• Crony Capitalism and Contemporary India

In his speech at the inauguration of the ISID Campus on 1st may 2007, the Prime Minister raised the queries - Are we encouraging crony capitalism? Is this a necessary but transient phase in the development of modern capitalism in our country? Are we doing enough to protect consumers and small businesses from the consequences of crony capitalism? At other fora he also expressed his concern about the cancer of corruption and issues relating to corporate social responsibility. The comments attracted considerable media attention for quite some time, and evoked sharply divergent responses.

As a part of the Institute's ongoing research on the Indian corporate sector, a Symposium on Crony Capitalism has been envisioned by the ISID in the first week of October 2007 with the idea of getting together academics, policy makers, jurists, journalists, and other concerned citizens for initiating a serious public debate on the following questions:

• Has liberalization actually changed the relationship between businesses and Government functionaries and officials into an arms-length one, or do individual businesses still benefit from special relationships with those occupying positions of authority?
• Have the old concerns about concentrated economic power exercising a disproportionate influence in the determination of public policy priorities ceased to be of relevance because big business houses are now subject, in principle, to the pressures of market competition and vast areas of economic activity have been freed from entry restrictions?
• Are the new and more limited mechanisms of regulation and monitoring of private economic activity adequate for ensuring that such activity does not go against the general good?
• Given the propensity of those in authority to mobilize resources whether for organizational purposes or to satisfy the desire to accumulate wealth, have some newer avenues been brought into play and reliance on some existing ones increased?
• Is crony capitalism a transient phase as posed by the Prime Minister? What do the experiences of western market-based democracies suggest in this regard?

The proceedings of the Symposium will include presentations by members of the ISID faculty based on their research as well as expositions by a panel of eminent scholars. It is hoped that the discussion at the symposium will also throw up ideas about the areas on which research at the Institute can focus on in the future.

• Aid Salary Discrepancies and Development Workers Performance

The Institute has entered into collaboration with Massey University, New Zealand for undertaking a study on Aid Salary Discrepancies and Development Workers Performance. The study seeks to investigate the implications of salary discrepancies in technical cooperation, across a range of under-investigated contexts where development workers address some of the world's most pressing poverty reduction challenges. The specific objectives are to:

1. Innovate new micro measures of pay discrepancy, alignment and harmonisation
2. Assess the motivational constructs of guilt, superiority, indignation, and withdrawal using reliable and valid (multi-item) measures
3. Broaden the scope of criterion variables to include the job performance indicators job satisfaction, mental health/emotional resilience, and intentions to leave versus stay in the job (brain drain)
4. Test for robust versus context-contingent links between (a) and (b)
5. Test for linkages between (b) and (c), thereby linking pay discrepancy, alignment and harmonisation to individual work performance in technical cooperation projects
6. Create a psychometrically sound instrument that allows for the motivational affects of pay discrepancy on work performance to be assessed in other settings
7. Contribute to poverty reduction through enhancing the work performance of aid workers.

• Structural Changes, Industry and Employment in the India Economy Marco Economic Implications of the Emerging Pattern

The recent pattern of structural changes raises a few basic questions relating to sustainability of development process, on the one hand, and equity and employment, on the other. How far is the decline in the importance of agriculture without corresponding increase in the share of industry, particularly manufacturing, and growing importance of the services sector represents a sustainable pattern of development? Is it a reflection and consequence of greater integration of Indian economy in the world economy as part of the globalisation process, on the one hand, and changing nature of the industrial, particularly manufacturing, sector where its linkages with agriculture and services, rather than its size as such, assumes greater importance? With the stagnant share of industrial sector in the economy and its declining employment potential, will the services sector expand fast enough to provide employment to increasing labour force? Will such an expansion be induced by growth in the industrial sector or will take place independently? Or, will the industrial sector still be providing employment of an increasing magnitude, particularly in its unorganised segment? It may be noted that employment generating capacity of the output growth in manufacturing and construction sectors is many times higher in the unorganised than in the organised segment, while the differences between the two segments in this respect are much lower in most sub-sectors in the services, particularly in transport and finance.

The above and other related issues arising out of the on-going changes in the structure of output and employment in the Indian economy are not only interesting from the an analytical academic viewpoint, but have strategic implications for the sustainability and equity of economic growth.

A research programme submitted to the ICSSR for financial support.

