Adaptation of Indian public sector to market‐based economic reforms

Abstract

PurposeEconomic policy reforms, characterised by a market‐driven, privatised policy regime, are being adopted as a strategy by India to promote economic development. As markets become liberalised, public sector organisations face extreme vulnerability unless they can identify and develop the competencies necessary to thrive in these competitive markets. This paper, drawing on the resource‐based view, aims to identify the pre‐reform capabilities of public sector organisations in India and similar developing country contexts that would be relevant even in the post‐reform context.Design/methodology/approachAn interpretative and theoretical approach is used to put forth the arguments and a framework is proposed to explain the possibility of deriving competitive advantages from pre‐reform capabilities in the post‐reform context.FindingsSeveral unique capabilities of Indian public sector organisations can be identified using the resource based perspective which can be leveraged in the post‐reform context. They have superior resource‐picking capacity compared to private firms, especially for government‐regulated resources, international financial assets and modern technologies. Their internal integrative managerial systems and structures offer them an advantage in meeting the competitive demands of speed and promptness. Under effective leadership, the loyalty of a large workforce and their number of years of experience gives them an advantage of effective coordination and knowledge sharing and flow. Also, their capability in delivering economies of scale and scope due to their size and supply chain integration gives them a cost advantage over others.Practical implicationsThis paper takes a practical approach. It accepts the existing organisational culture, processes and systems of public sector organisations as given and matters of long‐term change, and identifies existing capabilities in the current organisational context that could help them survive better.Originality/valueUnlike most papers that focus on how policy changes affect public sector organisations or those that conduct a comparative analysis with the private sector on various parameters, the main focus of this paper is to identify existing capabilities that can be leveraged by public sector organisations for effective adaptation in the new scenario.