ASEBUSS: Launching an Executive Master of Business Administration in Bucharest

Gerald E. Fryxell* and Jacob Catoiu**


The Communist leaders saw the people were getting more and more depressed. In an effort to encourage their morale, they told the people: "If you will work harder, you will become even more wealthy than the capitalists!" One of the workers responded by saying, "It's enough to just catch up to the capitalists; if we pass them, they will surely see the holes in our pants."

Ioanna IonIachc, Romanian entrepreneur and a new EMBA student

Educational Reform in Romania

After the fall of communism in Eastern Europe, there were numerous initiatives to forge linkages between Western B-schools and universities in that region. It was reasoned that such cooperation would be important to assist these institutions in moving from a curriculum burdened with Marxist dogma to courses more appropriate to a market-based economy. An obvious additional interest was to further stabilize the region's democracies through economic development brought by an active private sector.

In the highly fluid legal environment of Romania, private institutions have a negative reputation, due to the absence of any accrediting organization and continued heavy support of public schools by the government. Indeed, the best students still compete for positions in the public universities while many of these private schools verge on being "fly-by-night" operations of little repute while the reputation of the few relatively good institutions suffer.

Prior to the revolution, universities were extremely hierarchical. Students attended classes approximately 30 hours per week and, because textbooks were usually unavailable, became very skilled at rapidly taking notes while the professors dictated the text material. Younger faculty typically performed this task for up to 20 hours per week, which left little time for preparation or innovation. As even chalk was in short supply, this read-and-take- notes procedure characterized most of the class time. The all-important grades (on a scale from 1-10, with 5 needed to barely pass a course) were usually given out based on a single large multiple choice exam. Unfortunately, the inertia of the past persists, in that many courses are still run based on this model of education. Consequently, many of the alliances between Western business schools and Eastern academies of economics have been oriented toward both curriculum and pedagocial reform. However, because any real meaningful reform must be accompanied by changes both at the top and the bottom of the organization, few efforts have borne much fruit. One exception to this larger model of slow and often painful progress has been the successful launching of a new EMBA program at the Academy of Economic Studies in Bucharest.

The Birth of a New Business School

On October 17, 1993, the first EMBA program in Eastern Europe was formally initiated in "Foisor" an opulent mountain palace in Sinaia which had served as a residence of Nicolae and Elena Ceausescu, the former dictator and self-proclaimed scientist and his wife.(1) "Foisor" is located on the same grounds as two other palaces "Peies" of King Carol I and "Peleshoir" of Prince Ferdinand. Thus, the EMBA program began in an idyllic, fairybook setting.

According to Tom Wincek, the program director at the time, the intention of this grandeur was to send the multiple messages of quality, change, customer orientation, and national identification (while obtaining some media coverage at the same time). After the opening day, the week continued at the old Sinaia Casino (which had been a very active casino until being closed by Ceausescu as "immoral".) The casino had the added advantage of a microphone system. This setting proved very effective for leading case discussions with the 49 new students, with many faculty observers. During the week, the students and faculty stayed together in the "Economat Hotel," whose name captures the primitive state of marketing savvy within the government-run tourist system better than the conditions at the hotel itself. The Economat is actually quaintly rustic and on the same grounds as the three castles.

During the week, two courses were given by American professors. One, "The Case Methods," was given by Professor George Overstreet of the University of Virginia; the other was "The Role of the General Manager," given by Professor John Butler of the University of Washington. For three days additional speakers participated one of whom was a Romanian professor who gave an overview of the new accounting rules which would soon be enacted. During the week, special emphasis was placed on participation and alternatives to the lecture as teaching methods. Student response to the week was very favorable as evidenced by the questionnaire results taken at the end of the week. Especially strong endorsements were given for the use of simulations and the case method approach. Interestingly, about 77 percent of those students expressed the preference that English be the primary language of instruction. The only substantive criticism of the week was that it did not strongly address specifically Romanian issues. On common concern voiced by the students, however, which was not on the evaluation form, was how long a strong American presence would remain in the program, since most did not relish a return to the old model of Romanian education.(2)

The Origin of the Program

Immediately after the fall of communism in Eastern Europe, there was an increased flow of aid from most Western governments. While some in the East may argue that the flow of aid has not been in proper measure to the problems they face, the EMBA program was developed in Romania due to a USAID initiative to fund curriculum development and managerial training in the region. Because of the large size of these USAID awards, and a genuine willingness on the part of many U.S. faculties to help counterparts in Eastern Europe, many U.S. universities became bidders who had little previous experience" either in Eastern Europe or with such grants in general. On the other hand, the typical "beltway bandits" (i.e., consulting firms with much experience with such development contracts) were not especially well-positioned for these types of projects and, as a result, many universities found themselves suddenly administering USAID grants worth millions of dollars.

