Impact of institutional imprinting on the persistence of superior profits: a study of regulatory punctuation in India

Abstract

Drawing upon the literature on organizational imprinting, we examine how a firm’s history impacts its performance in subsequent periods. By considering the emerging market context of India, we present evidence that the degree of imprinting of the pre-liberalization era is negatively related to the persistence of superior performance in the post-liberalization period. Furthermore, we investigate the role of imprinting attenuators and find that a firm’s listing status, international exposure, and knowledge spillovers from foreign firms weaken this baseline relationship. Empirical results based on a large unbalanced panel data set of 18,201 firm-year observations of Indian firms during the period 1991–2005 provide robust support for our conceptual model. Complementing the growing literature on the impact of contemporaneous institutional changes on performance, this study sheds light on the important role of the institutional history of firms from emerging economies.