Does the Institution of State Business Relations Matter for Firm Performance? - A Study of Indian Manufacturing

27 Pages Posted: 4 Jun 2010

See all articles by Vinish Kathuria

Vinish Kathuria

Indian Institute of Technology (IIT), School of Management, Bombay

Rajesh Raj

Centre for Multi-Disciplinary Development Research (CMDR)

Kunal Sen

University of Manchester

Date Written: June 3, 2010

Abstract

This paper examines the role of the external institutional environment captured by effective state-business relations on firm performance. By effective state-business relations, we mean a set of highly institutionalised, responsive and public interactions between the state and the business sector. We find that effective state-business relations have had a discernible positive impact on firm performance in Indian formal manufacturing for the years 2000-01 and 2004-05. We also find internal and external institutional factors are complementary to firm performance - smaller firms, firms in urban areas, older firms and firms in simpler organizational forms benefit more.

Keywords: State business relations, firm productivity, manufacturing sector, India

JEL Classification: L25, O53, O43

Suggested Citation

Kathuria, Vinish and Raj, Rajesh and Sen, Kunal, Does the Institution of State Business Relations Matter for Firm Performance? - A Study of Indian Manufacturing (June 3, 2010). Available at SSRN: https://ssrn.com/abstract=1619707 or http://dx.doi.org/10.2139/ssrn.1619707

Vinish Kathuria

Indian Institute of Technology (IIT), School of Management, Bombay ( email )

IIT Bombay, Powai
400076
India

Rajesh Raj (Contact Author)

Centre for Multi-Disciplinary Development Research (CMDR) ( email )

Dr. B R Ambedkar Nagar
Lakamanahalli
Dharwad, 580004
India

Kunal Sen

University of Manchester ( email )

Oxford Road
Manchester, N/A M13 9PL
United Kingdom

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