Sir Fazle Hasan Abed was recently on the University of Michigan campus to receive a global health award. While there, he sat down with Kyle Poplin, editor for NextBillion Healthcare, an initiative of WDI, to talk about his work in Bangladesh. This article was originally published April 13, 2016 on NextBillion.
It was 1972 and Bangladesh was “an international basket case.” The Liberation War had just ended and the country was still reeling from the deadliest tropical cyclone ever recorded, Bhola, two years before.
The desperate conditions in his native country convinced Fazle Hasan Abed to quit his executive job at Shell Oil and try to help. But he couldn’t have foreseen the impact he would have on Bangladesh – and the world – when he founded what was originally a short-term relief effort called the Bangladesh Rural Advancement Committee.
That original group of a couple dozen people grew into what is now called BRAC, the largest non-governmental development organization in the world, with a $1 billion budget and 111,000 employees offering services to 138 million people. And Bangladesh, not coincidentally, has transitioned from the world’s second poorest country to lower middle income.
BRAC’s overarching philosophy is that poverty has many causes, so many solutions are needed. The organization provides programs in microfinance, education, health care, job training, empowerment of women, sanitation, agriculture, etc., and owns 16 social enterprises that provide $700 million in revenue. The remaining $300 million in revenue is generated through donations.
Abed – now officially Sir Fazle after being knighted by Queen Elizabeth II – has been called one of the world’s 50 greatest leaders, and was hailed as “a public health hero” when the University of Michigan awarded him one of its most prestigious honors, the Thomas Francis Jr. Medal in Global Public Health, on April 6.
The next day, in a sit-down interview with NextBillion, the 80-year-old talked about his four-decades-and-counting quest to empower the poor.
“The greatest influence on me about people’s lives and poverty was my mother. She was very concerned about poverty and poor people and she tried to help them as much as she could,” he said. “(After starting BRAC) I got to know poverty firsthand in the villages of Bangladesh. I became more aware of the multidimensional aspect of poverty. It’s not just lack of income, it’s lack of opportunities, lack of health care, lack of education. It’s all kinds of deprivation that constitutes poverty. Ultimately, it’s also powerlessness to do something about poverty, how to come out of it.
“In the old days, one used to think that one takes resources to the poor people and distributes them, and they come out of poverty. But we thought you have to involve the poor people themselves in the fight against poverty.”
He said he developed that concept – considered revolutionary in the ’70s – from reading “Pedagogy of the Oppressed” by Brazilian educator Paulo Freire. “Oppressed people have got their own way of thinking about life,” Abed said, “and if you can somehow mobilize them, make them critically aware of their own condition, and get them to act on their own behalf, make them an actor in their own history, then things become much easier.”
Perhaps the best example of Abed and BRAC putting that idea into practice was an oral rehydration therapy (ORT) program aimed at ultra-poor women in Bangladesh starting in the early 1980s. Diarrheal disease, the second leading cause of death in children under age 5, leads to dehydration, but it can treated with a simple mixture of water, sugar and salt known as ORT. Conventional wisdom held that illiterate, uneducated women were incapable of properly mixing and administering ORT, but BRAC taught millions of women from Bangladesh’s slums and villages how to do it. And today Bangladesh’s ORT rates are among the best in the world.
BRAC also pioneered a “graduation model” that empowers the ultra-poor to move from safety net programs to income-earning activities and self-sufficiency.
In the free-ranging video interview below, Abed talks more about BRAC’s future than its illustrious past.
He’s optimistic, for example, about the next generation of businesses that might help support BRAC, highlighted by a transition from a free to paid education model. He believes everyone can afford to pay $10 to $15 a month to ensure their children’s future, so BRAC is “looking into providing quality education for poor people.”
He’s wary of religious fundamentalism. The interview was conducted the day after a secular blogger was hacked to death in Bangladesh – the fourth such incident this year – in an attack attributed to a local chapter of al-Qaeda. Abed said that while “intolerant religion is becoming quite a force in our society,” it hasn’t yet had much of an impact on BRAC’s empowerment efforts, specifically of women, and he hopes such intolerance can be kept under control.
And he’s certain that it is, indeed, possible to eliminate extreme poverty worldwide, in accordance with Sustainable Development Goal No. 1. As one might expect, he’s got a plan in mind:
Kerry Shields worked in the healthcare industry before coming to U-M’s Ross School of Business for her MBA and has plans to return to it after graduation. So she was eager to find a MAP (Multidisciplinary Action Project) in a different industry, and was ecstatic when she learned she was part of the WDI-sponsored MBA student team working with the Relationship Coffee Institute and Sustainable Harvest in Rwanda.
The Relationship Coffee Institute (RCI) is a nonprofit, public benefit corporation – or, B Corp – working to increase social and economic opportunity for smallholder commodity farmers and their families. Its partner, Sustainable Harvest, is one of the largest importers of fair trade specialty coffee in the U.S.
“What this company is trying to do is important and innovative and I can learn from that,” she said. “Hopefully we will have had an impact at the end of the project and get a better understanding how a private company can help alleviate poverty.”
The MAP in Rwanda is one of eight student projects organized and sponsored by WDI. MAP is an action-based learning course offered at Ross for MBA students who receive guidance from their faculty advisors. Each project requires analytical rigor, critical thinking, and teamwork. Sponsors receive top-notch deliverables and data-driven recommendations from the team of students.
After learning about their projects and conducting research in the classroom for several weeks, the students then spend three to four weeks working alongside their project sponsors in the field.
Sylvia Jimenez will work on a WDI-sponsored MAP team for CARE, a non-profit organization seeking to use business approaches to address social issues.
“I’m looking forward to getting out of my comfort zone and doing something different than I have done before,” she said. “I think I’ll learn a lot about me as a team player, and learn about my teammates and what their strengths are.”
Ted London, vice president of WDI’s Scaling Impact Initiative, is one of the faculty advisors on the Sustainable Harvest and CARE MAPs as well as two others. Before the teams traveled to their destinations for on-the-ground work, he brought them together for a special WDI-focused session to get to know each other better before they left and to touch on some of the key issues the teams will face in the field.
He discussed what it takes to conduct good interviews, particularly in a base of the pyramid (BoP) market context, emphasizing that the goal of these interviews is to develop data-driven recommendations. Among other things, he also told the students to approach people they meet and interview with respect and humility to maximize the depth and quality of the data collected during the interview.
“You are not only there as expert problem-solvers, but also as experts in learning and listening,” he said. “Only by collaborating and co-creating can we build solutions that really work.”
London said his MAP projects allow students to take what they learned in the classroom and apply it in a BoP context.
“For students interested in working in this space as a career, it is an amazing opportunity,” he said. “These MAPs open students’ eyes to this part of the world and to this scale of enterprise and impact. They’re part of the minority seeing how the majority of the world conducts business.”
WDI and its partners get value from the experience as well, London said. Seven of the eight MAP projects are with partners that have long-term relationships with WDI.
“By leveraging MAP and the great skills of the Ross students, we’re providing resources and expertise to our partners to help them solve the problems they’re facing,” London said. “And it’s a way for us to collaborate with partners in the field, apply our knowledge, and learn what are the next-generation tools we need to think about in the future.”
Here is a summary of each MAP project:
Aravind Eye Care System – India
Advised By: Paul Clyde, WDI and Ross School of Business; Peter Lenk, Ross School of Business
MAP Team: Jackie Barnum, Katie Redman, Alex Kravitz, Matt Tafoya
Aravind Eye Care System (AECS) has five tertiary care centers, six secondary care centers, six community clinics, and 54 primary eye care centers across the Tamil Nadu state in India. Now AECS is expanding, opening tertiary hospitals in Chennai and Tirupathi in the next couple of years, and there are also plans to expand the services/facilities in the existing hospital units.
The student team will customize and test at two to three AECS facilities an existing process model that will measure performance of each unit and is understandable to everyone in the organization.
