Tarun Khanna is the Jorge Paulo Lemann Professor at the Harvard Business School, where he has sought for two decades to study the drivers of entrepreneurship in emerging markets as a means of economic and social development. At HBS since 1993, after obtaining degrees from Princeton and Harvard, he has taught courses on strategy, corporate governance and international business to MBA and Ph.D. students and senior executives. For many years, he has served as the Faculty Chair for HBS activities in India and South Asia.
A summary of his work on emerging markets appeared in his 2010 co-authored book, Winning in Emerging Markets, and an example of his comparative work on entrepreneurship appears in his 2008 first-person analysis of China and India, Billions of Entrepreneurs, both published by Harvard Business Press and translated into many languages. In 2014, his piece, Contextual Intelligence, was a runner-up for the McKinsey Prize for the year’s best article in the Harvard Business Review. His new book, Trust: Creating the foundations for Entrepreneurship in Developing Countries, will be released worldwide in July 2018.
He was named the first director of the university-wide The Lakshmi Mittal and Family South Asia Institute at Harvard in the fall of 2010. The institute rapidly grew to engage over 150 faculty from across Harvard in projects embracing the pure sciences, social sciences and the humanities, and spanning the region from Afghanistan to Myanmar. In this role, he currently teaches a popular university-wide elective course, Contemporary Developing Countries, where students work in multi-disciplinary teams to devise practical solutions to complex social problems. The course is part of Harvard’s undergraduate general education core curriculum, and is rare in that it also attracts graduate students from across the university, engaging everyone from 'sophomores to surgeons.'
In 2007, he was nominated Young Global Leader (under 40) by the World Economic Forum; and in 2009, elected as a Fellow of the Academy of International Business. In 2015, he was named by the Government of India to chair the national commission to help shape the fabric of India’s entrepreneurial ecosystem. In 2016, the Academy of Management recognized him as Eminent Scholar for Lifetime Achievement in the field of International Management. In 2018, the Government of India named him to its commission to help select India’s Institutes of Eminence, the project to enhance India’s leading Universities for the future.
Outside HBS, he serves on numerous for-profit and not-for-profit boards in the US and India, including AES, a Washington DC headquartered global power company, and India-based Bharat Financial Inclusion Limited (BFIL), one of the world’s largest firms dedicated to financial inclusion for the poor. He is a co-founder of several entrepreneurial ventures in the developing world, spanning India, China, Southeast Asia and the Middle East. Recently, he co-founded Axilor, a vibrant incubator in Bangalore. In 2015, he was appointed a Trustee of Boston’s Museum of Fine Arts.
He lives in Newton, MA, with his wife, daughter and son.
Creating the Foundation for Entrepreneurship in Developing Countries
Entrepreneurial ventures often fail in the developing world because of the lack of something taken for granted in the developed world: trust. Over centuries, the developed world has built customs and institutions such as enforceable contracts, an impartial legal system, and credible regulatory bodies--and even unofficial but respected sources of information such as Yelp and Consumer Reports--that have created a high level of what scholar and entrepreneur Tarun Khanna calls "ambient trust."
This is not the case in the developing world. But Khanna shows that rather than become casualties of mistrust, smart entrepreneurs can adopt the mindset that, like it or not, it's up to them to weave their own independent web of trust--with their employees, their partners, their clients, their customers, and society as a whole. This can be challenging, and it requires innovative approaches in places where the level of societal mistrust is so high that an official certification of quality simply arouses suspicion--and lowers sales! Using vivid examples from Brazil, China, India, Mexico, and elsewhere, Khanna's stories show how entrepreneurs can build on existing customs and practices instead of trying to push against them. He highlights the role new technologies can play (but cautions that these are not panaceas) and explains how entrepreneurs can find dependable partners in national and local governments to create impact at scale.
As far back as the 18th century, Adam Smith recognized trust as what Khanna calls "the hidden engine of economic progress." "Frankness and openness conciliate confidence," Smith wrote. "We trust the man who seems willing to trust us." That kind of confidence is critical to entrepreneurial success, but in the developing world entrepreneurs have to establish it through their own efforts. As Khanna puts it, "The entrepreneur must not just create, she must create the conditions to create."
