Global Reach. Global Knowledge.

Enhancing Social Capital in South Asia

Since its formation, the India Research Center (IRC) has worked to enhance intellectual capital creation by working with academics and business leaders in South Asia.

The Global Colloquium on Participant-Centered Learning (CPCL) is an HBS course for faculty at business schools in emerging economies who are trained in interactive methods of teaching and learning.

Executive Education
in India

Watch this space for 2010 offerings

Past programs include:

Agribusiness Seminar - an Asian Offering

May 10-13, 2009, Mumbai, India

Addressing the perspective of every player in the industry, the School's pioneering Agribusiness Seminar: An Asian Offering, tackles the formidable issues that executives face as they strive to position their businesses amid present-day realities.

South Asia Real Estate Seminar

June 17-20, 2008, Hyderabad, India

The South Asia Real Estate Seminar brought together an elite group of accomplished real estate executives to share best practices, explore fresh perspectives, and gain valuable insights into strategies for capitalizing upon opportunities in the global real estate market. This new HBS Executive Education program provided the knowledge, frameworks, and tools needed to maximize the value of development projects in South Asia and beyond.

Building a Global Enterprise in India

February 10-15, 2008, Hyderabad, India

Tailored to the specific needs of companies operating in this market, Building a Global Enterprise in India focused on how to build, manage, and sustain enterprise growth. Drawing on a wide range of research by renowned HBS faculty, the program offered invaluable lessons for expanding the scale of a business in India - and beyond.

All Global Executive Education Programs

2009

State Owned Entity Reform in the Absence of Privatization: Reforming Indian National Laboratories and Role of Leadership

Choudhury, Prithwiraj, and Tarun Khanna
August 2009

The literature on state-owned entity (SOE) reform has been focused on privatization. We, however, show that even in the absence of property rights, SOEs may significantly improve performance, and document 42 Indian state-owned laboratories over 1993-2006-starting from a base of negligible U.S. patents-being granted more patents than all domestic private firms combined. Patent licensing revenue increases from 3% to 15% as a fraction of government budget without negatively affecting publication quality and quantity. This follows incentive policy change and leadership change at labs, an event whose timing is plausibly exogenous being dictated by government employment rules.

Harvard Business School Working Paper, No. 10-006, July 2009

India's Pockets of Prosperity? Special Economic Zones Are Attractive on Paper, but They Pose Thorny Political Problems

Lyer, Lakshmi, Laura Alfaro, and Semil Shah
August 2009

The Christian Science Monitor, July 31, 2009

Direct versus Indirect Colonial Rule in India: Long-term Consequences

Iyer, Lakshmi
April 2009

This paper compares economic outcomes across areas in India which were under direct British colonial rule with areas which were under indirect colonial rule. Controlling for selective annexation using a specific policy rule, I find that areas which experienced direct rule have significantly lower levels of access to schools, health centers, and roads in the post-colonial period. I find evidence that the quality of governance in the colonial period has a significant persistent effect on post-colonial outcomes.

Putting Patients First: Social Marketing Strategies for Treating HIV in Developing Nations

Chance, Zoe, and Rohit Deshpandé
April 2009

It is more than mere coincidence that the highest rates of HIV occur in the world's poorest countries. Of the over 40 million people currently living with HIV, 95 percent are in the developing world. The first part of this paper explores the economics of HIV and treatment from a social marketing perspective. The second part of the paper uses three specific case histories of successful social marketing organizations in Africa, Asia, and South America to inductively generate a consumer (patient)-centric marketing model. The focal organizations are unique in that they all identify patient needs first, then work backwards to develop economically viable solutions. These solutions are not without flaws, and the future of these programs remains uncertain, but we hope that illuminating these particular cases within the consumer-centric marketing paradigm will shed light on ways in which other organizations may be able to serve the poor profitably.

