While it’s no secret that monetary influence pervades political landscapes, many might be surprised to learn that family-owned businesses — which represent the most prevalent corporate structure globally — often operate outside conventional political paradigms. Insights from Sukrit Puri, a political science PhD candidate, reveal that these family firms do not regard campaign contributions as mere short-term investments aimed at enhancing profit margins.
Puri’s research, which examines thousands of family firms in India, underscores how ethnic identity significantly affects political behaviors, consequently influencing economic development. “If family businesses adopt a distinctive political outlook, and they constitute the most frequent economic entities in any given economy, it undermines the accountability between businesses and government,” Puri explains. “As a result, elected officials may struggle to implement effective policies that foster economic growth.”
According to Puri, these findings could pave the way for innovative strategies aimed at revitalizing struggling economies in developing regions. “I want to encourage governments to recognize the pivotal role of family firms and consider how to incentivize them through supportive industrial policies,” he adds.
Beyond Stereotypes
Puri’s academic journey originates from a fundamental question he has grappled with for years: “What causes the disparity in wealth between nations?” As the son of an Indian diplomat, Puri’s exposure to stark inequalities during his upbringing has shaped his inquiry. After studying economics, political science, and policy at Princeton University, he came to the realization that businesses play a critical role in societal economic progress. However, the connection between firms and governments, and their combined effects on economic expansion, often remained elusive in traditional studies.
Puri observed that existing political science literature is largely “America-centric,” highlighting large public corporations that operate predominantly in shareholder interests. This perspective does not hold for many other countries, such as South Korea and India, where family firms—both large and small—are crucial economic actors. “The lack of in-depth investigation into the political participation of family-owned enterprises intrigued me,” he says. “I aimed to formulate a political theory that encompasses family firms and examines the dynamics of business and politics in developing democracies.”
Differential Campaign Contributions
To determine whether family enterprises view politics through a different lens, Puri focused on one of the most common forms of political influence worldwide: campaign donations. “In the U.S., corporations tend to view these contributions as short-term bets, supporting whichever party is currently in power and switching sides as needed,” he states. “They typically lack ideological allegiance.” However, family firms in India exhibit an entirely different modus operandi.
Puri meticulously curated a comprehensive dataset tracking political donations in India from 2003 to 2021, identifying 7,000 distinct corporate entities that contributed a total of $1 billion across 36 political parties in national and state elections. By recognizing family members on corporate boards, he discovered that companies with a strong family presence consistently support a single political party, indicating that their involvement in politics is more about loyalty than opportunism.
This unexpected behavior appears to have sociological roots. Family firms are seen not merely as economic agents but as social entities intertwined with community networks that shape their values and strategic decisions. In India, where community ties often revolve around caste and religion, family businesses may steadfastly support certain political entities, even if certain government policies may not serve their immediate economic interests, echoing the behaviors of traditional political benefactors who act out of ideology rather than calculated strategic advantage.
Engaging in Economic Debate
During his first year of college, Puri grappled with his academic path until he encountered a significant discussion in economic theory regarding poverty alleviation strategies in India and similar nations. On one side stood Amartya Sen, advocating for welfare initiatives, while Jagdish Bhagwati and Arvind Panagariya argued for prioritizing economic growth. “I was keen to delve into this debate, recognizing its implications for policy actions and feasibility,” Puri reflects, considering economics as a framework for evaluating socio-political trade-offs.
After completing his degree, Puri gained practical experience working in investment management, specializing in emerging markets. “In daily discussions with economists, our focus was almost exclusively political, assessing a country’s economic prospects through a simplistic political lens,” he notes, prompting his decision to pursue more rigorous political economic training.
At MIT, Puri finds the ideal environment to merge his interests in economic development with policy-oriented research. He emphasizes that understanding family firms is critical for governmental strategies. “These businesses tend to be insular, preferring old practices and favoring loyalty to co-ethnic partners, which can hinder innovation and adaptability,” he warns. “Though there are millions of family firms, they often lack the dynamism necessary for growth.”
In the ensuing phase of his research, Puri plans to explore the political behaviors as well as the investment and management strategies of family enterprises. He anticipates that larger firms more receptive to external innovations are overshadowing the growth of smaller family firms, thereby underscoring the need for governments to devise beneficial incentives for those businesses that hold the key to broader economic enhancement — especially in countries like India.
After earning his PhD from MIT, Puri envisions dedicating his academic career to studying the intersection of business and politics globally, with a particular emphasis on India. He aims to make his findings accessible to a wider audience, following in the footsteps of writers who inspired his initial interest in political economy. “I believe in disseminating knowledge for greater accessibility, which fuels my passion for teaching,” he concludes. “It’s incredibly fulfilling to introduce people to fresh perspectives through lectures and writing.”
Photo credit & article inspired by: Massachusetts Institute of Technology
