Indian CEOs in America are a knock on of India’s specific economic strengths

What are the broader takeaways from the apparent success of India trained CEOs in the US ? The usual Darwinian (best and brightest) or ‘sheer population’ arguments are attractive but dont withstand scrutiny. A broader explanation is that India has been disproportionately successful in producing corporate leaders (much like certain populations in the past were successful at producing generals or merchants), and due to trade and immigration links, some of its success has overflowed to the US as well.

Since 1984, India’s stock exchange has provided returns of an astounding 10,000%. Even the Dow Jones (3700%) has returned a fraction of the BSE’s returns.

This is a nearly forty year period, enough to average over most bear arguments. It spans the fall of the Berlin Wall, Kuwait War, 9/11 attacks, the Great Recession, the arrival of the internet, AI and smartphones. Given India’s strictly mediocre economic fundamentals in the 1980s, the success of listed Indian companies over an extended duration points to successful resource and work management.

Corporate India has played a much bigger role in India’s economic expansion than corporate China in China’s meteoric rise. The US tech sector has reaped an unanticipated reward of this fact. Globally though, the much more important economic implication is that India’s GDP rise is likely to be felt via private corporations, in contrast to China’s SOE heavy BRI.

39 thoughts on “Indian CEOs in America are a knock on of India’s specific economic strengths”

  1. The usual Darwinian (best and brightest) or ‘sheer population’ arguments are attractive but dont withstand scrutiny.

    Why do you think these do not withstand scrutiny?

    1. The graph of stock returns over 4 decades negates the ‘best and brightest’ argument. It is not that the US selected Indian managers are successful once transplanted. In general, Indian managers have been successful, whether in India or the US. If anything, conditions for running a successful business have been harder in India than the US.

      Regarding population, Brahmins and Banias together make up less than 10% of India’s population (less than half of US), but they make up a disproportionate number of top executives, whether in India or in US tech. The number of successful Indian managers in the US comfortably exceeds Chinese managers, despite the Chinese having a longer and larger history of migration to the US.

    2. (a) Numbers see point (e) too.
      (b) India sucks (pollution, children-education, infra, government, the usual…).
      (c) Hard work, picking monetary success over other pursuits.
      (d) Make zero noise and brown-card against cancel-culture lynch mod.
      (e) Single minded focus on tech-tech-tech. Hardly any Indian CEOs in Media, Fashion, Retail, Construction…

      Smartest Chinese people are in China doing things for China. Smartest Indian people are registering their companies in Canada and Singapore.

      1. “Smartest Chinese people are in China doing things for China.”

        Why do Chinese companies not make profits if the smartest Chinese are working there ?

  2. Indian elites amply produce natural bureaucrats, technocrats and “thought leaders” (mckinsey types). The large org CEO has evolved such that the elite engineering student (IIT) + IIM+ HBS/Wharton is the perfect formula to groom them.

    1. This argument seems purely teleological.

      Before independence, the Indian elites were being steered in the direction of law and administration. After independence, a concerted effort was made towards engineering and management. A surfeit of engineering and management workforce was produced, which was directed mostly towards India’s economic expansion. An overflow also found success in the US, which is highly visible and so dominates analyses.

      1. @vikram, the IIT grads in the US are much more than an overflow. Its a relatively recent thing that they are finding ample opportunities in India, but look at one of the graduating classes from the late 60’s or 70’s, the absolute entirety was transplanted to the US and ended up at xerox, IBM, bell, ect.
        Also, regarding prowess navigating bureaucracies, the example of the Raj was well known, but it also seems that the French also saw Indians as talented administrators and they were specifically recruited to manage affairs in Indochina. Not conclusive to any point, but the pattern might be worth further consideration.
        Finally, as an ind-american, during my undergrad experience at a university that could be said to churn out its fair share of business leaders, the most academically distinguished whites had absolutely zero interest in wall st. and only a minor inclination towards silicon valley, even the STEM guys. They are now academics, work for DARPA, lead research teams in private companies or work in media ect if they weren’t STEM. The south-asians, particularly engineers, made a bee line to wall st, and compared to other engineers weren’t geeks.

        1. This has to do with Indian mindset. Careers are picked less on a passion grounds than a practical grounds. Therefore, more diverse personalities end up in certain fields. Whereas for many other groups, so called “passion” is the driver. The end result is that non-Indian groups have often the classic streotypical personalities for a career. Whereas the Indians, who may not always share the same academic passion for a principle, rather seeing it as a means to an end of material success, often have a more diverse set of personalities, so of which are those predisposing to CEO qualities in proportions greater than in other groups.

          1. @thewarlock, due to the sub-par performance of the Indian economy under British rule, India has been a capital scarce economy for most of the last 70 years. We were hardly seen as a destination for investment and innovation. Such scarcity economic conditions produce attitudes that prioritize survival (income) over expression (passion). Within India, these attitudes have changed as more investment has come in.

            It is possible that the diaspora’s economic worldview has remained ossified in the 1950-1990 era, much like its social outlook seems out of touch to so many urban Indians today. Think about the number of unicorns created by Indians in India, whereas Indian-Americans 20% earn less than their immigrant parents (tinyurl.com/7kxny2fu).

          2. Yeah scarcity mindset is losing steam. New NRI generation way more passion focused and new Urban India I can believe too,especially among my cousins.

        2. @girmit, IIT grads are a fraction of India’s overall engineering and management workforce generation. One estimate puts the total number of IIT grads in the USA at not more than 30,000. Compare this to the total Indian American population of nearly 4 million. The vast majority of Indian engineers and managers in the US are not from any IIT.

          Having had an inside view of graduate admissions processes, I can say that a lot of the IIT to US university to top corporate pipeline happens due to recruitment strategies. One university department I know of got a disproportionate number of folks from IIT Madras, because they trusted the faculty there. IIT Delhi was not as highly thought of.

          Overall, the big story here is India’s industrial and technological expansion since 1950. Even without counting the software industry, we have moved from around the 16-20 position to the top 5 today. Embedded in this is the story of Indians moving to the US to further industrial expansion there. And within this layer, is the story of specific IITs and how they form catchments for particular US universities and companies.

          The latter two layers are nested inside the first one, but get talked about more because whatever happens in the West is more visible.

  3. Balaji Srinivasan tweets similar thoughts about India vs China.

    Although some commentators have observed that Indians do well at steering a company after it has left its “innovation” phase to emerge into a pure “steering” phase.

    Elon Musk is tweeting a lot of memes about Jack and Parag, especially one with the Stalin/Underling disappearing sequence – implying that Parag was chosen for qualities that are opposite to Jack. More a consolidator rather than a radical.

    “Survival of the weakest” paradigm might also play a role in the American context – as the American boardroom is fairly heavy with intrigue and battles. Frequently “the second best man” turns up on top as he is the compromise candidate. Specifically Board appointed CEOs are a perfect evolution from “group thinking games”.

    Very hard to see Elon Musk/Steve Jobs type personalities emerging from the Indian cultural context – that really turn the heat on shareholder value maximisation.

    Indian companies performing on the BSE are a really really different breed. Their managers aren’t remotely transplantable to the American jungle.

    1. Balaji Srinivasan sounds like someone who would post on Indian quora on ‘Why Cholas were better than Mughals’ or something similar.

      1. I think a fair argument can be made that the Cholas (proxy for South Indian empires) were better than the Mughals. Think of their successor states. The Mughal successor states include Pakistan, Bangladesh. South Indian successor states are Tamil Nadu, Karnataka and Andhra, all well industrialized with low murder rates and relatively higher public participation for women.

        Acemoglu identified the Mughal Empire as an extractive, rent seeking one. The elites the Mughals produced tend to be position seekers, and not the industrious, innovative kind. Think about the Muhajirs in Karachi versus the Gujaratis in Mumbai.

        1. “South Indian successor states are Tamil Nadu, Karnataka and Andhra”

          If u are thinking a S-Indian super-state then Vijaynagar is a better choice than Cholas. But then Vijaynagar was not a Tamizh enterprise so wouldn’t be pushed by Dravidians.

          1. Vijaynagar vs Mughal administrative setup as a precursor to the more advanced industrialization of South India vs N. India/Pak/Bangladesh is a very valid hypothesis to test.

        2. How exactly are Pakistan and Bangladesh successor states to the Mughals? Their political authority over both regions ended a good two centuries before independence. If they had a successor state it was Hyderabad which was founded by a former Mughal grand vizier and maintained itself as an independent power until Operation Polo.

          Besides which given Bangladesh’s GDP per capita is now higher than India’s perhaps it is not much of a relative failure at all. The divergent paths of Bangladesh, India and Pakistan are down to policies pursued since independence, not what the Mughals did in 1650 or whatever.

          Acemoglu’s analysis was as mutton-headed as the rest of his thesis. Bengal became a manufacturing superpower thanks to Mughal jungle clearance and development of the region plus chasing off Portuguese slavers. The impetus for the conquest of Bengal by the British was to prevent all their silver being drained by purchases of Bengali textiles. Once they took over they paid what they felt like, i.e. not much.

          1. I mean if we take Hyderabad as the successor state of Mughals, even their i fail to see how it can be classified as failure.

          2. I am thinking of successor state in terms of elite psychology, specifically attitudes towards economics. The elites the Mughals produced were aristocrats, reliant on position and rent extraction for their wealth. Even today, Muhajir’s in Karachi are more likely to assert their status via a ‘ahl-e-zaban’ type argument than stewardship of large, nationally important businesses.

          3. @Vikram

            Muhajirs don’t have significant political power or clout outside Karachi. No one remembers how the Mughals governed and they had no particular impact on shaping the attitudes of local elites. Bangladesh is largely ethnically and linguistically homogeneous which means focusing on improving human development, economic growth etc has a lot more buy-in. Pakistan is far more diverse and what you get is largely tribal competition for spoils in which the army is the most powerful tribe. Added to that is the usual South Asian attitude of brutal treatment of the weak and poor which likely long predates any Turkic invasions.

