Never miss a story

Get subscribed to our newsletter


×
9 out of 10 of manufacturing businesses have fewer than four employees. Pixabay

Most firms in India and other developing countries are family-owned and often shun outside managers and that is why even successful businesses fail to grow in such countries, a new study suggests. The study shows that the lack of managerial delegation factors significantly into why businesses in India tend to stay small and this has wider implications on the country’s economy, constraining innovation, economic growth, and per capita income.

“Our analysis confirms that the absence of managerial delegation is a significant factor in why successful Indian businesses fail to grow, which reduces the overall productivity of the country’s economy,” said researcher Michael Peters from Yale University.


Follow NewsGram on Instagram to keep yourself updated.

If Indian businesses used outside managers as efficiently as US businesses, it would boost economic productivity in India and increase the country’s per capita income by about 11 percent, according to the study published in the journal American Economic Review. For the study, the researchers focused their analysis on this disparity between size of firms in developed and developing countries.

ALSO READ: Best Tax Practices For Small Businesses

They created a quantitative model that centers on the role of managerial delegation in firm growth. It incorporated plant-level data from the US and India and was calibrated to recognize that businesses in India might face higher barriers to growth, such as having less access to start-up capital than US businesses. In India, more than 9 out of 10 manufacturing businesses have fewer than four employees, and those small firms account for more than half of total employment.

In contrast, two-thirds of US manufacturing employment is concentrated in establishments with at least 100 employees, and only one-third of firms have fewer than four employees, according to the study. The researchers found that India’s economy suffers from “a lack of selection” — the process of creative destruction through which successful firms expand while unproductive firms close or are swallowed up by the competitors — allowing unproductive businesses to survive because successful businesses do not expand. (IANS)


Popular

Wikimedia Commons

The brand focuses on creating quality products that are high efficacy made with all-natural and no chemicals in the formulae.

One of Indias fast growing Direct To Consumer (DTC) beauty and personal care brands, MyGlamm, launches its national TVC around the message 'All Natural #NoNasties today with actress Shraddha Kapoor, who is also an investor in the brand.

Kapoor who has a great millennial and Gen Z connect introduces 'My SUPERFOODS Kajal' which has No Parabens, No Mineral Oils, No Nasties while still being long-lasting and smudge-free and made with the goodness of nature. This is followed by many girls trying applying the kajal with confidence and while highlighting the ingredients Avocado Oil, Goji Berries, Vitamin E and Sunflower Seed Oil.

Keep Reading Show less
Pixabay

Phishing attacks targeting organisations rose up considerably during the pandemic.

Phishing attacks targeting organisations rose up considerably during the pandemic, as millions of employees working from home became a prime target for cybercriminals. A large majority (83 per cent) of IT teams in India said the number of phishing emails targeting their employees increased during 2020, according to a report by UK-based cybersecurity firm Sophos on Monday.

"It can be tempting for organisations to see phishing attacks as a relatively low-level threat, but that underestimates their power. Phishing is often the first step in a complex, multi-stage attack. According to Sophos Rapid Response, attackers frequently use phishing emails to trick users into installing malware or sharing credentials that provide access to the corporate network," Sophos' Principal Research Scientist, Chester Wisniewski said in a statement. The findings also reveal that there is a lack of common understanding about the definition of phishing. For instance, 67 per cent of IT teams in India associate phishing with emails that falsely claim to be from a legitimate organisation, and which are usually combined with a threat or request for information.

Scam Phishing Fraud The findings also reveal that there is a lack of common understanding about the definition of phishing. | Pixabay

Keep Reading Show less
Pixabay

Three days back, Kohli had also dropped a bombshell -- just a month before the ICC World T20 to begin

Former cricketers have questioned the timing of Virat Kohli's announcement that he will step down as Royal Challengers Bangalore captain at the end of the IPL 2021 season, saying "if you want to do that, you probably do it after the tournament". Three days back, Kohli had also dropped a bombshell -- just a month before the ICC World T20 to begin -- that he will stand down from Team India T20 captaincy after the mega sporting spectacle in UAE and Oman.

On Sunday night, he shared the news on Twitter - just hours before their first game in the resumed IPL 2021 on Monday -- that he will quit RCB captaincy as well. The timings of both the announcements have left the former cricketers a bit "surprised". They believe that Kohli has "unsettled" his RCB side.

Virat Kohli The timings of both the announcements have left the former cricketers a bit "surprised" | Wikimedia Commons

Keep reading... Show less