When Culture Governs Business Practice: A Look at the Indian Diamond Cutting and Polishing Industry

Abstract

As informal firms in emerging markets are expanding their role in global supply chains, managers of formal multinational organizations are increasingly relying on their services. Yet, little is known about the organizational aspects of enterprises in the informal sector. An investigation of informal firms engaged in the cutting and polishing of diamonds (CPD) in Surat, India, the world's hub of diamond manufacturing, reveals that in the absence of well-defined strategies, structures, and processes, the intangible aspect of organizing—specifically, organizational culture—governs business practices. Despite the strong clan-like orientation of these firms and a culture focused on loyalty, trust, team work, and consensus, the study found evidence of hierarchical characteristics and market-driven leadership. Coupled with insightful observations of the overall Indian CPD sector, these findings can help guide managers in planning strategies for effective partnerships with informal firms, regardless of their industry.

Keywords: india, diamond industry, culture, emerging markets