• Linkages between large enterprises and the unorganised sector: A study of subcontracting relations

The objective of the study is to a) Examine the pattern and magnitude contractual relationships between large and small enterprises across different industry groups; b) Analyse the different types of linkages and their advantages and disadvantages to the unorganised sector enterprise; c)Examine the role played by sub-contractual relationships in employment generation; d) Evaluate positive contribution of linkages on labour standards, labour productivity, wage levels, technology and so on through a comparison of enterprises that are engaged in sub-contracts and other that are not; and e) Critically evaluate the policy and regulatory framework under which the subcontracting firms are operating and make suggestions.

The proposal was submitted to National Commission for Enterprises in the Unorganised Sector (NCEUS) for funding.

• SME Clusters in India: Identifying Areas of Intervention for Inclusive Growth

This project aims to propose a comprehensive policy approach toward promotion of small enterprise clusters. SME clusters are conceived to be the potential sites for gainful employment and growth in developing economies. However, official policies on small enterprises largely remain confined in the supply side issues like credit provisioning and those to providing some training and networking facilities. The basic objective of this project is to view these clusters from the perspective of demand in emerging markets both home and abroad and the role they can play in creating gainful employment that strengthens inclusive growth. The study would depend upon field surveys in different states in India besides secondary sources available so far on SME clusters. It would look into Indian SME clusters, their performances and potentials in the changing scenario of domestic and exports markets. The study aims to identify the common constraints in forward and backward linkages that SME clusters usually face, as well as infirmities, organizational and institutional hindrances that reproduce the ‘low road'. Study the experiences of SME clusters where they are vertically linked to one or more large enterprises and identify the reasons behind as well as modes of interdependence. And finally, specify areas of remedial interventions in the national, regional and local levels that help evolve a coordinated effort to build required capabilities of competitiveness.

We are approaching the Planning Commission for financial support.

• Survey of Corporate Governance in India

Regulators, policy makers and investor bodies could benefit from regular studies on the practical implications and efficacy of corporate governance provisions. Regular studies are also necessary because there is no single model of good corporate governance. Even if the form of corporate governance is the same, due to differences in ownership structures, legal provisions, level of shareholder awareness and knowledge, etc., country experiences could differ.

In spite of the well-recognised importance of the subject, there are very few in-depth studies on corporate governance practices in India. The Institute plans to take up a research programme on various aspects of corporate governance. It intends to operationalise it through a Survey of Corporate Governance. Broadly, the studies would aim at ascertaining the efficacy of the CG Code, identify the weaknesses and suggest measures to improve the associated rules and regulations within the overall objective of fostering healthy development of the Indian corporate sector and in the process improve the overall understanding of the sector.

Some of the topics that would be examined under the programme include:

1. Ownership structure with emphasis on business groups and nature of controlling interests' shareholdings;
2. Composition of company boards with emphasis on independent directors and Audit, Remuneration and other Board Committees;
3. Protection of minority shareholder interests in buyouts, delisting, mergers, restructuring, etc.;
4. Nature, significance and trends in related party transactions including inter-corporate investments and loans;
5. Governance issues in privatised/partially divested public enterprises and FDI companies; and
6. Responsiveness of companies to other stakeholder interests.

These issues would be analysed at various levels of dis-aggregation like size, ownership categories, industry, region, age of the company, extent of internationalisation, etc.

The study is being taken up internally by the faculty.

• Internationalization Process of Indian Pharmaceutical Industry

The pharmaceutical industry is perhaps among a few sectors in the Indian economy whose foundation is built on the process of internationalization. During the first stage of internationalization—over 1947–69—inward FDI and imports served as the initial channels of overseas business links for the industry. Since then the internationalization profile of the industry has undergone significant changes overtime. Now, domestic pharmaceutical companies are leading this process by adopting a host of new strategies like exports, green field direct investment abroad, acquiring overseas companies, contract manufacturing and research and strategic alliances with global firms. The global growth of Indian pharmaceutical industry from a mere importer and distributor of drugs and pharmaceuticals to an innovation-driven cost-effective producer of quality drugs has been contributed by a host of strategic government policies in the past.

The study tries to explore the role of government policies in the internationalization of Indian pharmaceutical industry, different forms of internationalization and their impact on the competitiveness and growth of the industry. It also examines the competitive strength of the industry relative to global peers on pharmaceutical value-added, productivity, research and development and trade performance.

The study is being taken up internally by the faculty.

