Proposal preview

Big Business and Corporate Governance in 20th-century India

In the 1960s, several government committees were set up in India to examine the concentration of economic power and a unique structure of corporate governance, known as the managing agency system, that had evolved over a century. The end result of the deliberations was the abolition of the managing agency system in 1970 and a series of policies aimed at reducing the concentration of corporate power, giving rise to the license raj. The consequences of these policies are widely debated today even as the genesis of the issue remains under-researched.
In this context, this panel proposes to study the corporate landscape of India in the 20th century and identify factors associated with the emergence of big business and the changing character of the managing agency system.
Themes we would like to explore include:
• The impact of globalisation and de-globalisation during the 20th century on the corporate sector
• Corporate governance structures in firms within and outside the managing agency system
• Sector-specific narratives on big business and corporate governance
• The significance of corporate law and mergers and acquisitions in aiding the rise of big business
• The role of joint ventures and ‘technology transfers’ in the Nehruvian economy
• The structure of multinational corporations in three periods: interwar, post-war and post-liberalisation.
• The ‘Indianisation’ of management
• The evolution of banking, industrial finance and stock markets

Organizer(s)

  • Chinmay Tumbe Indian Institute of Management Ahmedabad chinmayt@iima.ac.in India
  • Aparajith Ramnath Ahmedabad University apconf@gmail.com India

Session members

  • Chinmay Tumbe, Indian Institute of Management Ahmedabad
  • Aparajith Ramnath, Ahmedabad University
  • Prateek Raj, Indian Institute of Management Bangalore
  • Kena Wani, Duke University
  • Jane Lynch, University of Michigan
  • Rishabh Kumar, California State University, San Bernardino

Discussant(s)

  • Tirthankar Roy London School of Economics t.roy@lse.ac.uk

Papers

Panel abstract

This panel engages with the topic of 'Big Business and Corporate Governance in Twentieth Century India' at the macro and micro levels using a wide range of sources. At the macro level, papers look at the evolution of big business using data from firm level directories and also inequality at the economy-wide level. At the micro level, papers look at organisational aspects of three large firms - Godrej, CIPLA and Burmah Oil (Energy) - as well as FabIndia in textiles, and also the genesis of 'management' in India, as big business transformed from a managing-agency structure to the business-group structure over the twentieth century.

1st half

Board interlocks, holding structure and firm performance in the Great Depression and Global Financial Crisis

Chinmay Tumbe, Amit Karna, Balagopal Gopalakrishnan

We argue that holding structures influence board interlocks and their relationship with firm performance and that this influence has changed over time. We empirically demonstrate this using a novel dataset of Indian firms during two major exogenous shocks that took place nearly a century apart from each other – the Great Depression and the Global Financial Crisis. In this period, holding structures in India moved from a British dominated managing agency system to the Indian business group system, corporate regulations improved and financial markets deepened. As a result, while in both periods holding structures led to greater board interlocks, the relationship between board interlocks and firm performance improved. This indicates a shift from an agency-based perspective to the resource dependence perspective of board interlocks.

We argue that holding structures influence board interlocks and their relationship with firm performance and that this influence has changed over time. We empirically demonstrate this using a novel dataset of Indian firms during two major exogenous shocks that took place nearly a century apart from each other – the Great Depression and the Global Financial Crisis. In this period, holding structures in India moved from a British dominated managing agency system to the Indian business group system, corporate regulations improved and financial markets deepened. As a result, while in both periods holding structures led to greater board interlocks, the relationship between board interlocks and firm performance improved. This indicates a shift from an agency-based perspective to the resource dependence perspective of board interlocks.

Supply Chain Gridlocks and the Story of Electrification

Prateek Raj and Achal Bassamboo

Psychiatrists, Business Experts and Pedagogies of Development: A Brief History of Management Studies in Postcolonial India

Kena Wani

This paper follows the travels and travails of a team of textile industrialists, UN funded psychiatrists and Ford Foundation consultants as they conducted behavioral experiments and programmes across the rural and urban regions of India (1950s-60s) to establish the putative validity of managerial leadership. It traces the global shifts in the post-World War II period, fraught with Cold War anxieties, which generated the emergence of “management” as an abstract organizational norm, as opposed to bureaucracies, for forming modern/rational capitalist democracies. I examine how these concerns were translated within the context of the developmental discourse in post-independence India, and the relationship of the then emerging field of management studies with the concerns of the postcolonial state, big business and industrial technologies. In the process, the paper leads up to the development of management institutions in the form of the IIMs (Indian Institute of Management) during the 1960s, with a specific focus...

This paper follows the travels and travails of a team of textile industrialists, UN funded psychiatrists and Ford Foundation consultants as they conducted behavioral experiments and programmes across the rural and urban regions of India (1950s-60s) to establish the putative validity of managerial leadership. It traces the global shifts in the post-World War II period, fraught with Cold War anxieties, which generated the emergence of “management” as an abstract organizational norm, as opposed to bureaucracies, for forming modern/rational capitalist democracies. I examine how these concerns were translated within the context of the developmental discourse in post-independence India, and the relationship of the then emerging field of management studies with the concerns of the postcolonial state, big business and industrial technologies. In the process, the paper leads up to the development of management institutions in the form of the IIMs (Indian Institute of Management) during the 1960s, with a specific focus on the institution in Ahmedabad. The paper critically interrogates the collaborations forged between the textile scions of the city and the “global” experts, as they attempt to synthesize the logic of productivity vis a vis democracy through the lens of management.

2nd half

Ambiguous decolonisation: A postcolonial reading of the IHRM strategy of the Burmah Oil Company

Neveen Abdelrehim, Andrew Smith, Aparajith Ramnath, Andrew Popp

This paper uses the lens of postcolonial theory to determine the extent to which colonial features persisted in the organizational culture of the Burmah Oil Company (BOC) after decolonisation in South Asia. It does this through an examination of the evolving staffing strategies of the BOC and its South Asian (especially Indian) subsidiaries before and after 1947. Through an analysis of archival material and company literature, we demonstrate that the BOC switched from an ethnocentric to a polycentric staffing strategy very gradually, with senior managerial positions being occupied by British managers into the 1970s, well after other British MNEs operating in India had already made this transition. We suggest that this persistence of colonial modes of organisation contributed to the BOC’s tense relations with the Indian government, and the latter’s decision to nationalise the firm.

This paper uses the lens of postcolonial theory to determine the extent to which colonial features persisted in the organizational culture of the Burmah Oil Company (BOC) after decolonisation in South Asia. It does this through an examination of the evolving staffing strategies of the BOC and its South Asian (especially Indian) subsidiaries before and after 1947. Through an analysis of archival material and company literature, we demonstrate that the BOC switched from an ethnocentric to a polycentric staffing strategy very gradually, with senior managerial positions being occupied by British managers into the 1970s, well after other British MNEs operating in India had already made this transition. We suggest that this persistence of colonial modes of organisation contributed to the BOC’s tense relations with the Indian government, and the latter’s decision to nationalise the firm.

Becoming an "Indian" Company: Corporate Structure and the History of FabIndia

Jane Lynch

This paper traces the history of Fabindia, India’s largest private retailer of craft, from its establishment in 1960 to the turn of the 21st century. Originally incorporated in the United States as Fabindia Inc., the American company operated as a foreign business exporting handwoven textiles from India during the post-war period. In 1976, both the corporate form and business model of Fabindia transformed as a result of the changing regulatory framework in India. By the postliberalization period, Fabindia had come to define “the look of the Indian middle class.” How, why, and what it meant for Fabindia to become an “Indian” company offers insight into both the history of India’s political economy and the changing structure of its multinational corporations. As this paper reveals, the “Indianization” of Fabindia is also an account of how the Indian middle class comes to transform the possibilities for doing business during the 20th century.

This paper traces the history of Fabindia, India’s largest private retailer of craft, from its establishment in 1960 to the turn of the 21st century. Originally incorporated in the United States as Fabindia Inc., the American company operated as a foreign business exporting handwoven textiles from India during the post-war period. In 1976, both the corporate form and business model of Fabindia transformed as a result of the changing regulatory framework in India. By the postliberalization period, Fabindia had come to define “the look of the Indian middle class.” How, why, and what it meant for Fabindia to become an “Indian” company offers insight into both the history of India’s political economy and the changing structure of its multinational corporations. As this paper reveals, the “Indianization” of Fabindia is also an account of how the Indian middle class comes to transform the possibilities for doing business during the 20th century.

Poor country, rich history: The evolution of Indian wealth-income ratios 1860-2018

Rishabh Kumar

The evolution and metamorphoses of wealth underpins historical questions of growth and distribution. This article develops new, homogenized series of the wealth-income ratio in India over fifteen transformational decades: from colonial rule after the demise of the Mughals to the contemporary rise of Indian capitalists on a global scale. Over the long run, there were two major waves of wealth accumulation. The first ended around World War II and was characterized by a Ricardian vision - landlords appropriated surplus value under low productivity conditions, benefiting from a large divergence of asset prices relative to consumer price inflation. Between 1939 and 2012, the Indian wealth-income ratio mimics the U shaped trend observed in other large economies. The second wave (between 1960 and 2012) is partly explained by capital accumulation but price effects consistently dominate large changes in wealth dynamics. Implications for distribution are noteworthy. Upswings of the wealth-income ratio are nearly...

The evolution and metamorphoses of wealth underpins historical questions of growth and distribution. This article develops new, homogenized series of the wealth-income ratio in India over fifteen transformational decades: from colonial rule after the demise of the Mughals to the contemporary rise of Indian capitalists on a global scale. Over the long run, there were two major waves of wealth accumulation. The first ended around World War II and was characterized by a Ricardian vision - landlords appropriated surplus value under low productivity conditions, benefiting from a large divergence of asset prices relative to consumer price inflation. Between 1939 and 2012, the Indian wealth-income ratio mimics the U shaped trend observed in other large economies. The second wave (between 1960 and 2012) is partly explained by capital accumulation but price effects consistently dominate large changes in wealth dynamics. Implications for distribution are noteworthy. Upswings of the wealth-income ratio are nearly always accompanied by rising concentration of economic power. Finally, over the last three decades the structure of national wealth favors private wealth over public capital. These findings underline an important stylized fact: despite large structural differences between rich and emerging countries, wealth-income ratios are rising everywhere in the twenty first century.