India →
- 06 Mar 2012
- Working Paper Summaries
Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China
Economists have argued that the "Great Divergence" between the developed and underdeveloped world in the nineteenth century was reinforced—if not caused—by rapid improvements in schooling that occurred in the advanced economies. Explaining differences in economic development today may hinge on understanding why most societies failed to develop adequate primary education in the late nineteenth and early twentieth centuries. This study sheds new light on the comparative experiences of Brazil, Russia, India, and China (BRIC) during the formative years of their primary education systems. Key concepts include: Extreme decentralization in environments without democracy or accountability for local officials may lead to unequal educational outcomes within countries, as elites in certain provinces may choose to spend less on public goods, such as education. Brazil, Russia, India, and China were among the largest and poorest states in the world in the early twentieth century, and their low level of development limited investments in mass schooling. Brazil and Russia—marginally richer and possessing slightly broader forms of elite democracy—saw greater investments in public primary schooling than India and China. Central authorities in each BRIC country mostly absolved themselves of the responsibility of providing primary education. The provision of education was frequently decentralized to lower levels of government, where the absence of accountable and representative democracy allowed local elites to capture political institutions, limit redistributive taxation, and dictate how public resources were allocated. Variation among elites or in the political and economics conditions they faced (whether across space or over time) generated multiple schooling equilibriums across and within BRIC. Closed for comment; 0 Comments.
- 29 Nov 2011
- Working Paper Summaries
Local Industrial Structures and Female Entrepreneurship in India
Despite its recent economic advances, India's gender balance for entrepreneurship remains among the lowest in the world. Improving this balance is an important step for India's achievement of greater economic growth and gender equality. This paper uses detailed micro-data on the unorganized manufacturing and services sectors of India in 2000-2005 to identify and quantify the importance of existing female business networks for promoting subsequent entrepreneurship among women at the district-industry-year level. Key concepts include: Higher female ownership among incumbent businesses within a district-industry predicts a greater share of subsequent entrepreneurs will be female. Moreover, higher female ownership of local businesses in related industries—those sharing similar labor needs, industries related via input-output markets—predict greater relative female entry rates even after controlling for the focal district-industry's conditions. Among broader district-level traits, better local infrastructure strongly connects with higher relative female entry in both manufacturing and services. Local education and the female literacy rate further matter for services entry. Within manufacturing, female shares are highest and typically exceed 50 percent in industries related to chemicals and chemical products, tobacco products, and paper and paper products. At the opposite end, female shares of 2 percent or less are evident in industries related to computers, motor vehicles, fabricated metal products, and machinery and equipment. Among services industries, female ownership shares exceed 30 percent in industries related to sanitation and education. Lowest rates are in industries related to research and development, water transport, and land transport. Closed for comment; 0 Comments.
- 21 Nov 2011
- Working Paper Summaries
Caste and Entrepreneurship in India
Has India's political revolution been accompanied by corresponding changes in the economic sphere? This paper argues that for the most vulnerable, whether in villages or cities, the social structure has not changed. While Scheduled Castes, Scheduled Tribes, and traditionally "middle-level" castes have made significant progress at the level of political representation in independent India, their progress in entrepreneurship has been uneven. By looking at the ownership of enterprises across the country, this paper sheds light on two larger narratives about India's emerging political economy: first, that the rich have benefitted more than the poor, the towns and cities more than the villages, and the upper castes more than the lower castes has acquired salience in several quarters. And second, that "Dalit entrepreneurship," a category conspicuous by its absence in India's business history, has become a significant trend. Findings by Lakshmi Iyer, Tarun Khanna, and Ashutosh Varshney show that while the "middle-level" castes have made progress in entrepreneurship, the Scheduled Castes and Scheduled Tribes are considerably under-represented in the entrepreneurial sphere. That is, for Scheduled Castes and Scheduled Tribes, political gains have not manifested themselves in greater entrepreneurial prowess. Key concepts include: By documenting some of the basic facts about caste and entrepreneurship, Iyer, Khanna, and Varshney provide evidence for the persistence of caste differences in important development outcomes. The Scheduled Castes are communities that have historically been at the bottom of the Hindu caste hierarchy, and subjected to considerable economic and social discrimination. Most such castes were considered "untouchables" by members of higher castes. Scheduled Tribes include communities that have traditionally been outside the Hindu caste system. The Indian constitution of 1950 explicitly prohibits discrimination on the basis of caste or tribe, and also provides affirmative action policies for Scheduled Castes and Scheduled Tribes in political representation, education and jobs. Members of the Scheduled Castes and Scheduled Tribes are under-represented in the ownership of enterprises. These patterns are not specific to any one region or state of the country. By contrast, members of traditionally "middle level" castes appear to be making significant progress in playing an important entrepreneurial role. Differences across caste categories are more pronounced in urban areas compared to rural areas, suggesting that these results cannot be attributed purely to social discrimination that might be expected to be higher in rural areas. Closed for comment; 0 Comments.
