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

Vinish Kathuria, Rajesh Raj () and Kunal Sen

MPRA Paper from University Library of Munich, Germany

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.

Keywords: State business relations; firm productivity; manufacturing sector; India (search for similar items in EconPapers)
JEL-codes: L25 O43 O53 (search for similar items in EconPapers)
Date: 2010-06-03
New Economics Papers: this item is included in nep-bec, nep-cse, nep-cwa, nep-eff and nep-sbm
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