships slowly disappeared from the horizon where they became an exception rather than the norm. Further the increased competition meant firms have to constantly outperform their peers in terms of market capture. They have to capture customers or reach out to customers before their competitors did. Interns became a handy tool in this exercise. Interns could be assigned marketing jobs. They would be asked to get involved in lead generation, setting up sales meeting, handling the customer relationship at counters or categories or at stores. They could set up appointment through tele-calling for the team leaders to visit. The interns might also be asked to visit clients and close the deals. The interns were more an extra hand, often free who wanted a certificate to justify their stay in the organization. So internship evolved into an exercise of marketing and sales and in some cases routine management operations.

Some institutes modified the internship into in-plant studies. This meant student interns would visit organizations, meet people, talk and record the interactions in the form of a report. However, the rapid expansion in B-Schools and intake in B-Schools meant a steep downward trend in internship quality. It reduced from an exercise of sales or operations to something of an extra hand in running errands. Given a lock-in of two months and in some cases up to six months interns have little option but to adjust to the life in the organization and perform tasks that hardly required the application or even basic understanding of what they have gone through in their first year of study. Further, the divergence between the internship work and the demands of institute for the research report meant a virtual fiction being created as research report. Thus what essentially was to be an exposure and application of concepts learnt in the first years to corporate problem became an exercise for going through the motions to both institute and the student. Few B-Schools however maintained a hype over internship to demonstrate seriousness yet hardly anything changed in practice.

As B-school completes around a century of its active existence, decline of the summers is one tale that it could have done without. The core activity and asset of internship programme has derailed and under serious threat and needs radical re-haul if it has to regain its sanctity for the hundreds of tier-II and tier-III B-Schools.


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