The present paper aims to study the impact of institutions on the performance of MSMEs in India. The study is mainly based on secondary data, i.e. 73rd round survey (2015–16) of unincorporated non-agricultural enterprises conducted by National Sample Survey Office (NSSO). Different types of regulations have been considered as proxy for institutions. It has been assumed that a firm registered under a particular regulation follows it and obtains benefits provided by the government under that regulation. The study observes that only around 30% of firms are registered under any regulations. Performance of registered firms is higher than that of unregistered firms. Further, registration has significant positive impact on the performance of firms. Since majority of MSMEs are owned by social backward groups, any policy intervention supporting growth of MSMEs may be more beneficial to socially backward groups and which may also help in social transformation.
- Non-agricultural enterprises
- Firm performance
- Policy incentives
- Institutional norms
- Sustainable development
- Social transformation
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The concepts of productive and unproductive entrepreneurship are coined by Baumol (1990). He categorises entrepreneurship in terms of activities. Productive entrepreneurship represents entrepreneurial activities such as innovation while unproductive entrepreneurship represents entrepreneurial activities such as renting and crime.
The term ‘Micro, small and mediumenterprises (MSMEs)’ is generally used for small firms across the world despite variations in their definitions. Majority of the countries/organisations have their own definitions of small firms.
This estimate is based on 73rd round of NSSO survey of unincorporated non-agricultural enterprises (excluding construction) conducted in 2015–16.
It does not include incorporated enterprises. However, the proportion of MSMEs in incorporated enterprises is very less. Thus, the findings based on this study will not affect general understanding about MSMEs in India.
Without dropping the inconsistent observation from the original dataset, the total number of unincorporated enterprises in the country in 2015–16 is around 63 million.
Total factor productivity is also called multi factor productivity. It is a measure of economic efficiency.
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Sharma, A.K. (2021). Impact of Institutions on the Performance of Firms in India: Towards Policy Implications for MSMEs from Empirical Evidence. In: Yamahata, C., Seekins, D.M., Takeda, M. (eds) Social Transformations in India, Myanmar, and Thailand: Volume I. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-15-9616-2_13
Publisher Name: Palgrave Macmillan, Singapore
Print ISBN: 978-981-15-9615-5
Online ISBN: 978-981-15-9616-2