Natural Experiments in History, edited by Jared Diamond and James Robinson. Harvard University Press, forthcoming

Colonial Land Tenure, Electoral Competition, and Public Goods in India

Banerjee, Abhijit, and Lakshmi Iyer
April 2009

Harvard Business School Working Paper, No. 09-114, April 2009

Barriers to Household Risk Management: Evidence from India

Cole, Shawn, Xavier Giné, Jeremy Tobacman, Petia Topalova, Robert Townsend, and James Vickery
April 2009

Financial engineering offers the potential to significantly reduce consumption fluctuations faced by individuals, households, and firms. Yet much of this promise remains unrealized. In this paper, we study the adoption of an innovative rainfall insurance product designed to compensate low-income Indian farmers in case of deficient rainfall during the primary monsoon season. We first document relatively low levels of adoption of this new risk management technology: only 5%-10% of households purchase insurance, even though rainfall variability is overwhelmingly cited by households as the most important risk they face. We then conduct a series of randomized field experiments to test theoretical predictions of why adoption may be low. Insurance purchase is sensitive to price, with an estimated extensive price elasticity of demand between -0.66 and -0.88. Credit constraints, identified through the provision of random liquidity shocks, are a key barrier to participation, a result also consistent with household self-reports. Several experiments find an important role for trust in insurance participation. We find mixed evidence that subtle psychological manipulations affect purchase and no evidence that modest amounts of financial education changes participation decisions. Based on our experimental results, we suggest preliminary lessons for improving the design of household risk management contracts.

Harvard Business School Working Paper, No. 09-117, April 2009.

Financial Literacy, Financial Decisions, and the Demand for Financial Services: Evidence from India and Indonesia

Cole, Shawn, Thomas Sampson, and Bilal Zia
April 2009

Why is demand for formal financial services low in emerging markets? One view argues that limited cognitive ability and financial literacy stifle demand. A second view argues that demand is rationally low, because formal financial services are expensive and of relatively low value to the poor. This paper uses original surveys and a field experiment to distinguish between two competing answers to this question. Using original survey data from India and Indonesia, we first show that financial literacy is a powerful predictor of demand for financial services. To test the relative importance of literacy and price, we implement a field experiment, offering randomly selected unbanked households financial literacy education, crossed with small incentive (ranging from U.S. $3 to $14) to open a bank savings account. We find that the financial literacy program has no effect on the likelihood of opening a bank savings account in the full sample but do find modest effects for uneducated and financially illiterate households. In contrast, small subsidy payments have a large effect on the likelihood of opening a savings account. These payments are more than two times more cost-effective than the financial literacy training, though this calculation does not take into account any ancillary benefits of financial education.

The Review of Economics and Statistics (forthcoming)

Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry

Nanda, Ramana and Tarun Khanna
April 2009

This study explores the importance of cross-border social networks for entrepreneurs in developing countries by examining ties between the Indian expatriate community and local entrepreneurs in India's software industry. We find that local entrepreneurs who have previously lived outside India rely significantly more on diaspora networks for business leads and financing. This is especially true for entrepreneurs who are based outside software hubs-where getting leads to new businesses and accessing finance is more difficult. Our results provide micro-evidence consistent with a view that cross-border social networks play an important role in helping entrepreneurs to circumvent the barriers arising from imperfect domestic institutions in developing countries.

Journal of Economics and Management Strategy (forthcoming)

When Dreaming Is Believing: The (Motivated) Interpretation of Dreams

Morewedge, Carey K., and Michael I. Norton
February 2009

This research investigated laypeople's interpretation of their dreams. Participants from both Eastern and Western cultures believed that dreams contain hidden truths (Study 1) and considered dreams to provide more meaningful information about the world than similar waking thoughts (Studies 2 and 3). The meaningfulness attributed to specific dreams, however, was moderated by the extent to which the content of those dreams accorded with participants' preexisting beliefs-from the theories they endorsed to attitudes toward acquaintances, relationships with friends, and faith in God (Studies 3-6). Finally, dream content influenced judgment: Participants reported greater affection for a friend after considering a dream in which a friend protected rather than betrayed them (Study 5) and were equally reluctant to fly after dreaming or learning of a plane crash (Studies 2 and 3). Together, these results suggest that people engage in motivated interpretation of their dreams and that these interpretations impact their everyday lives.