Cooperative for Assistance and Relief Everywhere (CARE) – India
Advised By: Ted London, WDI and Ross School of Business; Jane Dutton, Ross School of Business
MAP Team: Karina Cabanillas, David Chang, Takashi Takizawa, Sylvia Jimenez
CARE has been working in India for over 65 years, focusing on ending poverty and social injustice. Its overall goal is the empowerment of women and girls from poor and marginalized communities leading to improvement in their lives and livelihoods.
Most smallholder farmers, a vast majority of whom are women, have limited access to quality and affordable agriculture input, services, finance and technologies. The student team will develop a profitable and socially inclusive business plan that CARE can execute in 2016 that facilitates access for smallholder farmers to inputs and related services. This should be a commercially viable and financially sustainable approach that avoids donor dependency through the development of an agricultural input supply social enterprise in India.
Sustainable Harvest & Relationship Coffee Institute – United States
Advised By: Ted London, WDI and Ross School of Business; Ravi Anupindi, WDI and Ross School of Business
MAP Team: Stacey Nathan, Whitney Augustine, Erdem Eray, Grant Cowherd
Sustainable Harvest of Portland, Ore. is an importer of high quality, specialty grade coffees from smallholder farmers from 15 countries around the world. In 2012, Sustainable Harvest formed a nonprofit organization, the Relationship Coffee Institute (RCI), to help propagate its business model and advance farmer training. In fall 2015, in conjunction with RCI and 4,000 women farmers in Rwanda, Sustainable Harvest launched Question Coffee, which represents its fundamental goal to empower coffee farmers and foster sustainable supply chains. It is Sustainable Harvest’s first B Corp certified product throughout the entire value chain, meaning it’s a for-profit entity that includes positive impacts on society, workers, and the environment. Net proceeds from Question Coffee go to farmer training, which contributes to better quality, improved yields and increased income and wellbeing for coffee farmers at the base of the pyramid.
The student team will conduct research to identify Question Coffee’s value proposition to consumers, resulting in several specific, actionable recommendations on branding and marketing strategies. The team also will devise several recommendations and strategies for greater market penetration.
Relationship Coffee Institute (in partnership with Sustainable Harvest) – Rwanda
Advised By: Ted London, WDI and the Ross School of Business; Jane Dutton, Ross School of Business
MAP Team: Courtney Landy, Aaron Whallon, Juan Marino, Kerry Shields
For this project, the student team will test and evaluate the value of B Corp certification to see if it could improve the lives of smallholder farmers in Rwanda, and how it could be scaled or applied to other commodities.
Zemen Bank – Ethiopia
Advised By: Paul Clyde, WDI and Ross School of Business; Bob Dittmar, Ross School of Business
MAP Team: Dana Yerace, Max Jacobson, Florence Noel, Nicholas Mencher
Zemen is a commercial bank located in Addis Ababa, Ethiopia. Its vision is to bring new dynamism to the financial sector and the banking business in Ethiopia. It is interested in serving small- and medium-sized enterprises (SMEs). Using a banking scheme in which Ethiopians living in the U.S. could put a hold on some monetary amount in their bank account, Zemen would then access the account for a low interest loan for Ethiopian citizens starting or expanding a small business. The hold on the U.S. bank would be reduced as the loan is paid back.
The student team will develop the business case for diaspora SME loans and assess the prospects for scaling the program to a level that would interest Zemen Bank. If the scheme were deemed viable, then the team would formulate a plan for executing the program.
Imperial Health Sciences (IHS) – South Africa
Advised By: Paul Clyde, WDI and Ross School of Business; Ravi Anupindi, WDI and Ross School of Business
MAP Team: Amit Patel, Jennifer Paxton, Anuja Mehta, Aric Adams
IHS provides supply chain solutions to the public and private pharmaceutical markets in Africa. IHS and the Imperial Logistics group have adopted the Unjani project as its Corporate Social Responsibility project. Unjani aims to establish a network of nurse-owned franchise clinics in historically underserved communities across South Africa. It has 19 operating clinics with plans to add 25 more by May. The group will take over an independent, failing clinic.
The student team will assess the change in the failing clinic’s success level after instituting the processes, controls, training, and marketing of the Unjani franchise network. Examining the operational and environmental factors of the clinic, along with some financial analysis, will allow IHS to better understand why this clinic failed. That will help IHS further develop the Unjani concept and ensure successful clinics in the future.
ITC Ltd. – India
Advised By: Ted London, WDI and Ross School of Business; Venkatram Ramaswany, Ross School of Business
MAP Team: Nishant Agrawal, Kee Cho, Arun Prakash, Dave Teebagy
ITC is a major diversified Indian conglomerate. ITC’s e-Choupal initiative is enabling Indian agriculture to enhance its competitiveness by empowering Indian farmers through the power of the Internet. The initiative facilitates the two-way flow of goods and services in and out of villages, and describes itself as the largest Internet-based intervention in rural India by a corporate entity.
The student team will help ITC design the next version of e-Choupal. The team will deliver a report exploring how the first three versions of e-Choupal have created value and where further opportunities for value creation may exist. The team also will look into how other models of rural farmer engagement are being deployed in other developing countries, identify the various stakeholders impacted, and highlight how the proposed model creates value for them.
Aparajitha Foundation – India
Advised By: Paul Clyde, WDI and Ross School of Business; Jim Walsh, Ross School of Business
MAP Team: Jamyle Michael, Holly Price, Aaron Steiner, Meghan Sheehan
The Aparajitha Foundation is an arm of the Aparajitha Group. It is committed to the cause of creating transformational change in adolescents by using audiovisual technology to deliver life skills training to economically disadvantaged children in India’s Tamil Nadu state.
The MAP team will develop a complete business plan for entrepreneurship education, training and development. The model should be scalable so that it can be used across the country in the future.
We study non-U.S. companies that have used reverse mergers as a means to adopt U.S. corporate law (and sometimes U.S. securities law as well). Early adopters of cross-border reverse mergers and those firms that hired a Big Four auditor exhibited superior corporate governance outcomes. Later adopters of cross-border reverse mergers were likely to strategically mimic the early entrants only to gain access to U.S. capital markets—that is, they took some governance actions but not others—and are shown to be likely to have worse corporate governance outcomes over time. Firm-level origins in China initially appears to be a significant negative determinant of at least some corporate governance outcomes, but the variable loses its statistical power when examining the most comprehensive data set on crossborder reverse mergers yet assembled and when including a battery of relevant control variables. Adoption of Nevada’s corporate law is associated with some of the most serious restatements involving real corporate governance and data manipulation problems. In summary, the evidence supports the existence of strategic mimicry, which the capital market did not fully discern for many years. It also supports the explanatory power of reputational bonding to explain the fact that adoption of U.S. institutions can be used either to build reputation or to exploit relatively weak U.S. cross-border law enforcement.
Authors: Jordan Siegel, Yanbo Wang
The organizational theory of the multinational firm holds that foreignness is a liability, and specifically that lack of embeddedness in host-country social networks is a source of competitive disadvantage; meanwhile the literature on labor market discrimination suggests that exploiting the bigotry of others can be a source of competitive advantage. We seek to turn the former literature somewhat on its head by building on insights from the latter. Specifically, we argue that multinationals wield a particularly significant competitive weapon: as outsiders, they can identify social schisms in host labor markets and exploit them for their own competitive advantage. Using two unique data sets from South Korea, we show that in the 2000s multinationals have derived significant advantage in the form of improved profitability by aggressively hiring an excluded group, women, in the local managerial labor market. Our results are economically meaningful, realistic in size, and robust to the inclusion of firm fixed effects. Multinationals, even those whose home markets discriminate against women, often show signs of having seen the strategic opportunity. Though the host market is moving toward a new equilibrium freer of discrimination, that movement is relatively slow, presenting a multiyear competitive opportunity for multinationals.