Since USAID projects are often embedded in a larger political agenda and because of dubious claims that efficiency can be attained by working through existing institutions, funding for these projects has been biased toward helping existing, governmental institutions.(3) Thus, the University of Washington targeted both ASE and the Polytechnic Institute of Bucharest (IPB) in its proposal to USAID.

Under the UW proposal (and typical of many of the proposals ultimately funded by USAID) the "management training" portion of the project proposed the development of Small Business Development Centers (SBDCs). The proposal also involved providing general assistance to the National Agency for Privatization (NAP). Because USAID had a preference for cooperative efforts among U.S. universities, this "small business" portion was subcontracted out to Washington State University (WSU).

UW, on the other hand, had retained responsibility for the larger "economic education" portion which involved curriculum development. In the beginning, this part of the grant also encountered considerable difficulty. Indeed, the Second Quarter Report Year Two, begins with the words, "After a difficult and frustrating first fifteen months in Romania " (4) The original goals of this portion of the project were three-fold: 1) "To recommend an appropriate structure for delivering an Economics Education seminar series that will enhance the potential for supporting the business programs of ASE and IPB;" 2) "To determine which types of departments can best benefit from assistance;" and, 3) "To determine what specific curriculum components must be developed to train ASE and IPB faculty, students, and alumni most effectively."

Initially, some inroads were made at IPB in delivering a series of seminars, but it is clear that ASE remained a tough nut to crack. In the same report it was stated that, " the Academy of Economic Studies (ASE) was unable to arrange seminars that provided access to significant numbers of the ASE faculty."(5) In the early Spring of 1992, after realizing that this component of the project could not successfully be administered from over 10,000 miles away, a representative from UW was sent to Bucharest to recruit a full-time coordinator who, using the words of the report, "is familiar with Romanian universities and U.S. business education." As a result, UW hired Tom Wincek"a Carmelite Monk"as their director.

The Major Players

After his college days (leading to an undergraduate degree in business education), Tom Wincek became director of a student resource center that became a national model which eventually received millions of dollars from a host of federal, state and local agencies. He later became department head in the Office of Veterans Affairs at the University of Minnesota, where he hired and supervised a staff of more than 40 full-time professionals. Within the scope of this position, he represented the University of Minnesota before the White House and the U.S. Congress. He was next elected chairman of the National Association of Veteran Program Administrators and served as an advisor to Governor Perpich of Minnesota. When Jimmy Carter became President, he served as an advisor to Secretary of Labor Ray Marshall from 1976 to 1978. When the U.S. Congress legislated first White House Conference on Small Business, Tom served as a Task Force Director and helped coordinate a series of business meetings around the United States. In 1979 he became the Chairman of the Board for the Vietnam Veterans Foundation a national nonprofit organization located in Washington D.C. dedicated to assisting disabled Vietnam veterans in the area of small business and economic development programs.

In 1980, he bought WTKO Radio Station in New York in 1980 and became chairman of the board of VVF Communications Corporation. When Ronald Reagan became President in 1981, Tom served as chairman of one of the major subcommittees on Loans and Financing within the SBA.

Then at 32, he joined the Carmelite Order within the Catholic Church, one of the quieter and more reflective orders of monks. While assigned to the Diocesan staff in the Virgin Islands, he was responsible for social justice issues. Later he served as project director for the Catholic Peace Corps which involved him in various newspapers, TV stations, and homeless shelters. In 1991, he was asked by the Carmelites to go to Romania. Within a few months, he found himself in Bucharest seeking causes of sufficient interest and impact to support. After a period of time with humanitarian projects, he spent some time with WSU in its SBDC efforts. Shortly thereafter, he offered to help organize a small business conference in the city of Lasi, near the Romanian border with Moldova. During the next six months, he directed three more successful programs: A symposium on "Management and Economics Education" in Bucharest (6/92); a "Farmers' Fair" in Curtea de Arges (8/92); and, another agricultural fair in the far north of the country (10/92).

