By George C. Lodge, Lecturer and Administrative Assistant.Division of International Activities

Under contract to the Agency for International Development the Schoolstarts a new expl!riment in assisting developing countries.

A Project for AIDin Central America

Preliminary Investigation

In light of this request, Dean Bakerdispatched Professors Henry Arthurand Thomas Raymond and me toCentral America in April 1963. Theassignment was to make a three-weekpreliminary investigation. We foundthat there was, indeed, a need formanagement development. And wefelt that the School could make a realcontribution toward meeting thatneed. Per.haps most importantly, wefound an enthusiastic group of capa­ble, influential, and progressive busi­nessmen who were prepared to investtime and money to provide manage­ment education in the region. Thesemen - three from each country ­met with us in Guatemala City andagreed to return to their countries andestablish national committees to pro­mote the idea within the businesscommunity.

Upon our return to Boston, theFaculty voted to continue o~r inves­tigation of management dev~lopment

needs and opportunities in, CentralAmerica. The result was that lastsummer, from July 1 to the beginningof September, Professor Raymondand I returned with a seven-man re­search team l to identify the principalproblems of managers in the region,to find out where previous manage­ment training efforts had fallen short,and to make recommendations con­cerning future activities of the School.The research was carried out under agrant from AID and with the activeassistance. of the Central Americanbusiness community, especially thenational c~mmittees which providedoffice space and many useful contactsand introductions. The findings of the

President Kennedy, in a speech inSan Jose in the winter of 1963, com­mitted the United States to providingmajor assistance to effect this inte­gration.

1 Fnnds Aguilar. TobD Culbertson. DonaldHenley. C. L. Kendall. D.vid "uechle. lame.Trt'eJ. and Jane TbOt1lu. Profesoon RenatoTagiurl and Abnham Za1e=ilc, while not for­mally memOen of the ~. ,..ere in the regionfor. short time.

Hydroelectric power.

Indian business community, and theIndian government. It will offer itsfirst program this spring in a coursefor senior executives.

The second major foreign engage­ment started last spring. It is asimilar effort to assist the CentralAmerican business community in theestablishment of a Central AmericanInstitute of Business Administration(INeAE).

This project grew out of a requestfrom the late President Kennedy andTeodoro Moscoso of the Agency forInternational Development (AID) toDean Baker. They invited the Schoolto undertake a program of manage­ment development in the six coun­tries of Central America: Costa Rica,Guatemala, Honduras, Nicaragua,Panama and EI Salvador.

Wc were informed that CentralAmerica was regarded as an area ofspecial and critical importance by theU.S. Government and that a primaryneed in the region was an increase inthe quantity of managers and an im­provement in the quality of manage­ment. This was especially true becausethe region was well on the way towardeconomic integration and had, in fact,become the first group of developingcountries to form a Common Market.

With the creation by Dean Bakerof the Division of Intemational Ac­tivities, the School has taken a newapproach toward the fulfillment of itsinternational responsibilities. Underthe direction of Professor Harry L.Hansen, the Division is seeking toinsure

• that international activities willresult in returning knowledge to theSchool about a wide range of manage­ment problems abroad,

• that means will be available forthe conversion of this knowledgeinto useful teaching material for theSchool's programs, and

• that the· foreign activities them­selves will be of maximum value tothe persons for whom they are de­signed.

Major Foreign Engagements

With these intentions in mind, theSchool now has two major foreignengagements. The first, which hasbeen under way for more than a year,is the establishment of an Indian In­stitute of Management at Ahmedabad,India. We are training faculty, pre­paring teaching material, and provid­ing advice. This Institute is jointlyfinanced by The Ford Foundation, the

10 HBS BULLETIN JANUARy-FEBRUARY 1964

negotiating with AID at this writingwill provide funds for extensive prep­aration and case development for theAntigua program. It will also providefor additional research in the regionto assist INCAE in getting off to agood start. That contract extends forone year from January 1, 1964.

The research team felt that theSchool is specially qualified to be ofassistance to INCAE at this stage inits development by virtue of

• its experience with teaching bythe case method,

• its orientation toward practicalproblems as they really exist ratherthan toward theory,

• its background of teaching invarious other developing areas of theworld, and

• the extensive knowledge of nu­merous members of the Faculty in theinternational sphere.

Perhaps most important is the par­ticular - if not unique - competenceof the School in relating generalknowledge to specific problems and ingetting practicing managers togetherto analyze those problems.

Why Central America?

Some have questioned the locationof . such an educational venture inCentral America. "What about Someof the other areas of Latin Americaor of the world?" they ask. The re­search team in answering this ques-

Modern oil refinery.

George C. Lodge

AID will assist in financing thiseffort, although each partiCipant willpay an admission fee of approximatelySI,Ooo. The instruction will focus onCentral American management prob­lems as they were identified by theresearch team last summer. ActualCentral American cases will be used.Classes will be conducted in English;but high-quality simultaneous transla·tion will be available, and all teach·ing materials will be in Spanish.

Once the top managers of the re·gion recognize the need for this typeof training, INCAE hopes to trainmiddle managers and eventually uni­versity graduates. The Board feelsthat the Institute will perform an ex­tremely useful function in providingthe first place where Central Ameri­can managers can come together forseveral weeks to study their problemsin some depth and to exchange views.This in itself will help solve one of themost basic regional problems - lackof communication and understanding.The Board hopes to recruit a per­manent faculty for the Institute fromamong the Central Americans whoare ~ing trained in our InternationalTeachers Program here at the School.It also expects INCAE to be a valu­able center for research and consulta­tion in the region.

