Interest Groups and Small Scale Entrepreneurship in India

Abstract

Inadequate market development during the initial phases of industrialisation necessitates public sector investment in creating a support mechanism that can cater to the common needs of the sector. However, given its bureaucratic character, such mechanism may not be able to fully meet the industry's requirements especially in the private sector (Levitsky, 1992; Awasthi, 1993). This gap encourages the spirit of 'self-help' among entrepreneurs who then come forward and join hands for common purpose and collective action. They, usually, begin their activities with lobbying for deriving certain benefits from the government, thus redressing the problems confronting their smooth operation. These associations, as they mature and grow, invariably get co-opted by the governments because of mutually between these two organs. A continuous dialogue between the industry association and government lead to policies that facilitate smooth conduct of business. As such formations take shape because of the initiative of few individuals, these individuals assume a critical leadership role. However, they gradually develop vested interest in perpetuating their leadership as also in the interest of the group they represent, even at the cost of other groups within such formations. This leads to splits, dissentions due to intensification of internal contradictions, especially across the size or class of business. It is primarily because of heterogeneity in membership that leads to conflicting class interests. In most cases more powerful have their sway, leaving the weaker ones frustrated and disillusioned. It leads to separation of the minority interest group, who often form their own, independent associations. The same process starts working even in these new formations, leading to formation of other groups. Probably Marxian theory of dialectal materialism that every thesis has its anti-thesis holds good even in this context. Of course, this is one of the more plausible propositions though, there could be also be a few other processes determining the emergence and growth of industry association.