- 10 Nov 2011
- Working Paper Summaries
Spatial Determinants of Entrepreneurship in India
In South Asia, which regional traits encourage local entrepreneurship? While multiple studies have considered this question in advanced economies, especially for the manufacturing sector, there has been very little empirical evidence for developing countries like India. While India has historically had low entrepreneurship rates, this weakness is improving and will be an important stepping stone to further development. In this paper, the authors explore the spatial determinants of local entrepreneurship in India for both manufacturing and services. At the district level, their strongest evidence points to the roles that local education levels and physical infrastructure quality play in promoting entry. They also find evidence that strict labor regulations discourage formal sector entry, and better household banking environments encourage entry in the unorganized sector. The paper then evaluates how incumbent industrial structures of cities shape the type of entrants that emerge in local areas. Startups are more frequent for a city in industries that share common labor needs or have customer-supplier relationships with the city's incumbent businesses. This is among the first studies to quantify the spatial determinants of entrepreneurship in India. Moreover, it moves beyond manufacturing to consider services, which are very important for India's economic growth. Key concepts include: India's economic geography is still taking shape since the deregulations of the 1980s and 1990s. The spatial distribution of startups in India is more fluid than in the United States. The two most consistent factors that predict overall entrepreneurship for a district are education and the quality of local physical infrastructure. These patterns are true for manufacturing and services. Like previous research, this paper also links strict labor regulations in India to slower economic growth and development. This pattern is especially apparent for the organized manufacturing sector where these laws are most binding. The incumbent compositions of local industries influence new entry rates at the district-industry level within manufacturing. This influence operates through channels like access to common labor resources or customer-supplier relationships. Closed for comment; 0 Comments.
- 18 Oct 2011
- Working Paper Summaries
Historical Trajectories and Corporate Competences in Wind Energy
Analyzing developments in the wind turbine business over more than a century, Geoffrey Jones and Loubna Bouamane argue that public policy has been a key variable in the spread of wind energy since the 1980s, but that public policy was more of a problem than a facilitator in the earlier history of the industry. Geography has mattered to some extent, also: Both in the United States and Denmark, the existence of rural areas not supplied by electricity provided the initial stimulus to entrepreneurs and innovators. Building firm-level capabilities has been essential in an industry which has been both technically difficult and vulnerable to policy shifts. Key concepts include: Firms from Denmark have been unusually prominent throughout the history of the wind energy business. The basis of the competitive Danish industry was laid without support or even encouragement from its government. US-based firms have also been regularly found among the leading wind energy companies. But their relative importance varied considerably over time, has rarely reflected the overall importance of the U.S. market, and has involved a changing cast of actual firms. German and Spanish, and more recently Indian and Chinese firms, have emerged to become amongst the largest turbine manufacturers in the industry. The most striking change over the last decade has been in the competitive landscape. Engineering powerhouses, such as GE and Siemens, and wholly or partly state-owned Chinese firms with low-cost bases, are now prominent actors in this industry. Closed for comment; 0 Comments.