Doug Podoll possesses a Ph.D. degree in Education from the University of Texas at Austin. He is currently working with the executive programs within the business school of the University of Washington. The reporting requirements associated with research grants are demanding, although universities are easily able to cover these costs by routinely taking 40 percent of such grants as "overhead." Currently, most of Doug's salary and that of two other full-time UW employees in this section are actually paid for from this grant.

Gabriel Diaconescu received a doctoral degree in Economic Cybernetics from ASE in 1980. His dissertation was entitled "Designing a Statistical Data Base." Within ASE he was an associate professor, but this involved being a researcher in the Cybernetics Department with little teaching responsibility. (It might be noted that under the Ceauseseu regime, many professors gravitated to such areas as Cybernetics and Mathematics, as this aroused less suspicion than did other areas of management, such as Marketing.) He gained exposure to U.S. business education in 1976 through a Ford Grant at New York University and more recently, in 1991-92 through a year spent at the Stanford Graduate School of Business under Fulbright funding. Currently, he is the most vocal advocate of a U.S.-style program.

Time Line in the Development of ASEBUSS (6)

September 1992: Professor Gabriel Diaconeseu returned to ASE after one year at Stanford's Graduate School of Business (with the support of the Fulbright program of academic exchanges). Quite independent of UW efforts, he began to champion the idea of a "business school" in ASE. As a result of this evangelism, he shortly afterwards met Tom Wincek.

11 October 1992: General Elections in Romania. After the election in October, a new Cabinet was selected. Misu Negritoiu was appointed Minister of Strategy and Reform and Liviu Major was appointed Minister of Education.

26 November 1992: Diaconescu, Wincek, and Podoll held meetings which, in turn, led to a meeting with Academic Vice Rector of ASE, Opera Calin, who confirmed ASE administration's support of a USAID-funded Business School initiative.

15 December 1992: ASE and UW representatives met with Minister Negritoiu and his senior advisor, Leontin Dinulescu. They agreed to lend their support to a new Business School in ASE and recommended implementing the program in the following year. Minister Negritoiu stated that it was an important component of his overall reform program.

21 December 1992: Research Vice Rector Eugene Tiganescu gave his support to the creation of the School of Business Administration and the idea of a School of Public Administration. (Prof. Tiganescu was also a Fulbright Scholar at Harvard University in the field of Economics in the early '70s).

11 January 1993: Vice Rectors Calin and Tiganescu more formally agreed to a draft of a "Memorandum of Preliminary Agreement" establishing a School of Business and Public Administration.

28 January 1993: The formal agreement was signed between the Academy of Economic Studies and UW, pledging mutual support of a School of Business and Public Administration (hereafter called "ASEBUSS") at the Academy with USAID assistance. This agreement spells out the following mission and objectives:

Mission

"The School of Business Administration and Public Administration will graduate professional managers whose management skills will lead Romania in the process of restructuring and privatization of its economy. The management training will be based on applied skills rather than theory and be based on a democratic society within a free market economy."

Objectives

Begin Executive Master's of Business Administration (EMBA) program in September 1993.

  1. Implement information systems for ASE (that will meet the role of a Registrar's Office in the U.S.).

  2. Begin traditional, full-time Master's of Business Administration and Public Administration (MBA/MPA) program in September 1994.

  3. Begin traditional, full-time Bachelor's of Business Administration and Public Administration (BBA/BPA) in September 1995.

  4. Begin offering a limited number of short-term, certificate programs for students in other faculties of the Academy by September 1995.

  5. Establish financial commitment to program by students and their sponsors through mandatory tuition payments at all levels beginning with the EMBA program.

  6. Development of necessary support areas in priority order:

  7. Coordinate leadership of the School through establishment of an Advisory Board with representatives from governmental agencies, state industries, and private firms.

