Subcontracting and enterprise development in India's informal manufacturing sector

Abstract

PurposeSubcontracting is a crucial cause behind the simultaneous existence of formal and informal entrepreneurship in India. This article aims to provide an over-time comparative analysis between the subcontracted and the non-subcontracted enterprises within the informal sector. Further, it also brings to fore the contribution of subcontracting towards ensuring sustainability of the informal enterprises.Design/methodology/approachBy constructing a panel data from two rounds of NSS Unincorporated Enterprise Survey Data (2010 and 2015), and employing a PSM-DID method, considering labour productivity and net retained earnings as two critical indicators of growth and development of the informal sector firms, this study has made some broad claims regarding the differences in immediate and long run performances between the subcontracted and non-subcontracted informal sector enterprises in India.FindingsThis study finds that subcontracted enterprises have not only been performing at a much lower level than the non-subcontracted enterprises, they are also growing much slowly than their counterparts. However, it has been observed that for the establishments, who are capital abundant and also have a larger production capacity, subcontracting is showing the prospect for deriving sustainable gains.Originality/valueThis article contributes to the existing literature in the following two ways. Firstly, it provides an over-time comparative analysis between the subcontracted and the non-subcontracted enterprises within the informal sector. Secondly, it brings to fore the contribution of subcontracting towards ensuring sustainability of the informal enterprises.

An operating cost minimization model for buyer-vendor coordination batch system with breakdowns, scrap, overtime, and an external source

“…Lastly, they employed the utility interval method and provided sensitivity analyses to assess their results and measure their approaches' robustness with a real partner selection case from the Iranian factory. Other studies (Golden and Wiens-Tuers, 2008;Assid et al, 2015;Chiu et al, 2020;Chiu et al, 2021;Cornelius et al, 2021;Chiu et al, 2022;Porto et al, 2022;Chiu et al, 2023;Shekar and Nataraj 2023) discovered the effect of different subcontracting and overtime/output-increasing strategies on reducing batch runtime of modern manufacturing firms' operations and management.…”