Strategy, Ownership, and Performance of Firms in India: A Study of Manufacturing and Service Industries in India

Abstract

Purpose: There is considerable interest among academicians as well as practitioners in strategic differences between foreign-owned firms and domestic businesses. Linked with this is the question of whether there is a relationship between strategy and performance. This paper primarily concentrates on the differences in strategy pursued by foreign-owned firms and domestic firms. Methodology: A questionnaire was constructed. It was administered to senior level managers of reputable firms. The comprehensive list of managers was obtained from various databases including that of the Confederation of Indian Industry (CII). Responses to the questionnaire were received in two phases. The questionnaire was sent again after a fortnight of sending it the first time. None of the respondents asked for any clarification during their responses to the questionnaire. Findings: Results of analysis of the responses obtained clearly showed the differences in strategy between the two sets of firms. In the overall perspective, foreign-owned firms are much more holistic in their approach, whereas the domestic firms are quite narrow in their outlook—the domestic firms primarily concentrate on resources and how to add customers in order to survive and grow. The concept of investing in R & D, which is a prime parameter of strategy for foreign-owned firms, is completely absent in the case of domestic firms. As a result, factors affecting performance are far more widespread for foreign-owned firms than it is for domestic firms. Originality: While the comparison has been made between FOB and DOB, the differences in strategy have never been investigated before.