1 February 1993: Rector Constantin Barbulescu assigned four rooms within the Academy for ASEBUSS that were the former offices of a Prime Minister prior to the revolution.

4 February 1993: Secretary of State for Higher Education, loan Harjoaba, Ministry of Education, approved "The Agreement" on behalf of the Minister of Education. He stated that the project fits the Minister's goal of reforming the "Economic Institutions" to provide more of an applied business curriculum.

15 February 1993: ASEBUSS officially opened its offices on the fourth floor of the "Cybernetics" building. Wincek and Diaconescu occupy this space and limited office staff are hired.

24 February 1993: Minister of Education Professor Dr. Liviu Major formally acknowledged the importance of program through an open letter of support for ASEBUSS. He is yet another former Fulbright Scholar (University of Michigan).

1 March 1993: In a letter to Richard Hough of USAID, Rector Barbulescu committed ASE resources (e.g., mainly office and classroom space) to ASEBUSS in order to help assure USAID funding.

May 7-23 1993: Preliminary faculty selection process through interviews with Professor Fremond Kast and Dale Henning. Many of selected faculty targeted for summer training in U.S.

3 June 1993: The EMBA program is formally presented and approved by the ASE Senate. Within this document, hastily prepared syllabi were presented and the "priority of requirements for consultants taking part in curriculum planning" was presented. The purpose was to explain the criteria on which the Romanian faculty were selected (dated May, 1993):

Twenty-one "team members" were then listed, including three Americans Professors Kast and Henning, and Tom Wincek.

1 & 14 July 1993: Professors Kast and Henning submitted reports of trip to Doug Podoll. In Kast report, he refers to Professor Tiganescu as "a driving force" and notes satisfaction with the high level of ASE support given to the project. As for faculty participation, Professor Kast states: "The issue of assignment of faculty directly to ASEBUSS on a full-time basis is sticky. Many of the potential faculty already have teaching assignments next year and it would cause disruptions if they are taken out of these courses. During the transition period over the next two years or so, it is likely that ASEBUS will share faculty with other units."

The Henning report expressed recommendations on a wide range of topics. Concerning relations with the faculty, he recommended, "It is our hope that the faculty members teaching in the EMBA program can devote themselves full-time to this program. However, we recognize that this may not be possible in the beginning because a) the EMBA program may not demand full-time from each instructor, b) ASE has certain teaching and research needs that must continue to be met, and c) the faculty may have other outside commitments that prevent full-time attention to the EMBA program.

June-August 1993: Selected faculty go to U.S. for summer, developmental courses at major universities (e.g., Harvard, Wharton, and Stanford).

30 July-9 August 1993: Strategic planning meetings concerning EMBA program were held in Seattle by those who are able to attend. This involved a ten-member team of UW and ASEBUSS participants. Among decisions made and policies affirmed were:

It is noted that the program offers, especially for the foreign companies in Romanian the opportunity to have control of and the use for themselves 1 percent of the income which Romanian law requires them to budget for education research and development. It is also noted that "even with an entire first class of Romanian sponsored students, $100,000 would be raised to cover staff and faculty salaries with reserve funding for the next year given ASEBUSS "a cash-cow status" within ASE.

August 1993 (Bucharest): Fulbright grantee from University of Tennessee College of Business Administration arrives and meets with Tom Wincek who requests that he assist in formulating faculty policies and planning residence week. Professor Scott (Ph.D. in Economics from Claremont University) extends time in Romania after year at University of Brasov.

7 September 1993: President of Romania, Ion Iliescu formally announces the opening of the EMBA program. This announcement was postponed for about three weeks, thereby moving back the start date of residence week and classes by that amount of time.

15 September-10 October 1993: Students began applying for the program and selection interviews. A start date for the program of October 17-23 in Sinaia, Romania determined. During "residence week," two, 2-credit courses were delivered, along with other team-building exercises. Professors George Overstreet of University of Virginia and John Butler of UW deliver courses on "The Case Method" and "The Role of General Management," respectively. In addition, exposure to MacIntosh Computers is given.

