Flipkart's sale to Walmart in April this year has caused widespread cheering amidst intriguing questions of business and patriotism. A variety of reputed commentators have bemoaned the loss of India's premier startup to owners from abroad. This transaction, and the associated fallout, occurred in an environment with increasing deregulation on foreign ownership and reduced restrictions in sectors ranging from defence to single-brand retail.
We believe that this openness to sell to foreign owners develops from value systems that evolved based on the political and social context of a region in a particular time, resulting in distinct generational mindsets of leadership.
The Creating Emerging Markets project at Harvard Business School has spent a decade looking at the evolution of business leadership in South Asia and other emerging regions across the globe through interviews of top leaders active over the last forty years. The nearly thirty Indian business leaders featured hail from a diverse set of industries, regions and cultural backgrounds and are the founders of some of the largest corporations in India today.
They are on average ~75 years old and constitute the proud, first generation of entrepreneurs in independent India. Many, like Zia Mody, Sunil Mittal and Devi Shetty, are still involved in their companies' operations.
We believe that this first generation of Indian business leaders has unique characteristics shaped by the India they lived in. These beliefs influenced their decisions as they led their organizations through pivotal events including partnerships with foreign entities, negotiations with employees and product decisions for an emerging middle class. We discuss three themes that emerged from the study.
One, this first generation's leaders and their businesses were heavily shaped by their patriotism and national identity. They are proud of the Indian origins of their institutions and drew on facets of their version of what it means to be Indian as they led their companies. For example, Anu Aga's drive to make Thermax an inclusive, diverse organization drew from her belief in the criticality of secularism in modern Indian history. Dr. Prathap Reddy discusses his view that there are deep insights in ancient Indian medicine that modern healthcare must draw; a belief that drives Apollo Hospitals' focus on preventive healthcare for lifestyle diseases. Zia Mody talks about her pride in the Indian Supreme Court and its role in shaping Indian society.
This trait is especially interesting as it is almost entirely absent in the same project's interviews of equivalent top leaders from Latin America and elsewhere. We believe this brand of patriotism was shaped by the political context they lived through. These leaders were nearly all born around independence and grew up in a young, passionate country in a region that was home to one of the world's oldest civilizations. Many of them also had families that were involved in the independence movement to varying degrees (the Bajaj family being a prominent example).
Two, these leaders are also nuanced observers of India and have a deep understanding of the average Indian citizen's experience. They often describe their actions and stories as a response to a facet of the Indian identity. We believe their keen analysis of India created a more thoughtful business strategy, sensitive to the market it operated in. Many of these organizations sold products to Indian citizens well before liberalization in 1991, a period when Indian consumers had little conception of purchasing privately produced goods. It was imperative for leaders to truly understand how their fellow citizens think, across classes, regions and ethnicities. For example, Ratan Tata talks about how he believes that the Indian middle class dislikes handouts and prefers perceptions of luxury to economy. Devi Shetty talks about how his passion for providing accessible cardiac care derives from how millions of Indian women were being widowed as "young, male breadwinners" were dying from heart related conditions. These entrepreneurs created the first-set of truly Indian companies: Indian employees based in India made products for the Indian consumer.
Three, these leaders almost universally possess a deep focus on social upliftment and a belief that business had the potential and the responsibility to change society today. It is curious that this is a prevailing belief in an era where the rest of global business largely believes that business only has a responsibility towards equity holders. For instance, MV Subbiah discusses his family's belief that Indian society is an integral member of their partnership and hence must receive a share of their profits. Suresh Krishna talks about how he derives great personal satisfaction from seeing Sundaram Fasteners employees advance in society - he ensures his employees' families all have access to education. We believe that a key part of this phenomenon is driven by the fact that these leaders ran organizations that employed Indians from across social strata, thus giving them a vivid view into the sort of problems their employees and other Indians face.
But what does this study imply for Indian business today? As India continues to change rapidly, we believe that there are lessons Indian managers today can learn from their predecessors. Creating similar experiences for managers today can help develop perspectives similar to the generation in our study. To groom business leaders who are thoughtful about their role in society, they must be forced to interact with a larger swath of society. We believe that this has to be more ingrained than a once-a-year CSR activity, and should be incorporated into the regular course of business-as-usual. Rahul Bajaj's decision to send his children to the same school where his workers' children went is a striking example. Shared experiences foster empathy, empathy fosters action and action fosters change. As India risks becoming more stratified, businesses have a powerful role in promoting such interactions.
Most importantly, what will the next generation of Indian leaders - the generation occupied by Binny Bansal and others - look like? The fact that Flipkart was willing to sell to a foreign corporation is a sign of changing times; the previous generation might well have been more skeptical. We believe this is overall a positive change, for Indian companies compete in a more global world with better access to capital and talent from abroad. However the trade offs are at least worth considering. Will the next generation possess an even more internationalist outlook, and lose their Indian identities entirely? Does this matter? Will they continue to believe in a larger role for business in society and go beyond the boardroom to truly understand the Indian consumer? These are important questions. The DNA of the next Flipkart and the next phase of India's development depend on it.
Professor Geoffrey Jones is a professor of business history at Harvard Business School.
Vinay Sridhar is a 2018 MBA graduate of Harvard Business School.