Indian Business Structures

India:

In many ways, business structures mirror Indian society. Both are extremely hierarchical in nature, where people have an allotted position which they do not attempt to overturn. It is absolutely essential to understand how deeply these hierarchical thought-processes impact on Indian attitudes to business.  if overlooked, this simple fact can make working into India much more costly and inefficient.

Thus, companies tend to be run by one very strong individual (especially in the ubiquitous family companies) who will issue direct instructions down the chain of command. Everybody expects that these instructions will be given in a fairly authoritarian manner and that they will be followed unquestioningly by those further down the chain. People do not question either their position within the organisation or the validity of decisions taken - greater forces (karma and dharma) prescribe all of these.

As the boss is respected, his instructions must be correct and it is unlikely that they will be questioned even if it might appear that the instructions are wrong.  Even raising a 'red flag' could be seen as disrespectful behaviour.

This hierarchical approach means that when doing business in India it usually necessary to liaise as near to the top as possible. A great deal of time can be wasted dealing with middle management who may have very little impact on the final decision. If dealing in the middle, try to deal with those who have some influence over the real decision-maker.

Many MNC's try to introduce a flatter, more egalitarian structure to their Indian subsidiary in order to align it with other offices in the group. This may prove difficult in a country where hierarchy is unquestioningly accepted. It may not be impossible to take this approach but it is certain to require a great deal of explanation, retraining and patience.

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Suggested Reading List...

Doing Business in India Rajesh Kumar and Anand Sethi
Doing Business in India Pawan S. Budhwar and Arup Varma
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