Ignoring the Legacy Model

Indian business leaders and researchers have been keen students of the U.S. literature on business practices. In functional areas, they know the latest financial and marketing techniques, and U.S. management books are routinely best sellers in India. American business schools have also long had an honored presence on the subcontinent. The Indian Institute of Management, Calcutta, began in 1961 with the help of the MIT Sloan School of Management, and the Indian Institute of Management, Ahmedabad, began in the same year in collaboration with the Harvard Business School.

There is little evidence, though, that the India Way was simply borrowed from American models or imported from American scholars. Historian Ramachandra Guha has argued that the most important models for India after independence in 1947 were actually the Soviet Union and Japan, in both cases emphasizing the role of a central government directing economic activity and development.¹ Relations between America and India were strained in the 1960s at a time when U.S. multinationals were expanding in other countries. British enterprises had a far bigger presence on the subcontinent. Among those corporations, Hindustan Unilever stood head and shoulders above all others in terms of influence, perhaps especially in terms of transferring lessons about hiring and development practices.

But while international corporations like Hindustan Unilever clearly had an influence on Indian business, their presence was dwarfed by the sheer scale of the country and by the dominant driver and determinant of economic decisions, which was then the government. Privately owned businesses were heavily regulated in their product market practices and especially in the area of labor, where strong unions combined with extensive regulation to restrict severely the ability of employers to shape their own organizations.² The most basic underpinnings of the multinational companies had a hard time being absorbed in a country where the traditional Indian business ethos placed great emphasis on family ownership and treating the company as a large clan. Kinship-controlled firms still dominated the landscape, even though many were publicly listed. While Indian businesses clearly learned lessons from abroad, their response—like that of Indian culture to foreign influences throughout its long history—was to assimilate rather than mimic or reject, producing a novel recombination in the process.

The management practices of indigenous Indian businesses are equally difficult to reconcile with the contemporary American model. With respect to day-to-day management, Indian practices were deeply hierarchical. An Indian colleague of ours remembered how it was at a local factory when his immediate supervisor would visit from headquarters: the employees of the facility would line the pathway to the building and sprinkle flower petals on it as he approached. Similarly, former Procter & Gamble executive and commentator Gurcharan Das reported great resistance from established management cadres to the idea of giving his lower-level employees any amount of influence or autonomy over how they did their work.³

To the extent that there was a legacy model for managing employees in this era, it was not a helpful one: limited scope for leaders to act, a narrowly restricted sense of purpose that was driven mainly by national politics, strongly hierarchical supervision, and a fixation on seniority as the criterion for workplace decisions. The contemporary model of Indian business leadership thus does not represent a legacy of historical modes of operating.

Moreover, the new generation of leaders who created the India Way for the most part did not come from the executive ranks of the legacy companies. Rather, they were by and large entrepreneurs who started from scratch or, in the case of existing companies like Bank of Baroda, with a mandate to reshape the drawing board. The India Way model they created responded to the remarkably different environment for business offered up by the 1991 reforms and the economic context those reforms then created. The new model was further shaped by the fact that the leading companies in India were in industries that did not even exist before the 1991 reforms. Information technology companies like Wipro, HCL, and Infosys, and service companies like Tata Consultancy Services, did not have to break free of a traditional industry pattern, because none existed.

Cultural Influences, Not Cultural Hegemony

While the India Way fits into the national culture in important and intriguing ways, the full picture, we found, was far more complicated than that. It is easy, for instance, to see the Hindu stress on service to others reflected in the social mission of Indian business, but other aspects of the India Way are not so easy to square with the country’s culture.

Researchers Suresh Gopalan and Joan Rivera have summarized the accepted views about Indian national culture as they relate to business as follows: that the Hindu religion’s belief in predestination reduced personal ambition and persistence; that the country’s deep historical orientation led to conformity with the past and resistance to change; and that a long tradition of hierarchical social relations made individual leaders more important than the goals they pursue.⁴ Others have made similar arguments—for example, that Indian salespersons performed better under more hierarchical authority arrangements than did U.S. counterparts, and that the greater power imbalance between superiors and subordinates in Indian society required leadership styles that are much more task oriented, leaving little room for individual autonomy.⁵ These views of Indian culture, however, are hard to reconcile with the fast-moving, innovative Indian business scene, empowered employees, and ambitious leaders who populate the India Way.

We have found bits and pieces of the India Way in many other contexts—the sophistication of selection and talent development looked like U.S. companies in the 1950s, for example, and the concern with employee engagement was similar to Japanese practices, while the focus on credentials and skill development reminded one of German companies. And aspects of the portrait that emerged are little different from the American way or the Japanese way or the Chinese way. Wherever they operate and in whatever field, virtually all business managers favor an enduring set of qualities. A cross-national study of some 16,000 middle managers of 825 companies in 64 countries, ranging from Albania to Zimbabwe, found, for instance, that the most valued attributes of company leadership, regardless of country, are dynamism, decisiveness, and honesty; a capacity to motivate and negotiate with others; and a focus on performance. The company managers also universally agreed on several unfavorable traits: autocratic, egocentric, and irritable.⁶ And in specific ways, India proved little different from the United States: compared with other regions, managers in both countries displayed relatively favorable attitudes toward charismatic and individualistic leaders.⁷

But the complete package of the India Way could be found nowhere else. And parts of the system, especially the focus on a broader social mission, were uniquely Indian and deeply formative. The priority and value placed on service to others and the widely held belief that one’s goal in life should extend beyond oneself, especially beyond one’s material needs, has been crucial to the India Way. The third of the four stages of Hindu life, with its focus on the search for meaning, helping others, and a gradual withdrawal from the competitive business world, also neatly coincides with the typical age (over fifty) of senior business leaders. In the same research noted above, the Indian region scored the highest of any area in desiring leaders who were humane, compassionate, and generous.⁸ That preference fit nicely with the aspect of national culture manifesting service to others as a source of motivation.