Sustaining superior performance in an emerging economy: an empirical test in the Indian context

Authors

  • Murali D.R. Chari,

    Corresponding author
    1. Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, New York, U.S.A.
    • Lally School of Management and Technology, Rensselaer Polytechnic Institute, 110 8th Street, Troy, NY 12180, U.S.A.
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  • Parthiban David

    1. Kogod School of Business, American University, Washington, District of Columbia, U.S.A.
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Abstract

We demonstrate a negative relationship between pro-market reforms and the sustainability of superior profits in an emerging economy. The decline in sustainability of superior profits shows that pro-market reforms bring significant threats in addition to the various opportunities such as greater availability of production factors and greater freedom to enter and operate businesses highlighted in the extant literature. Our study thus contributes to a more complete conceptual understanding of the performance consequences of pro-market reforms in emerging economies. We also show that investment in research and development and greater investments in marketing and advertising are firm-level resources that provide a measure of protection against the erosion in sustainability of superior profits associated with pro-market reforms. Copyright © 2011 John Wiley & Sons, Ltd.

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