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 is 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.
Written and Produced by Keith Warburton
This country profile has been produced to give a short overview of some of the key concepts to bear in mind when doing business with contacts in India. It is intended to be an aid to business people who have commercial dealings with counterparties in the country but should not be seen as an exhaustive guide to this topic or as a substitute for more substantial research should there be a need.
With this in mind, we have covered the areas which are key to a better understanding of the cultural mindset underpinning business dealings in India and which are, quite often, extremely different from the approach and thought processes associated with business in other parts of the world.
Therefore this briefing note is broken into short, bite-sized sections on the following topics: