The State, Entrepreneurship and Culture

Culture and success of a venture—or indeed, of a country—are inevitably connected. India’s dysfunctional systems that hamper rather than enable growth are so often pinned down to cultural problems. Is this accurate, and is there a way out?

An article in a business daily some months ago claimed that Indians don’t give back to society because of the influence of Hinduism on Indian culture. A couple of months later, the author of that article wrote that the British left India too early (“because we could have learnt how to run cities”), so we could discount this worldview as coming from a traditional lackey for colonial rule. However, the role of culture in economics, entrepreneurship and management remains a worthwhile topic of study. Getting it right could make a huge difference in the success of your business.

Let’s examine the facts. As we look at the chaos in our cities, the venality of our public officials, the problems with getting things done with the government—and we see and hear of a relatively smooth-functioning system in the West—it is easy to ascribe this to an inherent cultural shortcoming in India. However, this analysis is superficial at best. Nothing succeeds like success. A couple of decades of high growth in India will have the same writers scrambling to analyze the “Indian model” of economic success.

After all, there was a reason why the Europeans were so keen to find a direct sea route to India. They coveted Indian goods; India was the land of riches. Europeans had little to offer in return, and the markups by the Arab traders on the land route were devastat- ing their economy. As late as 1700, India and China accounted for nearly 70 percent of the world’s GDP. Our towns and villages functioned well and were clean, while Europe was a cess- pool of dirt, disease and plague. Two hundred years of European colonial rule and, by the 1900s, our share of the world GDP had dipped to less than 1 percent. Our education system, our waterworks, our civil structures were in shambles. Worst of all, we had been taught to consider our culture, rather than colonialism, as the culprit.

Why, then, do our cities not function and our government system appears, most of the times, to be working against us? The answer is not so hard to find. The entire structure of the government—from the Civil Service to the District “Collector” to the centralized nature of our governance—is a creation of the colonial era. Post independence, we replaced the viceroy with the office of the Prime Minister, but there was no fundamental change in governance. The colonial state, of course, was never designed for service. It had a singular purpose—extortion—to extract tax revenue from the people while keeping them under control with the power of force. Little wonder, then, that the enterprising natives keep trying to find ways around a system that they don’t perceive as their own.

We can see these in the simplest of examples. While our government-managed cities are dysfunctional, our gated developments managed by co-operative societies of residents work reasonably well. While Indians are stymied at every turn by the government apparatus, Indians with the same cultural traits form the most successful expatriate communities in a relatively well-functioning system like the U.S. A few years ago, getting a telephone line from the government-run exchange was a nightmare; now, you can walk into a store and get a mobile phone number from umpteen private operators. Our culture did not change in this short time to start delivering phones—instead, the overbearing state, faced with an economic crisis of its own making, simply loosened some control.

A cultural trait comes into play here: our enterprising spirit that chafes under too much centralized control. In India, the power of the kings over the people in earlier times was very limited and taxation rates were relatively low. Local governance at the level of villages and jati groups wielded a lot of power; some of this power was pledged to a king. In our religious systems, too, we did not have an overbearing centralized church that told us how we must think; rather, we had the spiritual entrepreneurs, the gurus whose success lay in liberating the disciples who came to them, so that the disciples would be eventually independent— entrepreneurs in their own right.

The large centralized corporation, like the large centralized government, is not well-suited to Indian cultural conditions. The best models of the corporation would allow for enterprising individuals to share directly in business profits at every level. If people are able to use their jugaad to manage their mini-businesses within the corporate umbrella, “corruption” in a corporate context simply becomes performance-based rewards. Our social entrepreneurship, too, happens within family networks. For individual corporations, it is much harder to change culture than to adapt to it.

It is our state that has been a liability; it needs reform. Our culture is our strength. Management and entrepreneurship that operate in sync with culture have a better chance at success.

Originally published in Entrepreneur Magazine

© Sankrant Sanu 2009-2010. All rights reserved.

One thought on “The State, Entrepreneurship and Culture

  1. Sankrant has written perceptively. At the bottom of the “Indian mess” that riles both Indians and foreigners, is the fact that the political leadership just prior to and after Independence unquestioningly accepted whatever they saw in the colonial times and whatever was left by the British hastily retreating from India. Over the 60 and odd years after Independence, little to suit the indigenous society and culture was adopted in governance models, development models and of course, in education models. People like Aakar Patel know too little about our civilization or culture but are always too ready to attribute the present ills of Indian society to them!
    R.Venkatanarayanan

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