Indian Brand of Crony Capitalism: The Cultural Underpinnings

Abstract

One grave concern that the Indian economy/society face today is that of ubiquitous corruption/cronyism. Despite its importance, there is dearth of scholarly treatment of this phenomenon. In this presentation, we examine the cultural underpinnings of corruption/cronyism in India. There are four cultural dimensions that are pertinent to understanding Indian brand of cronyism and its prevalence: individualism-collectivism, verticalness-horizontalness, universalism-particularism, and ascription-achievement. In a collectivistic culture like India, interpersonal relationships are the basis of exchanges between one member and the other rather than formal rules/structures. Verticalness (high power distance) of Indian culture implies that people in power give preferential treatments to their in-groups at the expense of the out-groups. The ascription-orientation of Indian society means that status is not earned but ascribed to individuals based on family, gender, position, age, and other such factors, thereby undermining consideration of merit, achievement, and performance. According to the fourth cultural dimension, Indian society is high on particularism and low on universalism. A society high on universalism emphasizes universal laws, rules, and contracts, but in a particularistic culture, contracts, laws, and rules take a back seat to relationships between individuals. The outcomes of such a unique Indian cultural milieu (collectivistic, vertical, ascriptive, and particularistic) include inequality of influence, subversion of law, and poor enforcement of law. Further this cultural milieu in combination with Indian economic philosophy and history give rise to the unique brand of crony capitalism that we see in India today.