The conventional wisdom on firm size in India is that labour regulations on hiring and firing (specifically the Industrial Disputes Act, IDA) hinder its growth.
From experience, incentives are broken.
Consider personal balance sheet of entrepreneur
1) the returns from real estate or tax management >>actual ROE.
2) Cost of complying with the law is HIGH & benefits are LOW AND Cost of breaking the law is LOW & benefits are HIGH.
Both incentives discourage creating scale in business.
From experience, incentives are broken.
Consider personal balance sheet of entrepreneur
1) the returns from real estate or tax management >>actual ROE.
2) Cost of complying with the law is HIGH & benefits are LOW AND Cost of breaking the law is LOW & benefits are HIGH.
Both incentives discourage creating scale in business.