- 17 Aug 2011
- Research & Ideas
Protecting against the Pirates of Bollywood
Hollywood's earnings in India have largely been disappointing. Professor Lakshmi Iyer believes the problem has more to do with intellectual pirates than the cinematic kind. Open for comment; 0 Comments.
- 05 May 2011
- Research & Ideas
How ‘Political Voice’ Empowers the Powerless
Women in India often are targets of verbal abuse, discrimination, and violent crimes—crimes that are underreported. Fortunately, an increase in female political representation seems to be giving female crime victims a voice in the criminal justice system, according to new research by Harvard Business School professor Lakshmi Iyer and colleagues. Key concepts include: Political representation of disadvantaged groups is an important means of giving them a voice in the criminal justice system. An Indian constitutional amendment enacted in 1993 mandated that at least one-third of council seats at the village, intermediate, or district level be filled by women. The rise in female representation empowered more women to report crimes. Female political representation also induced law enforcement officials to be more responsive to crimes against women. Similar results were found in crimes against Scheduled Castes—the so-called untouchables who have historically been at the bottom of the Hindu caste system. An increase in SC political representation led to an increase of documented crimes against the group. Women (or other minorities) might be better able to maximize their voice by increasing their representation more broadly, rather than targeting a few high-level positions. Closed for comment; 0 Comments.
- 03 May 2011
- Working Paper Summaries
Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China, 1880-1930
In deducing why some nations are more developed than others, it makes sense to look at their educational systems. While comparative studies on the subject focus either on developed nations or on differences between developed and developing economies, this paper hones in four of the largest developing nations at the turn of the twentieth century: Brazil, Russia, India, and China (BRIC). Research was conducted by Aldo Musacchio of Harvard Business School, Laktika Chaundhary of Scripps College, Steven Nafziger of Williams College, and Se Yan of Peking University. Key concepts include: BRIC comprised half of the world's population in 1900, but only 14, 21, 9, and 4 percent of school-age children in Brazil, Russia, India, and China, respectively, were enrolled in primary school, compared with more than 75 percent in Germany, the United Kingdom, and the United States. In BRIC, decentralized political structures and lack of accountability led to situations in which public resources were funneled to educate the elites. Meanwhile, poor communities had to rely on insufficient private contributions to fund their schools. However, in many areas, the elites supported the expansion of mass education, either because they wanted to produce skilled labor for their companies or because they perceived political benefits from an educated population. Their results explain why it has been so hard for BRIC countries to catch up with the education levels developed countries in the twentieth century. While the United States, Germany, and the United Kingdom had two hundred years to get to their current levels of education, BRIC countries had a late start. Additionally, the paper highlights the importance of having centralized education balancing education deficiencies in distant localities or in provinces in which elites that are not interested in educating the masses capture the government. Closed for comment; 0 Comments.
- 05 Apr 2011
- Working Paper Summaries
The Power of Political Voice: Women’s Political Representation and Crime in India
Protecting the rights of disadvantaged citizens remains a challenge in both developing and developed countries. These individuals often are targets of verbal abuse, discrimination, and violent crime. Using evidence from India, this paper shows that political representation of disadvantaged groups is an important means of giving them a voice in the criminal justice system. Research was conducted by Lakshmi Iyer of Harvard Business School, Anandi Mani of the University of Warwick, and Prachi Mishra and Petia Topalova of the International Monetary Fund. Key concepts include: An Indian law enacted in 1993 mandated that at least one-third of council seats at the village, intermediate, or district level must be filled by women. The rise in female representation led to a rise in the number of reported crimes against women. The researchers take these statistics as positive news for women's empowerment. They provide supporting evidence that this is an indication of women now being more likely to report when they are attacked, rather than an increase in the actual incidence of crime. Female political representation at the local level also induces law enforcement officials to be more responsive to crimes against women. The researchers found similar results in the case of crimes against Scheduled Castes (SC)-the so-called untouchables that have historically been at the bottom of the Hindu caste system. An increase in SC political representation led to an increase of documented crimes against SCs. Closed for comment; 0 Comments.