Journal of Personality and Social Psychology

The Bloody Millennium: Internal Conflict in South Asia

Iyer, Lakhsmi
February 2009

This paper documents the short-term and long-term trends in internal conflict in South Asian countries, using multiple data sources. I find that incidents of terrorism have been rising across South Asia over the past decade, and this increase has been concentrated in economically lagging regions in the post-2001 period. This is in contrast to both the historical patterns of conflict and the evolution of other types of violence. Analyzing the role of economic, geographic, and demographic factors, I find that poorer areas have significantly higher levels of conflict intensity. The paper reviews the various approaches taken by governments to deal with conflict, contrasting security-based approaches with political accommodation and economic approaches. Finally, the paper reviews the potential role of regional cooperation in mitigating conflict.

Harvard Business School Working Paper, No. 09-086, January 2009

The Credit Crisis of 2008: Causes, Consequences and Implications for India

Narayanan, V.G., and Lisa Brem
January 2009

This article gives a brief overview of the causes and consequences of the current global credit crisis. The article then discusses the benefits and potential drawbacks of real estate loan securitization in India, and what India can do to realize those benefits while avoiding some of the pitfalls.

The Chartered Accountant 57, no. 6 (December 2008)

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2008

The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention

Kerr, William R., and William F. Lincoln
December 2008

This study evaluates the impact of high-skilled immigrants on U.S. technology formation. Specifically, we use reduced-form specifications that exploit large changes in the H-1B visa program. Fluctuations in H-1B admissions levels significantly influence the rate of Indian and Chinese patenting in cities and firms dependent upon the program relative to their peers. Most specifications find weak crowding-in effects or no effect at all for native patenting. Total invention increases with higher admission levels primarily through the direct contributions of ethnic inventors.

Harvard Business School Working Paper, No. 09-005, December 2008

The Agglomeration of U.S. Ethnic Inventors

Kerr, William R.,
July 2008

The ethnic composition of U.S. inventors is undergoing a significant transformation-with deep impacts for the overall agglomeration of U.S. innovation. This study applies an ethnic-name database to individual U.S. patent records to explore these trends with greater detail. The contributions of Chinese and Indian scientists and engineers to U.S. technology formation increase dramatically in the 1990s. At the same time, these ethnic inventors became more spatially concentrated across U.S. cities. The combination of these two factors helps stop and reverse long-term declines in overall inventor agglomeration evident in the 1970s and 1980s. The heightened ethnic agglomeration is particularly evident in industry patents for high-tech sectors, and similar trends are not found in institutions constrained from agglomerating (e.g., universities, government).

Harvard Business School Working Paper, No. 09-003, July 2008

Traveling Agents: Political Change and Bureaucratic Turnover in India (pdf)

Iyer, Lakshmi, and Anandi Mani
July 2008

We develop a framework to examine how politicians with short-term electoral pressures control bureaucrats with long-term career concerns. Empirical analysis using a unique data set on the career histories of Indian bureaucrats supports the key predictions of our framework. We find that politicians use frequent reassignments (transfers) across posts of varying importance as a means of control. High-skilled bureaucrats face less frequent transfers and a lower variability in the importance of their posts. There are alternative routes to career success: officers of higher initial ability are more likely to invest in developing expertise, but officers who belong to the same caste as the politician are also able to obtain important posts. Bureaucrats are less likely to be transferred if politicians have alternative means of control through subordinate politicians. Districts with higher rates of politically induced bureaucrat transfers are somewhat less successful in poverty reduction over the long run.

Harvard Business School Working Paper, No. 09-006, July 2008.

Fixing Market Failures or Fixing Elections? Agricultural Credit in India

Cole, Shawn A.
July 2008

This paper integrates theories of political budget cycles with theories of tactical electoral redistribution to test for political capture in a novel way. Studying banks in India, I find that government-owned bank lending tracks the electoral cycle, with agricultural credit increasing by 5-10 percentage points in an election year. There is significant cross-sectional targeting, with large increases in districts in which the election is particularly close. This targeting does not occur in non-election years, or in private bank lending. I show capture is costly: elections affect loan repayment, and election year credit booms do not measurably affect agricultural output.

Harvard Business School Working Paper, No. 09-001, July 2008.

Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality? (pdf)

Cole, Shawn A.
July 2008

In 1980, India nationalized its large private banks. This induced different bank ownership patterns across different towns, allowing credible identification of the effects of bank ownership on financial development, lending rates, and the quality of intermediation, as well as employment and investment. Credit markets with nationalized banks experienced faster credit growth during a period of financial repression. Nationalization led to lower-interest rates and lower-quality intermediation and may have slowed employment gains in trade and services. Development lending goals were met, but these had no impact on the real economy.

Harvard Business School Working Paper, No. 09-002, July 2008

An Indian FOPSE: Innovations Case Discussion on Keggfarms

Isenberg, Daniel J.
June 2008

I first met Vinod Kapur in the summer of 2006 when I was conducting research in India on a case for my Harvard Business School class on international entrepreneurship. A friend of mine had invited me to attend the ceremony for the first Innovations for India Awards in Mumbai. Several Indian businesspeople received the award, but I was particularly struck by a dignified silver-haired gentleman who took the stage to receive the award for social innovation. He then proceeded to eloquently describe the development of a business concept centered on the rural poor of India, which was based on a specially bred "superchicken" that was twice as big and five times as productive as the typical backyard chicken. The incongruity of Vinod Kapur's elegant appearance and his subject matter struck me as fascinating, but the most intriguing element of the presentation was how he arranged an entire system of distribution to deliver the hatched chicks to these remote villagers and did so in a way that enabled everyone to profit in concrete financial terms, from Keggfarms itself to the rural villagers. Almost a million households are today affected by Keggfarms, and the numbers are constantly rising.

Innovations: Technology, Governance, Globalization 3, no. 1 (winter 2008)

America the Difficult

Desai, Mihir
June 2008

The American (May - June 2008)

Testing Limits to Policy Reversal: Evidence from Indian Privatizations

Dastidar, Siddhartha G., Raymond Fisman, and Tarun Khanna
April 2008

We examine the effect of regime change on privatization using the 2004 election surprise in India. The pro-reform BJP was unexpectedly defeated by a less reformist coalition. Stock prices of government-controlled companies that had been slated for definite privatization by the BJP dropped by 3.5 percent relative to private firms. Surprisingly, government-controlled companies that were only under study for possible privatization fell by 7.5 percent relative to private firms. We interpret this as evidence of investor belief of policy irreversibility, where reforms may reach a stage beyond which future regimes have difficulty reversing those policies. Further analysis suggests that layoffs, combined with the privatization announcement, served as a credible commitment to the government's privatization agenda.

Journal of Financial Economics (forthcoming)

Learning to Live with Governments: Unilever in India and Turkey, 1950-1980

Jones, Geoffrey G.
March 2008

A noteworthy characteristic of the contemporary global economy is the uneven distribution of world foreign direct investment (FDI). In 2007 three-quarters of world FDI was located in developed countries. The residual was concentrated in a small number of emerging countries. Large countries with little inward FDI included India and Turkey. This is puzzling, given that both countries have greatly liberalized their regulations on inward FDI. After 1945 many developing governments pursued policies which restricted foreign-owned firms. India and Turkey were among the countries with particularly difficult policy environments. This paper explores why Unilever, the Anglo-Dutch consumer products company, was able to sustain large businesses in developing countries such as India and Turkey. The paper argues that the explanation is multi-causal. Unilever held first-mover advantages, but was also prepared to accept low dividend remittances for years. It pursued flexible business strategies beyond its "core" business, even distributing condoms. It maintained a high standard of corporate ethics. It was effective at building contacts with local business and government elites, primarily through localization of management.

Entreprises et Histoire 49 (December 2007)

The Fiscal Impact of the Brain Drain: Indian Emigration to the U.S.

