Does the institution of State Business Relations matter for Firm Performance? – A study of Indian Manufacturing

Kathuria, Vinish and Natarajan, Rajesh Raj and Sen, Kunal (2010): Does the institution of State Business Relations matter for Firm Performance? – A study of Indian Manufacturing.

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 institutionalized, 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.

• Item Type: MPRA Paper
• Language: English
• Keywords: State business relations; firm productivity; manufacturing sector; India
• Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East

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