Authors: Jordan Siegel, Lynn Pyun, B.Y. Cheon
Administrative Science Quarterly
This study identifies how country differences on a key cultural dimension—egalitarianism—influence international investment flows. A society’s cultural orientation toward egalitarianism is manifested by intolerance for abuses of market and political power and a desire for protecting less powerful actors. We show egalitarianism to be based on exogenous factors including social fractionalization, dominant religion circa 1900, and war experience from the 19th century. We find a robust influence ofegalitarianism distance on cross-national flows of bond and equity issuances, syndicated loans, and mergers and acquisitions. An informal cultural institution largely determined a century or more ago, egalitarianism exercises its effect on international investment via an associated set of consistent contemporary policy choices. But even after controlling for these associated policy choices, egalitarianism continues to exercise a direct effect on cross-border investment flows, likely through its direct influence on managers’ daily business conduct.
Authors: Jordan Siegel, Amir N. Licht, Shalom H. Schwartz
Journal of Financial Economics 102 (2011) 621–642 © 2011 Elsevier B.V. All rights reserved.
Although one of the central questions in the global strategy field is how multinational firms successfully navigate multiple and often conflicting institutional environments, we know relatively little about the effect of conflicting labor market institutions on multinational firms’ strategic choice and operating performance. With its decision to invest in manufacturing operations in nearly every one of the world’s largest welding markets, Lincoln Electric offers us a quasi-experiment. We leverage a unique data set covering 1996–2006 that combines data on each host country’s labor market institutions with data on each subsidiary’s strategic choices and historical operating performance. We find that Lincoln Electric performed significantly better in countries with labor laws and regulations supporting manufacturers’ interests and in countries that allowed the free use of both piecework and a discretionary bonus. Furthermore, we find that in countries with labor market institutions unfriendly to manufacturers, Lincoln Electric was still able to overcome most (although not all) of the institutional distance by what we term flexible intermediate adaptation.
Authors: Jordan Siegel, Barbara Zepp Larson
Management Science 55(9), pp. 1527–1546 ©2009 INFORMS
One of the most rigorous methodologies in the corporate governance literature uses firms’ reactions to industry shocks to characterize the quality of governance. This methodology can produce the wrong answer unless one considers the ways firms compete. Because macro-level shocks reverberate differently at the firm level depending on whether a firm has a cost structure that requires significant adjustment, the quality of governance can only be elucidated accurately analyzing a firm’s business strategy and their corporate governance. These differences can help one determine whether the fruits of a positive macro-level shock have been expropriated by insiders. Using the example of Indian firms, we show that an influential finding is reversed when these differences are considered. We further argue that the conventional wisdom about tunneling and business groups will need to be reformulated in light of the data, methodology, and findings presented here.
Authors: Jordan Siegel, Prithwiraj Choudhury
The study tests the functional convergence hypothesis, which states that foreign firms can leapfrog their countries’ weak legal institutions by listing equities in New York and agreeing to follow U.S. securities law. Evidence shows that the SEC and minority shareholders have not effectively enforced the law against cross-listed foreign firms. Detailed evidence from Mexico further shows that while some insiders exploited this weak legal enforcement with impunity, others that issued a cross-listing and passed through an economic downturn with a clean reputation went on to receive privileged long-term access to outside finance. As compared with legal bonding, reputational bonding better explains the success of cross-listings.
Journal of Financial Economics, 75 (2005) 319–359
Speaker: Neil Gregory, Chief Strategy Officer, Investment Operations, International Finance Corporation (IFC).
Emerging markets serve as the world’s economic growth engine and the far reaching effects continue to play out. Neil Gregory discussed the evolution of emerging markets over the next 8 years based on key structural trends impacting those markets. IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines its policies. Its work in more than a 100 developing countries allows companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives.
Speaker: Onno Schellekens, Managing Director, Investment Fund for Health in Africa (IFHA).
With average GDP growth of over 5% for the past 7 years in Africa, improvements in political stability, and a quadrupling of foreign direct investments over the past years, Africa is positioning itself as an attractive market for alternative investments, not only in terms of financial returns but also in terms of social returns. Private sector development is essential in order to achieve a better healthcare system in Africa, and over the past number of years the private health sector has outperformed general economic growth, showing great potential. IFHA’s investment strategy takes into account that investing in healthcare in Africa is inherently risky. Onno discussed these challenges and the need for a new development paradigm.