- 24 Jan 2011
- HBS Case
Terror at the Taj
Under terrorist attack, employees of the Taj Mahal Palace and Tower bravely stayed at their posts to help guests. A look at the hotel's customer-centered culture and value system. Open for comment; 0 Comments.
- 06 Oct 2010
- Working Paper Summaries
Using What We Know: Turning Organizational Knowledge into Team Performance
An organization's captured (and codified) knowledge--white papers, case studies, documented processes--should help project teams perform better, but does it? Existing research has not answered the question, even as U.S. companies alone spend billions annually on knowledge management programs. Looking at large-scale, objective data from Indian software developer Wipro, researchers Bradley R. Staats, Melissa A. Valentine, and Amy C. Edmondson found that team use of an organization's captured knowledge enhanced productivity, especially for teams that were geographically diverse, relatively low in experience, or performing complex work. The study did not find effects of knowledge use on the quality of the team's work, except for dispersed teams. Key concepts include: Using captured knowledge had a positive effect on the team's project efficiency (delivering on budget) but not on project quality (number of defects in the code). When use of knowledge was concentrated in a small number of team members, efficiency improved but quality declined. Knowledge use improved project efficiency but not quality for teams with less experience. For more dispersed teams, knowledge use was related to improved quality but not efficiency. Team knowledge use was related to improved efficiency and quality for teams completing more complex work. Closed for comment; 0 Comments.
- 02 Aug 2010
- Research & Ideas
Modern Indian Art: The Birth of a Market
Before 1995, there was little market for twentieth-century Indian fine art. That's when artists, auction houses, critics, and others defined a new product category—modern Indian fine art—resulting in worldwide demand and soaring prices. Professor Mukti Khaire explains the dynamics behind new market categories. Closed for comment; 0 Comments.
- 15 Mar 2010
- HBS Case
Developing Asia’s Largest Slum
In a recent case study, HBS assistant professor Lakshmi Iyer and lecturer John Macomber examine ongoing efforts to forge a public-private mixed development in Dharavi—featured in the film Slumdog Millionaire. But there is a reason this project has languished for years. From the HBS Alumni Bulletin. Closed for comment; 0 Comments.
- 10 Dec 2009
- Working Paper Summaries
State Owned Entity Reform in Absence of Privatization: Reforming Indian National Laboratories and Role of Leadership
Is privatization necessary? In India and across emerging markets, state-owned entities (SOEs) continue to make up a large proportion of industrial sales, yet they lag behind private counterparts on performance measures. But SOEs may be able to significantly improve performance even in the absence of property rights, according to HBS doctoral candidate Prithwiraj Choudhury and professor Tarun Khanna. As they document, 42 Indian state-owned laboratories started from a base of negligible U.S. patents, yet in the period 1993-2006 (during which the Indian government launched an ambitious privatization program), the labs were granted more patents than all domestic private firms combined. The labs then licensed several of these patents to multinationals, and licensing revenue increased from 3 percent to 15 percent as a fraction of government budgetary support. Findings are relevant to firms and R&D entities around the world that depend on varying degrees of government budgetary support and government control, especially in emerging markets like India, where SOEs control up to one-third of all industrial activity. Key concepts include: Despite the absence of property rights, 42 Indian state-owned laboratories significantly increased U.S. patents and licensing revenue from multinationals without negatively affecting publication quality and quantity. This development may be due to incentive policy change and leadership change at the labs. U.S. patents as well as revenue from multinationals increased sharply in response to director changes, an event whose timing was dictated by rigid government employment rules. Private firms including multinationals can play a catalytic role in driving up revenue at SOEs. The state-owned labs leveraged the U.S. institutional context in effecting their turnaround. The general point is that organizations in emerging markets can leverage institutions from outside their location of origin, once they have some established source of competitive advantage (in this case, their R&D-generated know-how). Although the labs were able to commercialize projects without sacrificing publication quality and quantity, a question remains as to whether and why national labs should concern themselves with commercialization. Closed for comment; 0 Comments.