Desai, Mihir , D. Kapur, and J. McHale
February 2008

Easing immigration restrictions for the highly skilled in developed countries portend a future of increased human capital outflows from developing countries. The myriad consequences of these developments for developing countries include the direct loss of the fiscal contributions of these highly skilled individuals. This paper analyzes the fiscal impact of this loss of talent for a developing country by examining human capital flows from India to the U.S. The escalation of the emigration of highly skilled professionals from India to the U.S is examined by surveying evidence on the changing nature of the Indian-born in the U.S. during the 1990s. The loss of talent to India during the 1990s was dramatic and highly concentrated amongst the prime-age work force, the highly educated and high earners. In order to estimate the fiscal losses associated with these emigrants, this paper first estimates what these emigrants would have earned in India, and then integrates the resulting counterfactual distributions with details of the Indian fiscal system to estimate fiscal impacts. Two distinct methods to estimate the counterfactual earnings distributions are implemented: a translation of actual U.S. incomes in purchasing power parity terms and an income simulation based on a jointly estimated model of Indian earnings and participation in the workforce. The PPP methods indicate that the foregone income tax revenues associated with the Indian-born residents of the U.S. comprise one-third of current Indian individual income tax receipts. Depending on the method for estimating expenditures saved by the absence of these emigrants, the net fiscal loss associated with the U.S. Indian-born resident population ranges from 0.24% to 0.58% of Indian GDP in 2001.

Journal of Development Economics (forthcoming)

Colonial Land Tenure, Electoral: Competition and Public Goods in India (pdf)

Banerjee, Abhijit and Lakshmi Iyer
February 2008

Harvard Business School Working Paper, No. 08-062, February 2008

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2007

China + India: The Power of Two

Khanna, Tarun
December 2007

China and India are burying the hatchet after four-plus decades of hostility. A few companies from both nations have been quick to gain competitive advantages by viewing the two as symbiotic. If Western corporations fail to do the same, they will lose their competitive edge-and not just in China and India but globally. The trouble is, most companies and consultants refuse to believe that the planet's most populous nations can mend fences. Not only do the neighbors annoy each other with their foreign policies, but they're also vying to dominate Asia. Moreover, the world's fastest-growing economies are archrivals for raw materials, technologies, capital, and overseas markets. Still, China and India are learning to cooperate, for three reasons. First, these ancient civilizations may have been at odds since 1962, but for 2,000 years before that, they enjoyed close economic, cultural, and religious ties. Second, neighbors trade more than non-neighbors do, research suggests. Third, China and India have evolved in very different ways since their economies opened up, reducing the competitiveness between them and enhancing the complementarities. Some companies have already developed strategies that make use of both countries' capabilities. India's Mahindra & Mahindra developed a tractor domestically but manufactures it in China. China's Huawei has recruited 1,500 engineers in India to develop software for its telecommunications products. Even the countries' state-owned oil companies, including Sinopec and ONGC, have teamed up to hunt for oil together. Multinational companies usually find that tapping synergies across countries is difficult. At least two American corporations, GE and Microsoft, have effectively combined their China and India strategies, allowing them to stay ahead of global rivals.

Harvard Business Review 85, no. 12 (December 2007)

Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality

Cole, Shawn
November 2007

In 1980, India nationalized its large private banks. This induced different bank ownership patterns across different towns, allowing credible identification of the effects of bank ownership on financial development, lending rates, and the quality of intermediation, as well as employment and investment. Credit markets with nationalized banks experienced faster credit growth during a period of financial repression. Nationalization led to lower interest rates and lower quality intermediation and may have slowed employment gains in trade and services. Development lending goals were met, but these had no real impact. Finally, competition with private banks provided some discipline to nationalized banks.

Review of Economics and Statistics (forthcoming).

Testing Limits to Policy Reversal: Evidence from Indian Privatizations

Dastidar, Siddhartha G., Raymond Fisman, and Tarun Khanna
October 2007

We examine the effect of regime change on privatization using the 2004 election surprise in India. The pro-reform BJP was unexpectedly defeated by a less reformist coalition. Stock prices of government-controlled companies that had been slated for definite privatization by the BJP dropped by 3.5 percent relative to private firms. Surprisingly, government-controlled companies that were only under study for possible privatization fell by 7.5 percent relative to private firms. We interpret this as evidence of investor belief of policy irreversibility, where reforms may reach a stage beyond which future regimes have difficulty reversing those policies. Further analysis suggests that layoffs, combined with the privatization announcement, served as a credible commitment to the government's privatization agenda.

NBER Working Paper Series, No. 13427, September 2007.