• Indian Multinationals in Global Economy

Outward FDI has emerged as the most preferred route of internationalization for Indian companies in the 1990s. The numbers of both green field investment and overseas acquisition by Indian companies have grown dramatically in the recent past. The present study would like to investigate three issues—(i) firms from which sectors are investing trans-border, (ii) where are they investing, and (iii) what implications such activities have for Indian economy. It would analyze the causes and motivations of Indian firms becoming multinationals. The emphasis would be on country-specific factors like policy regime with respect to trade, foreign investment and technology, sectoral characteristics like market structure and domestic competition, sectoral government policies, product characteristics, suitability to the country's factor endowments, etc., and firm-specific factors like firm size, technology, exports, and so on. Different types of motivations for multinational activities involving horizontal FDI (market accesses, efficiency seeking, strategic asset seeking, natural asset seeking, and gaining insider status in trading blocks) and vertical FDI (accessing raw materials, establishing trade-supporting infrastructure) will receive attention. The changing characteristics of Indian multinationals will be discussed with reference to the TWMNE Theory proposed on multinationals from developing countries.

The study would undertake detailed case studies of three industries, namely Indian Software Industry (one from services sector), Pharmaceutical Industry (one from manufacturing sector), Indian Petroleum and Gas Sector (one from natural resource sector) and case studies on top three Indian multinationals to further understand the phenomenon. It is hoped that this study would derive strategic policies for India to suitably manage its emerging multinationals to derive maximum economic gain.

The study is being taken up internally by the faculty.

• Changing Pattern of Corporate Ownership and Implications for Monitoring Company Managements

The basic purpose of stock market is to provide capital for investment and liquidity for the investors. The need for such capital is expected to increase with size of the enterprise. For large companies to emerge and function effectively, there is a need to pool risk capital which individual entrepreneurs cannot bring in on their own or with the help of relatives, friends and acquaintances. Theories emerging from the experience of US and UK demonstrate that in modern corporations management and ownership are divorced from each other because of widely dispersed shareholding. Evidence from other countries, however, differs significantly. There is an extensive and growing body of literature to understand the relationship between ownership pattern and corporate management.

Traditionally shareholding pattern of large Indian companies is characterised by low promoter holdings and substantial stakes of public financial institutions. In the post-liberalisation period, entry of foreign institutional investors and mutual funds and Indian companies being permitted to raise capital from abroad and the compulsions for private managements to ward-off takeover threats, freedom for companies to have much higher level of foreign equity and the policy thrust to let companies raise capital directly from investors are the factors which could influence the ownership patterns. Theoretically, large investors are expected to help monitor managements better while dispersed shareholding would be to the advantage of professional managers. High promoter stake, however, has dual implications. On the one hand, since promoters in most cases are also in the management, it would align the interests of managements with that of other shareholders. The high promoters stakes may however, be used to hurt minority shareholders' interests.

The study seeks to trace the changes in the shareholding pattern of listed companies in the context of the role of stock market as a provider of risk capital and as a monitoring institution. Shareholding data of more than 2,500 Bombay Stock Exchange listed companies has been collected and is being examined at the categories of promoters, institutional investors, other corporate bodies and individual shareholders.

The study is being taken up internally by the faculty.

• Under the media centre, it is proposed to undertake research on the following aspects:

1. The growth and Development of the media industry: The Growth of Balaji Telefilms and its competitive outcomes for the development of the television industry in India: A historical study of the Balaji Media Business House and factors leading to its prominence and its survival strategies.
2. Advertising war and struggle for markets/ Advertising marketing strategies and search for spaces.
3. National Media Policy and Economic and Cultural Imperatives.
4. Looking at the growth of the FM network its policy implications, business model and issues of social responsibility and implication for growth of a democratic culture.
5. Representation of industry in the context of national development: A semiotic analysis of three major English dailies during the decade of the 90's.
6. The Emergence of the Business Channels a study of structure, content and relationship with the industry.

It is also proposed to organise Seminar on Media Industry: Issues and Concerns in December 2007. The issues involved are: i) Issue of Growing Media Monopolies; ii) Increasing Entry of Global Players and its Economic Implication for the National and Regional Players; iii) Government Policy and Its Implications; iv) Issues related to Media Structure and Management; and v) Implication of Media Economics on the Changing Pattern of Content of: a) News, b) Serials, c) Reality Shows, d) Sport Broadcasts, e) Films.