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By Mike Cummings
January 13, 2021
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Workers at a textile company in India. (Photo credit: Vestal McIntyre)
In today’s economy, American businesses often tap into professional management to grow. But most firms in India and other developing countries are family owned and often shun hiring non-relatives to manage their companies. A new study co-authored by Yale economist Michael Peters explores the effects that the absence of outside professional management has on India’s businesses and the country’s economy.
The study, published in the American Economic Review, uses a novel model to compare the relationship between the efficiency of outside managers and firm growth in the United States and India. It shows that the lack of managerial delegation factors significantly into why businesses in India tend to stay small and has wider implications on the country’s ....

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