Team Familiarity, Role Experience, and Performance: Evidence from Indian Software Services (pdf)

Huckman, Robert S., Bradley R. Staats, and David M. Upton
September 2007

Much of the literature on learning views experience as a unidimensional concept captured by the cumulative production volume or number of projects completed by a team. Implicit in this approach is the assumption that teams are stable in their membership and internal organization. In practice, however, such stability is rare, as the composition and structure of teams often changes over time or between projects. In this paper, we use detailed data from an Indian software services firm to examine how such changes may affect the accumulation of experience within, and the performance of, teams. We find that the level of team familiarity (i.e., the average number of times that each team member has worked with every other member of the team) has a significant and positive effect on performance but that conventional measures of the experience of individual team members (e.g., years at the firm) do not impact performance. We do find, however, that the role experience of individuals in a team (i.e., years in a given role within a team) is associated with better team performance. We examine the impact of role experience separately for team managers and team members. We find that a manager's role experience is positively related to outcome measures that are easily observable in process but is not related to outcomes that are difficult to monitor in process. In comparison, a member's role experience is positively related to both types of outcomes. Our results offer an approach for capturing the experience held by fluid teams and highlight the need to study context-specific measures of experience, including role experience, in addition to offering further insight into how the interactions of team members may contribute to the development of broader firm capabilities.

Harvard Business School Working Paper, No. 08-019, September 2007

Remedying Education: Evidence from Two Randomized Experiments in India

Banerjee, A., Shawn A. Cole, E. Duflo, and L. Linden
August 2007

This paper presents the results of two randomized experiments conducted in schools in urban India. A remedial education program hired young women to teach students lagging behind in basic literacy and numeracy skills. It increased average test scores of all children in treatment schools by 0.28 standard deviation, mostly due to large gains experienced by children at the bottom of the test-score distribution. A computer-assisted learning program focusing on math increased math scores by 0.47 standard deviation. One year after the programs were over initial gains remained significant for targeted children, but they faded to about 0.10 standard deviation.

Quarterly Journal of Economics 122, no. 3 (August 2007): 1235-1264

Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry (pdf)

Nanda, Ramana, and Tarun Khanna
July 2007

This study explores the importance of cross-border social networks for entrepreneurship in developing countries by examining ties between the Indian expatriate community and local entrepreneurs in India's software industry. We find that entrepreneurs located outside software hubs-in cities where monitoring and information flow on prospective clients is harder-rely significantly more on diaspora networks for business leads and financing. Relying on these networks is also related to better firm performance, particularly for entrepreneurs located in weaker institutional environments. Our results provide micro-evidence consistent with a view that cross-border social networks serve an important role in helping entrepreneurs to circumvent the barriers arising from imperfect local institutions in developing countries.

Harvard Business School Working Paper 08-003, July 2007

Explicating Lean Principles by Examining Indian Software Services

Staats, Bradley R., and David M. Upton
July 2007

This paper examines the implementation of a lean operating system at an Indian software services firm. By studying the introduction and impact of lean management techniques in a nontraditional setting we are able to move beyond the artifacts and gain insight into the principles that may lead to improved performance in certain settings. In particular we find that the impact of the changes on problem solving, standardization of work, and coordination improve the way that the firm learns and its productivity. Using a detailed case study we document the internal firm processes that the lean principles influence and empirically show that firm operational performance has improved. Finally, we suggest that the lean initiative studied possesses qualities of a Trojan Horse change initiative-its outward manifestation accomplishes the short-term goal (entering the city gates / productivity) while its inner core leads to much more radical change (sacking of Troy / innovation).

Harvard Business School Working Paper 08-001, July 2007

Poverty, Social Divisions and Conflict in Nepal (pdf)

Quy-Toan Do, and Iyer, Lakshmi
April 2007

We conduct an econometric analysis of the economic and social factors which contributed to the spread of violent conflict in Nepal. We find that conflict intensity is significantly higher in places with greater poverty and lower levels of economic development. Violence is higher in locations that favor insurgents, such as mountains and forests. We find weaker evidence that caste divisions in society are correlated with the intensity of civil conflict, while linguistic diversity has little impact.

Harvard Business School Working Paper 07-065, April 2007

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2005

Accounting Standards and the Globalization of Indian Businesses

Miller, Gregory S., and V.G. Narayanan
November 2005

The Chartered Accountant (July 2005): 50-52

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