An empirical investigation of hybrid corporate governance systems in large firms: Evidence from India

The heightened pace of corporate governance reforms has focussed attention on country-specific governance models. Considerable debate has ensured as to whether the outsider Anglo-Saxon system or the insider Continental system is most applicable to India. This paper reports the results of a study of Indian governance which used a primary qualitative approach of twelve interviews of key executives of five large firms in 2008 as well as publicly available documents. A literature review establishes six key characteristics that distinguish the two major systems. The governance characteristics of the Indian firms are classified in terms of the two systems with a view to assessing the extent and nature of hybridization. The findings endorse the hybrid corporate governance system of India, clearly identifying similarities and differences to the two major governance models. In drawing on rich interview data, the paper delves into the national characteristics of India that have influenced the hybrid model such as stewardship, corporate social responsibility and partnerships between the corporate and community sectors. The evolution of the governance practices and the rationale for their existence are also examined. The paper demonstrates that the hybrid governance system has emanated from country-specific culture including values and ideologies, and political orientation of socialism. The scope of this study was limited to large listed companies and business groups. Future research should use a larger and more diverse sample including private and unaffiliated firms for outcomes that can be generalized.