Does the Institution of State Business Relations Matter for Firm Performance? - A Study of Indian Manufacturing
27 Pages Posted: 4 Jun 2010
Date Written: June 3, 2010
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: Suggested Citation