India's Evolving Economic Model:

Abstract Over the course of the past 50 years, India has developed as a stable economy. Economic policies of the Indian government have guided and shaped India into a mixed economy. Political stability has been a significant factor in this process. The United States and European economic and political systems had a significant impact on evolution of India's economic model. Financial and economic reforms since 1991 have accelerated the pace of change toward an open market economy both in its internal operations and in its linkages with the global markets. India's economic future is now promising as it moves forward on its unique path of economic policy.     

Determinants of South Asian Entrepreneurial Growth in Britain: A Multivariate Analysis

This paper aims to contribute to our understanding of the factors influencing South Asian entrepreneurial growth in Britain. It develops a multivariate model along the lines of small business economics but includes cultural and social variables. The theoretical model specified assumes that cultural factors have an augmenting effect on socio-economic factors. A distinction is also drawn between initial entrepreneurial characteristics and later expansion strategies used. The empirical model, based on the general-to-specific approach, can explain almost 60 per cent of entrepreneurial growth. The results suggest that moving away from a style of management based on immigrant culture has a positive impact on growth. This requires greater delegation of responsibilities to non-family employees. At the same time, strengthening links with the country of origin has a positive impact on growth. While the commitment to work hard at start-up is essential, human capital factors like the entrepreneur's educational attainment and employee training appear to be more crucial than financial resources in contributing to growth.     

Family control and dilution in mergers

We analyze the influence of the level as well as the change in family ownership on value creation in mergers involving newly public firms. Our findings suggest that acquirers with low levels of family ownership earn lower abnormal returns than do those with high levels of ownership. In addition, families with low ownership in their firm are more likely to use cash as the medium of exchange, thus avoiding dilution and maintaining their control. Further, acquisitions of targets with low levels of family ownership are associated with greater value creation. Our results are consistent with the entrenchment of families at low levels of ownership and a better alignment of their interests with those of minority shareholders at high levels of ownership. Finally, we find that dilution of the family’s ownership, due to the use of stock as the medium of exchange, alters the family’s incentives and thus influences firm value.     

Rethinking Management Theory and Practice for the Indian Context: An International Management Perspective

The Indian economy characterized variously as a slumbering giant, powerful tiger, and the most promising market has witnessed a slowdown, occasional disturbances in the industrial relations space, and attention of the world in the last five years. In this special issue, we raise pertinent questions and present research on multiple dimensions of the dynamic and rapidly changing business environment of India. The suitability of management models and frameworks developed in the North American contexts in emerging markets like India and China is questioned. One example of how the well‐established models in the literature on success of international joint ventures were insufficient to explain the success of three international joint ventures in the insurance space in India is presented as case in point. Finally, the nine papers that materially contribute to the theme of this special issue are introduced. © 2016 Wiley Periodicals, Inc.     

Regulation,Minimum Wage and Informality: Introduction to Symposium

Are markets in developing and transition economies over‐regulated or under‐regulated? This is a perennial question in the development discourse, but one for which answers appear to come more from preset ideology than from context‐specific analysis and evidence. These issues become even more pressing when the debate turns to the links between regulation, deregulation and inequality. The recent experience of rising inequality in many countries has also brought to the fore predictable policy positions. A key aspect of labor regulation in developing countries, and one becoming more prominent in the era of rising inequality, is the minimum wage. The range of issues around regulation, minimum wage and informality was addressed by papers presented to a conference held in New Delhi on December 17–18, 2014. The conference was co‐sponsored by the World Bank, UK Department for International Development, Cornell University and Columbia University. The organizers of the conference were Kaushik Basu, Stefan Dercon, Ravi Kanbur and Jan Svejnar. A selection of papers from the conference which passed the usual review procedures of the Review of Development Economics, and a further selection of papers from those submitted to the journal, form this symposium.     

