Opinion | The persistence of caste in business
A study shows caste affiliation plays a role in Indian corporate decisions. This suggests the assault of capitalism on the system has failed. We mustn’t ignore the economic implications
Caste is often described as “division of labour" dating back to antiquity, though its hereditary basis still results in much inequity. In spite of its claims to an economic rationale of sorts, it’s a hush-hush subject in discussions on India’s political economy. In fact, it is only during election season, as identity politics asserts itself, that it acquires salience for many of us. Yet, evidence of caste as a factor in commercial affairs is too strong to dismiss and its implications remain relevant. Consider the findings of a recent study on the persistence of caste in the corporate sector. A research paper titled Firms Of A Feather Merge Together: Cultural Proximity And Firms Outcome by scholars of Indian Institute of Management Bangalore and Pomona College, Claremont, California, has revealed that a disproportionate number of mergers and acquisitions (M&A) occur between businesses whose directors belong to the same caste group. The report, which took up 1,200 M&A deals in the country for analysis, also delves into the mechanism that makes endogamous deals more likely. Not only is information shared more smoothly between caste-proximate firms, their directors tend to place a higher value on the outcome of such a merger. To those who see business as a caste-neutral meritocracy, this is an eye-opener.