Indian manufacturing: strategic and operational decisions and business performance

Abstract

India is attracting significant attention as an attractive location for manufacturing industries in recent times. There have been many studies that demonstrate the rapid productivity and technological growth of Indian manufacturing industries post-industrial liberalization. We focus on the firm level strategic operational decisions with regard to (i) Scale and Operating Focus, (ii) Product and Process Technologies and (iii) Planning, Control, and Execution Systems. We find little evidence that firms have taken advantage of scale economies in India during the post-liberalized era. However, we find evidence that firms in industries such as chemicals and pharmaceuticals imported sophisticated process technologies and developed in-house R&D capabilities to adapt them to the local environment even prior to liberalization. These capabilities seem to have enabled them to undertake more technology-intensive activities and take further advantage of liberalization to improve product technologies.