Corporate Interlocks and the Specificities of Indian Capitalism

This paper aims at studying the interlocking directorates among Indian firms as a way to better understand the specificities of Indian capitalism. It draws on a study of interlocks among the top 250 companies of the NSE in 2000 and 2012. It also compares indices of centralization, compactness, density, etc. with those of similar-size networks in other countries in order to evaluate the specificity of the structure of the Indian corporate network and to locate it within a comparative typology.

This paper more particularly intends to bring a contribution to the embeddedness theory. Drawing on existing socio-historic studies, one could argue that the Indian capitalist system distinguishes itself by five characteristics: 1° A very recent liberalization that makes it a newcomer in the game of free-market economy; 2° The importance of State owned companies (PSU); 3° A long and lasting tradition of conglomerates among business groups; 4° The importance of family ties among Indian groups; 5° The importance of caste in business networks.

We thus propose 5 hypotheses to assess the impact of these specificities on Indian corporate networks:

1° The 1991 liberalization policies had an impact on the shape and density of networks.

2° Networks are still very much shaped by the stakes the State has in PSU companies.

3° Companies belonging to a business group are likely to be more connected to other companies than independent companies.

4° Connections between firms are likely to be structured by caste and family networks.

5° The density of corporate networks in India is likely to be both relatively low due to the recent liberalization of the country and to show pockets of strong density on the basis of business group, regional, family and caste ties (overall low density of connections but a high number of multiple connections held by specific actors).