- 18 Nov 2009
- Working Paper Summaries
India Transformed? Insights from the Firm Level 1988-2005
Between 1986 and 2005, Indian growth put to rest the concern that there was something about the "nature of India" that made rapid growth difficult. Following broad-ranging reforms in the mid-1980s and early 1990s, the state deregulated entry, both domestic and foreign, in many industries, and also hugely reduced barriers to trade. Laura Alfaro of Harvard Business School and Anusha Chari of the University of North Carolina at Chapel Hill analyze the evolution of India's industrial structure at the firm level following the reforms. Despite the substantial increase in the number of private and foreign firms, the overall pattern that emerges is one of continued incumbent dominance in terms of assets, sales, and profits in both state-owned and traditional private firms. Key concepts include: In sectors dominated by state-owned and traditional private firms before liberalization (with assets, sales, and profits representing 50 percent or higher shares), these firms remain the dominant ownership group following the reforms. Rates of return remain stable over time and show low dispersion across sectors and across ownership groups within sectors. The high levels of state ownership and ownership by traditional private firms in India raise the question of whether existing resources could be allocated more efficiently and whether remaining barriers to competition jeopardize the effectiveness of reform measures that have been put in place. Closed for comment; 0 Comments.
- 30 Jul 2009
- Working Paper Summaries
Fluid Teams and Fluid Tasks: The Impact of Team Familiarity and Variation in Experience
In the context of team performance, common wisdom suggests that performance is maximized when individuals complete the same work with the same people. Although repetition is valuable, at least up to a point, in many settings such as consulting, product development, and software services organizations consist largely of fluid teams executing projects for different customers. In fluid teams, members bring their varied experience sets together and attempt to generate innovative output before the team is disassembled and its individual members move on to new projects. Using the empirical setting of Wipro Technologies, a leading firm in the Indian software services industry, this study examines the potential positive and negative consequences of variation in team member experience as well as how fluid teams may capture the benefits of variation while mitigating the coordination costs it creates. Key concepts include: As organizations continue to depend on the output of teams, and teams, in turn, rely on members with varied prior experience, it becomes critical for teams to manage these differences and dependencies successfully. If the most valuable assets of many companies are their employees, then organizations need to shift from only thinking about their project portfolio to also considering their employee-experience portfolio. Managing employee-experience portfolios will require managers to consider the breadth of types of experience (e.g., customer, technology, etc.) captured across the members of a team as well as their familiarity with each other. Doing so may offer managers an important new lever for improving organizational performance. Closed for comment; 0 Comments.
- 15 May 2009
- Working Paper Summaries
Barriers to Household Risk Management: Evidence from India
Insurance markets are growing rapidly in developing countries. Despite the promise of these markets, however, adoption to date has been relatively slow. Yet households often remain exposed to movements in local weather; regional house prices; prices of commodities like rice, heating oil, and gasoline; and local, regional, and national income fluctuations. In many cases, financial contracts simply do not exist to hedge these exposures, and when contracts do exist their use is not widespread. Why don't financial markets develop to help households hedge these risks? Why don't more households participate when formal markets are available? HBS professor Shawn Cole and coauthors attempt to shed light on these questions by studying participation in rural India in a rainfall risk-management product that provides a payoff based on monsoon rainfall. The results suggest that it may take a significant amount of time—and substantial marketing efforts—to increase adoption of risk-management tools at the household level. Key concepts include: To increase the insurance penetration rate of insurance products, it is important to minimize transaction and administrative costs and foster competition among insurance providers. Technological advances and contractual innovations may improve these products. The estimated significance of trust and vendor experience suggests that product diffusion through the population may be relatively slow until a track record is established. Optimal contract design could help by paying a positive return with sufficient frequency. "Catastrophe"-type insurance might be most beneficial for households, since it provides payouts that are concentrated in states of nature where the marginal utility of consumption is particularly high. Closed for comment; 0 Comments.
