ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Political Lobbying and Fiscal Federalism

In a quasi-federal democracy like India, political representatives often fight to attract central disbursements towards their own states. Among central disbursements, two most important ones are letters of intent and industrial licences. Much of the disparities in the economic growth of various states is attributable to variations in the development of industries and the latter, in turn, are largely contingent on the nature of the industrial policies that were followed. In this paper the authors argue that the industrial policies pursued in the post-independence era resulted in a distorted pattern of disbursement of letters of intent and industrial licences. This remains true even after account is taken of the 'demand'-generated aspect of the disbursements. It is also shown how the presence of the same distortion in the disbursements in the so-called backward regions vitiates the very objective of balanced regional development.

Configuration of Indian Software Industry

The IT Task Force has set a vision of making India an IT superpower by 2008. While the Task Force recognises that software and hardware are the two sides of a gold coin, its report is oblivious to the mechanism that would establish an interdependent growth path for the IT industry of India. It has been argued in this paper that the weakness of the Indian software industry continues because of its weak linkages with the domestic manufacturing industry where rests the scope of critical software capability - the high skill/high risk/high value embedded software segment that can flourish only with wide applications of microelectronics in the industrial products and processes. This is the segment that offers the opportunity for interdependent growth of both hardware and software sectors of the Indian IT industry. The structure of Indian IT industry that supports low value/low skill products and services is not strong enough to enter the high investment high R and D area of the embedded software segment without a strong strategic push.

Are Listed Indian Firms Finance Constrained?

We formulate a simultaneous equations model and with the data of a panel of 600 Indian firms for the period 1991-92 to 1997-98 test the hypothesis of finance constraint. The firms are classified by the dividend pay-out ratio into high-cost and low-cost groups; a high dividend pay-out ratio implies a low cost of information faced by the firms and vice versa. In the context of developed countries, earlier researchers found that the firms in the high-cost group shows evidence of finance constraints and severity of the constraint goes down with the decrease in the cost of information. In our study we found that the firms with medium dividend pay-out ratios are constrained in the loans market so far as investment in fixed capital is concerned. This is quite a surprising result that requires careful explanation.

Work Organisation and Employment Contracts

In this paper we have examined the impact of technological modernisation on the contractual relationships between the workers and their union and the management within a firm. This calls for an examination of the internal organisation of the firm as a nexus of several treaties among its active agents. These treaties are likely to change with the changes in the production technology. Our study relates to some selected organised textile firms in India.

Potential Selectivity Bias in Data

A number of recent firm-level studies on Indian industry have used data available from Prowess, a database of Indian firms compiled by the Centre for Monitoring Indian Economy. This paper attempts to identify the extent and nature of potential selectivity biases in samples drawn from Prowess. The paper shows that the distributional properties of samples drawn from Prowess are not consistent over the years. Also, the distributional properties of a balanced panel extracted from the database are not consistent with those of the full sample in different years.

Financial Markets, Human Resource Policies and Flexibility

Financial systems that are bank-based such as in Germany and Japan employ an internal strategy of managing human resources via job ladders and screening whereas in market-based systems such as in the UK and the US an external strategy where recruiting and laying off occurs as demand changes and market signals help set wages. India is a bank-based system that in the organised sector till recently followed the internal strategy of managing employment. But as product markets are liberalised and firms face increased competition, the ability to pass on the costs of worker privileges such as job security diminishes depending on the state of capital markets. The new epoch of competition based on the use of more flexible technologies and forms of work organisation thus calls for job enlargement and multiskilling and in some cases rearranging employees rather than recomposing the tasks they perform.

Productivity, Prices and Profitability

In this paper, the link between productivity, prices and profitability is examined for the Andhra Pradesh State Road Transport Corporation (APSRTC), using its annual data from 1979-80 to 1999-2000. We find that, by and large, productivity gains achieved by APSRTC are being passed through to customers. However, the data reveal a significant change in the pattern during the 1990s, particularly from 1995-96 onwards. During this period, on average the productivity of APSRTC declined, whereas its input factor prices compared with output prices increased significantly. This has resulted in a deterioration of its financial condition.

Foreign Firms and Local Linkages

Few attempts have been made at addressing the question of how the degree of foreign ownership influences the propensity of firms in developing local linkages. This empirical work shows that contrary to popular belief and host-government intentions, multinational enterprise (MNE) affiliates have fewer linkages with the host-country enterprises vis-a-vis the local enterprises. Host governments need to design creative mechanisms to ensure effective alignment and achievement of both the MNE and host-country objectives.

Why the Arts Are Integral to Management Education

Management education follows a strictly structured pattern, while meeting career demands may often entail tolerating ambiguities, or even unlearning that which has already been taught. The elective course, Tracking Creative Boundaries, designed for students at IIM, Bangalore, seeks to inculcate this aspect by introducing students to artistes, all masters in their own chosen fields. Not only is society best represented by the arts, but also because artistes have always had the capacity to inspire. Their ability to transform themselves and thereby the wider environment as well is brought about by their constant endeavour to reinvent themselves, while respecting their own vocations - a lesson that could stand in equal good stead for the business leaders of tomorrow.

Signalling, Work Experience and MBA Starting Salaries

This paper investigates the determinants of MBA starting salaries using a unique placement database from one of the 'premier' business schools in India. We invoke some simple arguments regarding schooling, human capital theory and signalling from the economics of human resources to theoretically inform our analysis. The results indicate that there are large salary returns to academic performance and mild returns to prior work experience when the entire sample is studied. However, when the functions are run separately for the domestic and international sector, we find that only academic performance is significant in the domestic sector whereas only prior work experience is significant in the international sector. We interpret the latter result as approximating a 'perfectly separating signalling equilibrium' process.

Rise and Fall of Fast Moving Consumer Goods

The mindset of Indian companies was formed by over 40 years of industrial licensing which limited production capacities. Capacity limitations made premium products the appropriate response. In addition there was the influence of the approach of the multinational companies that value was more important than price and that product features would attract consumers more than low prices. We find it difficult to consciously reduce features, and even value in products, so as to give the mass market consumer what he can afford.

Are Institutional Nominee Directors Required?

Given the context of promoter family control of management of companies in India and the relatively poor quality of corporate governance, institutional shareholders would be doing a great disservice to themselves and to the diffused class of small shareholders if they shirk their responsibility of taking interest in the quality of management of the companies in which they have a large shareholding.


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