15 October 1993: Arrival of Doug Podoll, Contract Administrator from UW with contract funds for EMBA program. It is an interesting fact that until this time, the payroll and expenses for the launch of the program were being from funds which Wincek was planning on forwarding to his brotherhood when the funds from UW finally became available. In the meantime, no Romanian faculty have been paid.

17-23 October 1993: EMBA program begins with residence week in Sinaia. Program ends with a consensus that week was successful.

25 October: Podoll meets with Richard Hough of USAID to discuss further fundings for the EMBA project.

20 October: First day of classes in temporary classroom.

The Organizational Influences Shaping the Program

It is clear that the EMBA program benefitted from a number of planned and serendipitous influences in its development. Instead of being a straightforward collaboration between two universities, the organizational set underlying the successful launch of the program was considerably more complex. For example, one particularly strong influence came from the work of the Fulbright program in laying the foundation for change. Not only where the American experiences of three Romanians highly significant (Professor Diaconsecu, a primary grass roots change agent within ASE; Vice-Rector Tiganescu, who rallied support at the top of ASE; and Minister Major, of the Ministry of Education who provided the highest level of support), but the content and pedagogy of the residence week was influenced by an American Fulbrighter at the Academy. Harvard University unexpectedly provided a number of grants for Romanian faculty to receive extensive training in their School of Business.

Most of the other organizations depicted had more straightforward influences on the program, with the notable exception of the Carmelites. It is no doubt highly unusual for the Carmelites to have any influence on a business program for elite managers at a public institution. Nevertheless, the program benefitted greatly in two ways from this organization. First, the "give back" of a large part of Tom Wincek's compensation was a great benefit. Second, due to bureaucratic inefficiencies in Washington, D.C. and in Seattle, funding didn't arrive for the program until the beginning of residence week. Thus, in order for the program to start on time Wincek paid some staff and bills from personal funds.

Current Issues/Problems Facing ASEBUSS

Based on student evaluations and publicity alone, it is probably safe to conclude that the launching of the EMBA program was successful. In large part this success can be traced to four factors: First, a market need for such a program along with a positive orientation toward American-management style; second, the organizational and networking skills of Tom Wincek as demonstrated by his ability to make "events" of various types happen in Romania; third, the right combination of Romanians with Fulbright experiences at simultaneously different levels which enabled a whole new program to be ratified as a larger package. Experience in other countries would suggest that the usual pattern is the such programs get bogged down in the minutia of getting syllabus and curriculum changes through multiple levels of a hierarchy. The fourth factor would best be described as "serendipity." There was simply the right interaction and dynamic unfolding of circumstances which allowed it to happen. For example, it is usual that at the start of residence week, by far more salary money was spent in Washington than in Romania where the major American influences were a Carmelite Monk and a Fulbright grantee (who was free to the project).

Nevertheless, while the residence week may have been successful, the program now faces serious challenges as it faces the more mundane task of delivering the curriculum.

Consequently, a number of more "managerial" issues either remain to be addressed or can be expected to emerge in the near future:

Leadership/Management. Having been effectively led to the realization of a successful Residence Week, where students were promised new content, new pedagogies, new classrooms, new computer facilities, and intense interaction in student groups, it will be particularly challenging to deliver on these promises. More than being "led," these changes will have to be "managed" in some regular detail. One difficulty in this area is that this must be done in an environment when the larger undergraduate mission of ASE is beset with massive enrollment increases and resource shortages. While ASEBUSS has it's own budget, it still has to rely on the larger institution to get many of these things accomplished. For example, as many students in Romania are opting for economics and commerce over engineering (in light of an over supply of engineers from the ambitious of the previous regime), the classroom facilities are already greatly overburdened and it is not clear that the service departments within ASE will necessarily give business school higher priority. In sum, maintaining the momentum of the program as students wait for these promises to materialize will be challenging and require considerable follow through and attention to detail.

