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Who controls the Indian economy: The role of families and communities in the Indian economy

Published on Jul 1, 2019in Asia Pacific Journal of Management 2.74
· DOI :10.1007/s10490-018-9633-5
Dalhia Mani2
Estimated H-index: 2
(IIMB: Indian Institute of Management Bangalore)
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Abstract
Research on the concentration of corporate control frequently highlights the role of a few families, who control large swaths of their economies. The prominent role of certain communities is also evoked in these discussions, but the extent of their influence is unclear. Public and scholarly debate is also divided on the meaning of this kinship-based control; whether it reflects entrenchment or entrepreneurship. This paper examines questions about the extent and meaning of family and community control in the context of India. The results show that three trading communities (the Marwaris, Gujaratis and Parsis) play a disproportionate role in the control and ownership of Indian publicly traded firms. However, their role is skewed towards smaller, younger, and lower market share firms, and there is significant turnover in the identity of the largest firm over time. The results are similar for family control and ownership. Overall, the results do not support the entrenchment perspective, and instead supports the view that these social groups are the primary vehicle for raising funds among smaller, younger, and low market share firms. However, neither do the results support the view that Indian firms are rapidly embracing a managerial model with diffuse shareholdings.
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Published on Mar 1, 2019in Entrepreneurship Theory and Practice 6.19
Dalhia Mani2
Estimated H-index: 2
(IIMB: Indian Institute of Management Bangalore),
Rodolphe Durand27
Estimated H-index: 27
(HEC Paris)
In this article, we investigate family firms' position in the intercorporate ownership network. Rooting our predictions in the Behavioral Agency Model and a Network analytical framework, we predict and find that family involvement decreases the likelihood of business group affiliation and of cross-group ties leading to a lower embeddedness within the overall network. We predict and find the opposite effect for community involvement. We use the complete longitudinal dataset of publicly listed fir...
Published on Apr 1, 2015in Strategic Management Journal 5.57
K S Manikandan2
Estimated H-index: 2
(Indian Institute of Management Tiruchirappalli)
We extend the “institutional voids” perspective on business groups by examining the value-adding potential of two of the characteristic features of business groups: their diverse portfolio and multi-entity organizational form. We maintain that portfolio diversity affords affiliates privileged access to opportunities hidden by incomplete strategic factor markets. We hypothesize that the multi-entity organizational form enables superior sensing and seizing of these growth opportunities by affiliat...
Published on Jun 1, 2013in Emerging Markets Review 2.11
Stijn Claessens67
Estimated H-index: 67
(IMF: International Monetary Fund),
B. Burcin Yurtoglu24
Estimated H-index: 24
(WHU - Otto Beisheim School of Management)
This paper reviews recent research on corporate governance, with a special focus on emerging markets. It finds that better corporate governance benefit firms through greater access to financing, lower cost of capital, better performance, and more favorable treatment of all stakeholders. Numerous studies show these channels to operate at the level of firms, sectors and countries—with causality increasingly often clearly identified. Evidence also shows that voluntary and market corporate governanc...
Published on Feb 1, 2013in Journal of Financial Economics 4.69
Richard W. Carney6
Estimated H-index: 6
(ANU: Australian National University),
Travers Barclay Child1
Estimated H-index: 1
(Tinbergen Institute)
We investigate changes to the ownership and control of East Asia's largest companies in 1996 and 2008. Newly compiled data for 1386 publicly traded companies at the end of 2008 are supplemented with existing data on 1,606 publicly traded companies at the end of 1996. Two main findings stand out. First, where status quo political arrangements persist, preexisting ownership arrangements go unchanged or become more entrenched. Where major political changes occurred, corporate ownership would underg...
Published on Jun 1, 2012in Review of Financial Studies 4.97
Jordan I. Siegel14
Estimated H-index: 14
(Harvard University),
Prithwiraj Choudhury5
Estimated H-index: 5
(UPenn: University of Pennsylvania)
The last decade of corporate governance research has been focused in large part on identifying what leads to superior or deficient corporate governance in emerging economies. We propose that firms' corporate governance and firms' strategic business activities within an industry are interlinked. By conducting a simultaneous economic analysis of business strategy and corporate governance, scholars can better discern the quality of a firm's governance. We look at one of the most rigorous extant met...
Published on Jun 1, 2012in Family Business Review 6.19
Thomas Zellweger23
Estimated H-index: 23
(HSG: University of St. Gallen),
Robert S. Nason9
Estimated H-index: 9
(Babson College),
Mattias Nordqvist31
Estimated H-index: 31
(Jönköping University)
Whereas existing research on the longevity of family firms has focused on the survival of firms, this article investigates transgenerational entrepreneurship of families. By building on the transgenerational entrepreneurship research framework, the authors argue that by shifting from firm to family level of analysis, one gains a deeper understanding of family firms’ ability to create value across generations. The authors find evidence for their argument in that such a level shift reveals extende...
Published on Sep 1, 2011in American Journal of Sociology 4.46
Henning Hillmann5
Estimated H-index: 5
(UMA: University of Mannheim),
Brandy Aven2
Estimated H-index: 2
(CMU: Carnegie Mellon University)
Emergent economies suffer from underdeveloped market infrastructures and insufficient public institutions to enforce contract commitments and property rights. Informal reputation-based arrangements may substitute for government enforcement, but they require close-knit networks that enable monitoring. Economic development also requires access to capital, information, and other resources, which is enabled by wide-reaching and diverse networks and not by closure. How is entrepreneurship possible gi...
Published on Sep 16, 2010in Financial Management 1.54
Belen Villalonga18
Estimated H-index: 18
(Harvard University),
Raphael Amit38
Estimated H-index: 38
(UPenn: University of Pennsylvania)
We test what explains family control of firms and industries and find that the explanation is largely contingent on the identity of families and individual blockholders. Founders and their families are more likely to retain control when doing so gives the firm a competitive advantage, thereby benefiting all shareholders. In contrast, nonfounding families and individual blockholders are more likely to retain control when they can appropriate private benefits of control. Families are more likely t...
Published on Mar 1, 2010in Journal of Management Studies 5.84
Luis R. Gomez-Mejia18
Estimated H-index: 18
(A&M: Texas A&M University),
Marianna Makri12
Estimated H-index: 12
(UM: University of Miami),
Martín Larraza Kintana4
Estimated H-index: 4
(Universidad Pública de Navarra)
This study examines diversification decisions of family firms and suggests that on average family firms diversify less both domestically and internationally than non-family firms. When they do diversify, family firms tend to opt for domestic rather than international diversification, and those that go the latter route prefer to choose regions that are ‘culturally close’. Lastly, we find that family firms are more willing to diversify as business risk increases. The hypotheses are tested using a ...
Published on Jan 31, 2010
Mark Granovetter35
Estimated H-index: 35
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