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Forbes India Magazine - Marwari Businesses - Leveraging Social Capital

The document discusses Marwari businesses in India and their ability to leverage social capital. It notes that trust within communities was critical for entrepreneurship in India, enabling risk-taking when formal institutions were lacking. Specifically, the Marwari community provided strong social networks that supported business success through funding and trust. While Marwari businesses have traditionally done well in trading and commodities, the article suggests they now face challenges in newer industries like IT and need to continue adapting to remain competitive.

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Abhishek Singh
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290 views1 page

Forbes India Magazine - Marwari Businesses - Leveraging Social Capital

The document discusses Marwari businesses in India and their ability to leverage social capital. It notes that trust within communities was critical for entrepreneurship in India, enabling risk-taking when formal institutions were lacking. Specifically, the Marwari community provided strong social networks that supported business success through funding and trust. While Marwari businesses have traditionally done well in trading and commodities, the article suggests they now face challenges in newer industries like IT and need to continue adapting to remain competitive.

Uploaded by

Abhishek Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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3/9/14

Forbes India Magazine - Marwari Businesses: Leveraging Social Capital

C opyright 2011, Forbse india.com

Marwari Businesses: Leveraging Social Capital


by R Jagannathan | Mar 7, 2014

Trust, more than collateral, is vital for taking on business risks. This enabled capitalism and entrepreneurship to survive in the years of
independence

This issues cover theme on Marwari businesses is unusual for Forbes India. Not because we dont track success or entrepreneurship, for
that is our stock-in-trade, but because we have never tried to profile an entire business community collectively. What we are trying to do
with this issue is to understand the social context of a business communitys continued success.
India is an oddball in terms of entrepreneurship because our business successes are often the result of
community support and seed funding. Thanks to our huge diversity, and thanks particularly to the
Indian states suspicions about business from the time we became independent in 1947, it was the social
capital provided within communities that proved critical for entrepreneurship. Whether it is the
Marwaris, the Parsis, the Gujaratis, the Reddys, the Chettiars or many other communities, business has
flowered around a communitys social capital. This is because trust, more than collateral, is vital for
taking on business risks. It was this trust that enabled capitalism and entrepreneurship to survive in
the hostile initial years of independenceand all the way till the opening up of the economy in 1991.
The Marwaris are, arguably, among the three or four most influential business communities in India
and even abroad, if one considers the fact that Lakshmi Mittal is the worlds largest steelmaker and the
Aditya Birla group was a global business long before globalisation became a fashionable term in India.
Originally hailing from the Marwar region of present-day Rajasthan, todays definition of Marwari has
outgrown this geographical limitation. Most successful Marwaris, despite an emotional connect to the
region, live outside Marwar.
In many ways, the early Marwaris were ahead of their times in terms of understanding risk and cash. Their parta system of daily cashbased accounting, for example, enabled them to keep close tabs on business trends which even todays sophisticated ERP systems may
not be able to match. If todays trend is professionals turning entrepreneurs, the Marwaris did this decades ago by encouraging valuable
employees to develop their own businesses as suppliers to core businesses.
But, in other ways, the Marwari businessman has lagged behind change: For example, it is difficult to think of a single big Marwari
business that has made waves in IT or biotech or any business that involves knowledge and IPR. Marwaris have largely excelled in
trading and commodity-based businesses.
Clearly, the challenges ahead are immense in the brave new world we are entering. But Marwari businessmen are also beginning to
change. More power to them.
Best,
R Jagannathan
Editor-in-Chief, Forbes India
Email: [email protected]
Twitter id: @TheJaggi

This article appe are d in Forbe s India Magazine of 21 March, 2014

forbesindia.com/printcontent/37313

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