The contract which the School is

Thomas C. Ra:fmond

.carch team were contained in a~port to the Faculty, submitted in

October, and in a later report to AID.

Central American cotlon mill.

Central American Institute ofBusiness Administration

During the course of the summer,each national committee designatedone of their number, who in each casewas an outstanding leader of business,to go to San Salvador, the capital cityof EI Salvador. These six men electedFrancisco de Sola of San Salvador' astheir chairman and decided, then andthere, to form the Central AmericanInstirute of Business Administration(INCAE). They became its Boardof Directors and pledged development<If this Institute.

The Board envisions an importantrole for INCAE. It hopes to b~oaden

the vision of top managers in Central'America so that they can see theirproblems more clearly in the midst ofradical change and can realize thevalue of professional management.With this thought in mind the Boarddecided to offer a five-week advancedmanagement program in Antigua.Guatemala, in July and August ofthis summer for about 40 CentralAmerican managers. The Board in­vited the Harvard Business School toconduct this program, and the Facultyvoted in October to accept the in­vitation.

HBS BULLETIN JANtJA.RY~FEBRtJARY 1964 11

tion draws attention to the unusualopportunities in this area for theSchool to learn about managerialproblems in developing countries.The team also underscores the oppor­tunities for converting this knowledgeinto useful teaching mau-=rial for usehere and elsewhere.

Among other considerations in thisregard is the fact that an enthusiasticand organized management group,with whom we have already workedsuccessfully, has the determination,competence, and access to fundsnecessary to provide a sound base forfuture management development ac­tivity. Moreover, the region providesan e;tceUent laboratory for researchon the problems of management de·velopment in developing countries.

Comparing the six countries revealsgreat variety, ranging from CostaRica, with the highest literacy rote inLatin America and the purest democ·racy, to Honduras, which is one ofthe most primitive countries in thehemisphere. There is Nicaragua, asemirnilitary autocracy tending towarddemocracy and bursting with indus­trial enthusiasm. EJ Salvador is achiev­ing remarkable industrial growth; somuch so, in fact, that it recently at­tracted a branch of the First NationalCity Bank.

Guatemala is currently a militaryautocracy, in which 50% of the popu­lation are unintegrated Indians. Pan­ama, a commercial trading center forLatin America, of course, embracesthe Canal with all the problems aris­ing from it. In effect, therefore, weare dealing with si;t different societiesat various levels of evolution. All ofthem, however, are bound by manyties, not the least of which is a com·man language.

Social and Strategic Significance

Central America is a region wherethe old social order is breaking downwith new, still obscure, forms takingits place. Strategically located as theconnecting link between North andSouth America on the Caribbean pe-

rimeter, it is thus a target for politicalintrigue and subversion.

The Central American countriesare currently on the crest of a devel­opment wave which gives to the re­gion a spirit of hope and optimismnot found in maay parts of LatinAmerica. Change in this region canstiU proceed in an orderly WilY ratherthan through violent rt'voluti,on ­which seems an too likely in severalof the larger countries of LatinAmerica.

It is large enough to be significant(12 million population) and yet smallenough to be a good research site inthat movemeat and activities can bemeasured fairly simply and their ef­fects judged relatively qUickly. At thesame time, the region is readily ac­cessible (six hours by plane) and iseasy to cover internally on the ground.

Central America provides the onlye;tample in the world of less-devel­oped countries undergoing economicintegration. This fact surely will beincreasingly imponant as tbe rest ofLatin America proceeds toward aLatin American Free Trade Associa­tion, and as similar regional effortsdevelop in Africa and perhaps Asia.

It is now the scene of vigorous in­ternational competition, oat onlyamong enterprises within the region.but also U.S., German, Swiss, British.<lnd Japanese interests which theCommon Markcl has attracted.

In short, Central Amcrica providesa convenient sile for observing andstudying most of the problems can·fronting not only locOlI m<lnagers indeveloping areas of the world but alsoof U.S. companies doing business inthose areas.

The region has the chance of be·coming a model for the rest of LatinAmerica as an e;tample of regionalintegration, economic development.and political rdonn. It is too early,of course, 10 say whether it will ac­tually become such a model. But itis certainly an exciting opportunityfor the School to be a pan of an ad­venture with such important possibiIi­

·ties. 0

Fuller

Associate D~an Fullu

On January 1. Stephen Herbert Ful­ler took over the reins as AssociateDean for External Affairs from Pr<rfessor Myles L. Mace. Mace, whohad occupied the post for the past 18months, is to be away from the Schoolfor the ne;tt few months on a consult­ing assignment to Anderson, C1aytc.,& Co.; ne;tt autumn he will be backleaching in the area of internationalbusiness. Fuller brings to his ap­pointment an impressive array of qual­ifications aDd e;tperience. Referringto him recently Dean Baker said:"With a little e:tperience in this newjob under his belt, Steve will be aboutthe best-rounded man we've gOl."

Teacher, Director, Consultant

Fuller has been on the Faculty hereat the School for the past 16 years.

12 HBS BULLETL.... JANUARY-FEBRUARY 1964