Faculty Compensation. One of the more difficult matters for the program to resolve will be associated with how to pay faculty. Little forethought has been given this extremely important issue. Originally the UW project budget was based on 10 faculty members who were allocated US $300 dollars from the grant (which was backed up by an additional 30% of the funds for taxes and other anticipated assessments). Up to the point of Residence Week, none of the 14 full-time faculty had been paid while many appear to be assuming that merely being accorded status as "full-time" faculty members will entitle them to the bulk of this amount in hard currency. Needless to say, the legal issues surrounding specifically how to pay the faculty are complex and have yet to be resolved. Moreover, as Romanian faculty are very poorly paid, most professors"ASEBUSS faculty included"are already highly committed. This high level of prior commitments coupled with the fact that faculty have significantly different levels of teaching obligations would suggest that a consensus on any pay scheme which attempts to link pay to performance will be difficult to achieve. This, in turn, may lead to concerns with the fairness of compensation.

Growth. The original USAID proposal promised a great deal more than an EMBA program: The installation of a computerized registration and billing system for the larger Academy; a traditional MBA program in the year following the EMBA program; and, the organization of an accreditation board for business education in Romania. It is reasonably clear that the program simply won't be able to deliver on all these promises (at least within the timetable of the proposal). On the other hand, newer and probably more relevant opportunities are emerging, such as the possibility for "in-house" executive training programs which probably fit better strategically with the EMBA program. Thus, the school must face the issue of what will be the best means to diversify it's product lines and activities.

Institutional Autonomy. As the intent of the EMBA program is to be a significant departure from traditional educational approaches common within ASE, it is important for ASEBUSS to have a high level of autonomy. This will affect many facets of it's operations, including the matters of performance appraisal and faculty compensation as mentioned above. To some extent, a level of autonomy has already been granted as the school does have it's own bank accounts and it's own "seal" (authorization to use a rubber stamp to formalize documents).

However, having it's own bank account is little compared to having autonomy in deciding how to use the funds and in determining such matters as basis upon which faculty are given promotions in rank.

Pedagogy. The program is intended to be based heavily on the highly interactive case method, but there are some impediments to the effective implementation of this pedagogy. Very few Romanian cases currently exist, which implies that, for most class sessions, less relevant cases must be substituted. Some effort is currently underway to develop cases, but there is a type of "Catch-22" in this endeavor, as effective case writers are usually effective case teachers. Moreover, while the faculty have all been exposed to the case method (and are enthusiastic about it's potential), only a few of the current faculty have a depth of classroom experience in using the method in their classes. As it takes considerable time and effort to become comfortable in leading case discussions, there will be considerable temptation to revert to the more traditional lecture method. The third impediment is the class size of nearly 50 students which will make it difficult to probe students individually in order to assess their preparation.

Fiscal Issues. As the goal of the program was to enroll 50 acceptable students, there was actually less concern given to the actual payment of fees than might have been expected. Consequently, a large number have been admitted on rather thin promises to pay or on the expectation that donor funding will be found down the road. If full payment will actually be required at some point, it is probably inevitable that a sizable number will have to be purged from the program. On the other hand, permitting students to complete a degree without the payment of fees will create serious equity problems especially in a program that is perceived to be extremely expensive by Romanians.

Conflict Resolution. Given a fairly high level of ambiguity in policy, disagreements within both American and Romanian camps about how the program should proceed, and the large amount of resources involved, it is probably inevitable considerable conflict will emerge. It will remain to be seen whether such conflict will be constructively resolved or will degenerate into nonconstructive political bickering. Moreover, the legacy of 40 years of Communism may pose some impediments for effectively working out differences in an open and direct manner as survival during the previous regime required less overt and straightforward methods.

Notes

1. Ironically, Elena Ceausescu attended school only from the age of 7 through 10 (4 years of elementary education). Apparent "sensitivity" about this lack of education led to a number of degrees and scientific papers credited to her by force.

2. A recent newspaper poll shows that, relative to other countries in the region, Americans and "things American" enjoy considerable popularity in Romania.

3. Interestingly, one of the most successful initiatives in Eastern Europe was a British effort under the guidance of Dr. Michael Thomas which created four completely independent training centers in Poland.

4. Ibid, p. 13.

5. Ibid, p. 14.

6. Much of this time line is taken from an RFP by Doug Podall to USAID which requested funding for the EMBA program.

* Gerald E. Fryxell, Assoc. Professor of Management, The University of Tennessee, Knoxville, TN

* Jacob J. Catoiu, Dean, Faculty of Commerce & Professor of Marketing, Academy of Economic Studies, 70167 Bucharest ROMANIA