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Do effective state–business relations matter for firm performance? A study of Indian manufacturing

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  • Vinish Kathuria
  • Rajesh S.N.
  • Kunal Sen

Abstract

This paper examines the role of the external institutional environment captured by effective state–business relations (SBRs) on firm performance. By effective SBRs, we mean a set of highly institutionalised, responsive and public interactions between the state and the business sector. We find that effective SBRs have had a discernible positive impact on firm productivity in Indian formal manufacturing over the period 1989–1990 to 2004–2005. We also find internal and external institutional factors are complementary to firm performance – smaller firms, firms in urban areas and firms in simpler organisational forms benefit more.

Suggested Citation

  • Vinish Kathuria & Rajesh S.N. & Kunal Sen, 2013. "Do effective state–business relations matter for firm performance? A study of Indian manufacturing," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(4), pages 654-672.
    • Handle: RePEc:taf:rjapxx:v:18:y:2013:i:4:p:654-672
    DOI: 10.1080/13547860.2013.827447
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    References listed on IDEAS

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    1. World Bank, 2007. "India - Land Policies for Growth and Poverty Reduction," World Bank Publications - Reports 7818, The World Bank Group.
    2. World Bank, 2007. "India : Land Policies for Growth and Poverty Reduction," World Bank Publications - Books, The World Bank Group, number 15791.
    3. Alm, James & Annez, Patricia & Modi, Arbind, 2004. "Stamp duties in Indian states - a case for reform," Policy Research Working Paper Series 3413, The World Bank.
    4. Cimoli, Mario & Dosi, Giovanni & Stiglitz, Joseph E. (ed.), 2009. "Industrial Policy and Development: The Political Economy of Capabilities Accumulation," OUP Catalogue, Oxford University Press, number 9780199235278.
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