New technologies can be unsettling for industry incumbents, regulators, and consumers, because norms and institutions for dealing with them don't yet exist. Interestingly, businesspeople in emerging economies face similar challenges: The rules are unclear and infrastructure is lacking. In this article, the author suggests that tech pioneers would do well to heed a lesson he's gleaned from his research in the developing world: For long-term success, companies must invest in the surrounding ecosystem. The author presents examples of entrepreneurs who have done just that in China, Bangladesh, Africa, and Chile, benefiting the public as well as their own enterprises. He then describes how an Indian health care organization is tackling institutional voids as it expands into medical tourism in the Cayman Islands. An in-depth look at the nascent drone industry follows, with profiles of companies that are helping create the conditions for the industry's growth by amassing knowledge about best practices, influencing the development of regulations, exploring new uses for drones, developing a professional workforce, and so forth. The argument is that when firms launching innovative products or services look beyond their self-interest and work to collectively build the institutional infrastructure, they--and society as a whole--are more likely to prosper.
I have come to a conclusion that may surprise you: trying to apply management practices uniformly across geographies is a fool's errand. Best practices simply don't travel well across borders. That's because conditions not just of economic development but of institutional maturity, educational norms, language, and culture vary enormously from place to place. Students of managerial practice once thought that their technical knowledge of best manufacturing practices (to take one example) was sufficiently developed that processes simply needed to be tweaked to fit local conditions. More often, it turns out, they have to be reworked quite radically—not because the technology is wrong but because everything around it changes how it will work. There's nothing wrong with the tools we have at our disposal, but their application requires contextual intelligence: the ability to understand the limits of our knowledge and to adapt that knowledge to a context different from the one in which it was acquired. Until we can better develop and apply contextual intelligence, failure rates for cross-border businesses will remain high, what we learn from experiments unfolding around the world will remain limited, and the promise of healthy growth in all parts of the world will remain unfulfilled.
by Tarun Khanna and Krishna G. Palepu, with Richard Bullock, published by Harvard Business Press in April 2010
Most books thus far on emerging markets are either investing-oriented, or country - or market-specific, or descriptive. No book has definitively targeted the corporate strategists who need a practical framework and assessment tools for analyzing emerging markets, identifying new business opportunities, and planning strategy and execution. This book does just that. Rather than defining emerging markets by particular size or growth qualifications, Palepu and Khanna argue that the primary exploitable characteristic of these markets is their lack of developed infrastructures and institutions that might enable efficient business operations. Credit card systems, intellectual property adjudication, and data research firms are all market intermediaries taken for granted in advanced economies, for example, and operating without them poses specific challenges - as well as major opportunities. Building upon of the authors' series of popular HBR articles on the topic, the book gives managers a systematic framework for assessing the institutional context of any emerging market so that they can spot institutional voids, position themselves in the market, and finally build execution strategies that factor in an informed prognosis of that market's future. Translation available in Chinese.
By Tarun Khanna, published by HBS Press in January 2008, (Penguin Books in India and South Asia)
Translations available in Arabic, Brazilian Portuguese, Indonesian, Korean, Portuguese, Turkish, Vietnamese.
Western concerns about the rise of China and India are raising alarms today, much as they were fifty years ago. China and India currently operate in the global economy as mirror images of each other—one favors multinationals over indigenous private companies, the other advantages its locals and shuns foreigners. In a book published by Harvard Business School Publishing, HBS Professor Tarun Khanna explores the likely evolution of the Chinese and Indian models and the implications for the world in four settings—China and the world, India and the world, Chinese and Indian mutual relations, and the view from the developed world. And just as hysteria and protectionism proved unwarranted half a century ago, Khanna argues that the rise of China and India is again an opportunity for profit and hope.
By Tarun Khanna and Yasheng Huang, Foreign Policy, July - August 2003
What’s the fastest route to economic development? Welcome foreign direct investment (FDI), says China, and most policy experts agree. But a comparison with long-time laggard India suggests that FDI is not the only path to prosperity. Indeed, India’s homegrown entrepreneurs may give it a long-term advantage over a China hamstrung by inefficient banks and capital markets.
I have come to a conclusion that may surprise you: trying to apply management practices uniformly across geographies is a fool's errand. Best practices simply don't travel well across borders. That's because conditions not just of economic development but of institutional maturity, educational norms, language, and culture vary enormously from place to place. Students of managerial practice once thought that their technical knowledge of best manufacturing practices (to take one example) was sufficiently developed that processes simply needed to be tweaked to fit local conditions. More often, it turns out, they have to be reworked quite radically—not because the technology is wrong but because everything around it changes how it will work. There's nothing wrong with the tools we have at our disposal, but their application requires contextual intelligence: the ability to understand the limits of our knowledge and to adapt that knowledge to a context different from the one in which it was acquired. Until we can better develop and apply contextual intelligence, failure rates for cross-border businesses will remain high, what we learn from experiments unfolding around the world will remain limited, and the promise of healthy growth in all parts of the world will remain unfulfilled.
