The less-than-one percent: how a few firms shape regional capabilities in India

Nanditha Mathew and Emanuele Pugliese

Chapter 24 in Research Handbook on Regions and Transformative Innovation Policy, 2026, pp 399-424 from Edward Elgar Publishing

Abstract: In this work, we explore the multi-level interplay of capabilities in fostering economic development. We argue that development, especially human development, is driven by the complex interactions of firm-level capabilities, embedded in organizational routines, and regional and national capabilities, embedded in institutions. Using India as a case, we show how the capabilities of a few top firms, the “less-than-one-percent,” drive regional capabilities, shaping economic diversification and growth, which in turn foster human and economic development. In the context of transformative industrial policy, particularly within emerging economies, these top firms can play a critical bridging role—connecting incumbent industries with emerging actors and innovations—thus helping to steer systemic change towards more sustainable and inclusive outcomes. Drawing on data on firm activities, production capabilities, and social indicators, we highlight the nested structure of economic and social capabilities. This framework provides insights for tailoring industrial policies in emerging economies to enhance firm and regional capabilities, enabling more sustainable development pathways.

Keywords: Organizational capabilities; Institutions; Social capabilities; Nestedness; Industrial policy (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035309924
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