- 15 May 2009
- Working Paper Summaries
Money or Knowledge? What Drives Demand for Financial Services in Emerging Markets?
Why is there apparently limited demand for financial services in emerging markets? On the one hand, low-income individuals may not want formal services when informal savings, credit, and insurance markets function reasonably well, and the benefits of formal financial market participation may not exceed the costs. On the other hand, limited financial literacy could be the barrier: If people are not familiar or comfortable with products, they will not demand them. These two views carry significantly different implications for the development of financial markets around the world, and would suggest quite different policy decisions by governments and international organizations seeking to promote "financial deepening." HBS professor Shawn Cole and coauthors found that financial literacy education has no effect on the probability of opening a bank savings account for the full population, although it does significantly increase the probability among those with low initial levels of financial literacy and low levels of education. In contrast, modest financial subsidies significantly increase the share of households that open a bank savings account within the subsequent two months. Key concepts include: Subsidies or price reductions may represent a more cost-effective way of drawing households into the financial system. Financial literacy efforts targeted at the general population may be relatively ineffective. These results do not necessarily constitute support for financial literacy education even among the low-literacy subpopulation. Even if financial literacy programs are carefully targeted, they may still not be cost-effective. Closed for comment; 0 Comments.
- 30 Oct 2008
- Working Paper Summaries
Do Voters Appreciate Responsive Governments? Evidence from Indian Disaster Relief
In a functioning democracy, politicians' ability to win reelection declines when they perform poorly. This idea fits well with models of political accountability. Recent evidence suggests, however, that voters may punish politicians even for events outside their control. This behavior may violate standard models of democratic accountability, and has been advanced as evidence of voter irrationality. This paper uses detailed weather, electoral, and relief data to identify the relationship between government responsiveness to an emergency and electoral decisions. Specifically, the authors look at the decisions that Indian voters made in provincial elections, using the intensity of the monsoon rains as an exogenous shock to welfare. They find that voters, on average, punish incumbent politicians for being in office during weather events beyond their control. However, the degree of voter punishment is reduced somewhat when the government responds more vigorously to the crisis. Key concepts include: Voters do a better job of holding governments accountable during these emergencies. Voters punish politicians following adverse weather events, but the degree of punishment depends critically on the quality of the ruling party's response: Those distributing greater amounts of relief aid suffer smaller subsequent electoral losses. Closed for comment; 0 Comments.
Is India’s Manufacturing Sector Moving Away from Cities?
One of the biggest challenges in development is urbanization. Within developing countries, nearly two billion people are expected to move from rural regions into cities in the next two decades. This paper closely examines the movement of economic activity in Indian manufacturing between urban and rural areas. The authors find that while the organized sector is becoming less urbanized, the unorganized sector is becoming more urbanized. This process has been most closely linked to greater urbanization changes in districts with high education levels; a second role is often evident for public infrastructure as well. On the whole, these urbanization changes have modestly improved the urban-rural allocation of industries within India's districts. Key concepts include: Much of the urbanization that is occurring is in the unorganized sector. Policies that take an inclusionary approach to the urban informal economy may be more successful in promoting local development and managing its strains than those focused only on the formal sector. Districts with better education and infrastructure have experienced a faster pace of urbanization, although higher urban-rural cost ratios cause movement out of urban areas. Observers have frequently noted the relatively slow pace of India's urbanization. Moreover, the movement of organized manufacturing sector plants to rural areas is surprising, given the relative youth of India's manufacturing sector. Continued investment in infrastructure and education, beyond their direct effects for Indian businesses, may also provide beneficial effects from an urbanization and spatial allocation perspective. The most urbanized states in terms of manufacturing employment are Delhi and Chandigarh at over 90 percent in 2000, with Gujarat, Haryana, Maharashtra, and Punjab also above 60 percent. However, Bihar, Orissa, and Himachal Pradesh have urbanization rates of less than 20 percent for manufacturing employment. Closed for comment; 0 Comments.