Subcontracting and enterprise development in India's informal manufacturing sector
Journal of Small Business and Enterprise Development
ISSN: 1462-6004
Article publication date: 5 July 2022
Issue publication date: 19 May 2023
Abstract
Purpose
Subcontracting is a crucial cause behind the simultaneous existence of formal and informal entrepreneurship in India. This article aims to provide an over-time comparative analysis between the subcontracted and the non-subcontracted enterprises within the informal sector. Further, it also brings to fore the contribution of subcontracting towards ensuring sustainability of the informal enterprises.
Design/methodology/approach
By constructing a panel data from two rounds of NSS Unincorporated Enterprise Survey Data (2010 and 2015), and employing a PSM-DID method, considering labour productivity and net retained earnings as two critical indicators of growth and development of the informal sector firms, this study has made some broad claims regarding the differences in immediate and long run performances between the subcontracted and non-subcontracted informal sector enterprises in India.
Findings
This study finds that subcontracted enterprises have not only been performing at a much lower level than the non-subcontracted enterprises, they are also growing much slowly than their counterparts. However, it has been observed that for the establishments, who are capital abundant and also have a larger production capacity, subcontracting is showing the prospect for deriving sustainable gains.
Originality/value
This article contributes to the existing literature in the following two ways. Firstly, it provides an over-time comparative analysis between the subcontracted and the non-subcontracted enterprises within the informal sector. Secondly, it brings to fore the contribution of subcontracting towards ensuring sustainability of the informal enterprises.
Keywords
Acknowledgements
The authors would like to thank Dr Zakaria Siddiqui for invaluable comments and suggestions. The authors convey special thanks to the DSI/NRF/Newton Fund Trilateral Chair in Transformative Innovation, the 4IR and Sustainable Development for the support. The authors also thank Professor K J Joseph, Dr Beena P L and Professor Vinoj Abraham for encouragement in CDS campus. The authors appreciate the editors and referee(s) efforts for giving valuable comments and suggestions.
Conflict of interest: The authors declare that they have no conflict of interest. The authors have no relevant financial or non-financial interests to disclose.
Ethical approval: This paper does not contain any studies with human participants or animals. All views expressed in this paper are those of the authors.
Authors' Contribution: Both the authors have equally contributed.
Availability of Data and Materials: All the data sources used are retrieved from the ICSSR Data Source Repository-http://www.icssrdataservice.in/datarepository/index.php/catalog
Code Availability: Software used to perform the analysis is STATA. Codes are available on request.
Funding: No funding was received for conducting this study.
Citation
Shekar, K.C. and Nataraj, M. (2023), "Subcontracting and enterprise development in India's informal manufacturing sector", Journal of Small Business and Enterprise Development, Vol. 30 No. 3, pp. 448-474. https://doi.org/10.1108/JSBED-02-2022-0106
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited