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

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  • Kathuria, Vinish
  • Natarajan, Rajesh Raj
  • Sen, Kunal

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.

Suggested Citation

  • Kathuria, Vinish & Natarajan, Rajesh Raj & Sen, Kunal, 2010. "Does the institution of State Business Relations matter for Firm Performance? – A study of Indian Manufacturing," MPRA Paper 23053, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:23053
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    More about this item

    Keywords

    State business relations; firm productivity; manufacturing sector; India;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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