Capital adjustment cost and inconsistency in income‐based dynamic panel models with fixed effects

After the seminal work of Nickell (1981), a vast literature demonstrates the inconsistency of ‘conditional convergence’ estimator in income‐based dynamic panel models with fixed effects when the time horizon (T) is short but the sample of countries (N) is large. Less attention is given to the economic root of inconsistency of the fixed effects estimator when T is also large. Using a variant of the Ramsey growth model with long‐run adjustment cost of capital, we demonstrate that the fixed effects estimator of such models could be inconsistent when T is large. This inconsistency arises because of the long‐run adjustment cost of capital which gives rise to a negative moving average coefficient in the error term. Income convergence will be thus overestimated. We theoretically characterize the order of this inconsistency. Our Monte Carlo simulation demonstrates that the size of the bias is substantial and it is greater in economies with higher capital adjustment costs. We show that the use of instrumental variables that take into account the presence of the negative moving average term in the error will overcome this bias.     

Consumer perceptions of product variants positioned on atypical attributes

How do consumers perceive new product variants that are positioned on atypical attributes? The authors investigate the joint effects of three factors? brand familiarity, retail shelf display, and consumer goal orientation. The study focuses on snack foods positioned on the atypical attribute of low fat. There are three main findings. First, although high (vs. low) brand familiarity causes relatively unfavorable perceptions on the positioning attribute, it also creates sufficiently favorable perceptions on another determinant attribute, product taste, resulting in a net positive effect for brand equity on purchase likelihood. Second, goal-based versus taxonomic shelf display (i.e., placement with health foods vs. regular snack foods) results in relatively negative perceptions on the positioning attribute, yet more favorable buying intentions. Finally, more (vs. less) health-oriented consumers rate such product variants less favorably on fat content but more favorably on product taste; the former segment is also more likely to buy such product variants.     

A Tale of Two Indices: The Story of the NASDAQ and the SENSEX

Using the daily data on SENSEX and NASDAQ from January to October of 2000, the paper attempts to find out to what extent the “news” on NASDAQ helps price formation at the beginning and at the end of a trading day at the Indian bourses. The possible impact of NASDAQ on SENSEX is analyzed through OLS equations under cointegration and error correction framework. The results indicate that the “news” on NASDAQ plays an important role in price formation at the beginning of a trading day at the Indian bourses. However, as the impact of NASDAQ fades a lot during the trading hours when the Indian market remains open and the US market remains closed, the closing figures at SENSEX could not be predicted well with this information.

     

Self-service innovativeness scale: introduction,development, and validation of scale

Consumer innovativeness is a central variable in innovation diffusion and adoption literature. The foremost challenge confronted by investigators involved in innovation diffusion and adoption research is the problem of measuring the innovativeness construct. Furthermore, a scale measuring innovativeness towards self-service technologies (SSTs) adoption is required as SSTs have grown considerably in the last few decades. To this end, this study develops and validates a self-service innovativeness (SSI) scale applicable across a variety of SSTs. The study presents a series of six distinct phases describing the development and validation of a six-item, self-report scale. The innovativeness scale has been validated in different contexts, allowing comparisons across distinct samples (i.e., student vs. non-student sample) and different industries (i.e., retail and hospitality industries). The SSI scale presented in this paper is short, valid, reliable, and easy to administer in service domains.     

Redistributive innovation policy,inequality, and efficiency

We examine the efficiency and distributional effects of regressive and progressive public R&D policies that target high‐tech and low‐tech sectors using a heterogenous‐agent growth model with in‐house R&D and incomplete capital markets. We find that such policies have important implications for efficiency and inequality. A regressive public R&D investment financed by income tax could boost growth and welfare via a positive effect on individual savings and effort. It could, however, also lower growth and welfare via its effect on the efficiency–inequality trade‐off. Thus, the relationship between public R&D spending and welfare is hump‐shaped, admitting an optimal degree of regressivity in public R&D spending. Using our baseline model, and the US state‐level GDP data, we derive the degree of regressiveness of public R&D investment in US states. We find that US states are more regressive in their R&D investment than the optimal regressiveness implied by our growth model.