          4. @Vikram
            Muhajirs are probably the only ethnic group in Pakistan that by and large are not rent seekers on the state. Read Anatol Lieven’s: ”Pakistan: A hard country”, where he has described the wide network of patronage that the populations residing in each province extract from the state institutions (elected officials, judges, police and even the army). Muhajirs, have been lacking this state patronage since 1958 and yet still are the most successful ethnic group (materially speaking) whether in Pakistan or in their diaspora abroad (GCC, UK, USA, Canada etc).
            So what does this prove? weird theories on North vs South India are just that: weird. Not sure why the Southies are flexing about history, weren’t they poorer than the North before 1947

    2. “Their managers aren’t remotely transplantable to the American jungle.”

      Indian L1 transfers do well in the US. Anecdotally, one cousin of mine who was a manager in India for four years did brilliantly at a major corporation in the UK rising to Vice President there.

      If anything, its the opposite which seems harder. Vishal Sikka did not last long at Infosys.

    3. Counterpoint to the steering after innovative stage is Satya Nadella. Just look at MS share price after his takeover as CEO.

  4. Social skills. Razib Khan has highlighted research that even adjusting for work skills, Indians get promoted 4X more often than East Asians and about 2X more than whites in the US.

    Is some of that nepotism? Maybe, but I don’t think that is an satisfactory answer. For whatever reason, Indians do office politics better. Being good at that isn’t enough without skills but if you have two candidates about equal in skill but one is good at office politics/social stuff and the other isn’t then it’s clear who wins.

    1. If it is social skills, we still need to get at the root of why Indians would have better social skills than Europeans and East Asians.

      One possible explanation is the greater role of religious/spiritual institutions in India naturally makes us more empathetic on a personal basis. In CEO survey counts, Catholics, Hindus and Jews are over represented, while not a single CEO reported being agnostic.

      See Table 1 here: https://core.ac.uk/download/pdf/217155978.pdf

  5. You would have thought immigrant Chinese would have had a big impact but the general lack of English fluency likely holds them back a lot and they probably find better opportunities for themselves back in China.

  6. I mean if we take Hyderabad as the successor state of Mughals, even their i fail to see how it can be classified as failure.
    responding to saurav,
    there are districts of karnataka (gulbarga, bijapur) which were parts of nizam rule. there are still called hyderbad-karnataka. these are on of the poorest in karnataka and see large scale migration.
    this is also similar to latur, ichalakaranji etc in maharastra. very backward compare to mysore and peshwa kingdoms.

    1. Turkic rule does seem to correspond to chronic under investment in education across the subcontinent.

    2. @brown
      I’ve tried to draw the same correlations myself but still wonder if we are omitting some cofounding factors, most importantly, climate/ecology. Arid interior deccan tracts correspond to a specific kind of agriculture that couldn’t be more different than the malnad and coastal areas. The former might correlate with less female empowerment, something that is a developmental advantage. It would help if we compared two arid regions like Gulbarga to Chitradurga (but even they have non-trivial differences).
      Regarding the examples you gave, Bijapur and Ichalakaraji were both under Peshwa control and later the Bombay presidency, it is Latur and Gulbarga that were both under Nizami control. More land revenue reforms under that former if i understand correctly.

  7. @ Ali Chaudhary and S. Qureishi,

    Of course, the Muhajirs have been outdone in rent seeking by the locals. They simply dont have the numbers or the mystique. I think they severely underestimated the racialized nature of identity formation amongst Sindhi, Pashtuns and Punjabi peasantry. But they did not let their early hold pass without putting Karachi through a lot of violence.

    It is possible that if the Muhajirs had more visible Turkish/Persian ancestry, they would continue to be top dog in Pakistan.

    1. Or.. Occams razor: a better explanation is that muhajirs are not rent seekers so you need to refine your theory that the Turko Persian elite in Northern India was exclusively rent seeking. Muhajir immigrants abroad are highly successful so they have not only thrived in Pakistan but also abroad.

      1. Muhajir entitlement to government positions goes back to Syed Ahmed and the opposition to any role for Hindi as an official language in the United Provinces. Even accepting Hindi as an additional official language was not acceptable to them. Later in Pakistan, they resented Sindhis getting a proportionate share of positions even in the Sindh government. They rioted when Sindhi was made an official language in Sindh.

        1. @Vikram

          Syed Ahmad Khan was well aware he was a Pakhtun, not sure how you are linking him to the Muhajirs. The proponents of Hindi using the Devanagari script wanted Urdu (effectively Hindi in Persian script) to be removed as an official language. They did not argue for both to be permitted. Even Gandhi thought that caused unnecessary communal division.

          Muhajirs objecting to Sindhi is another example of the ethnic tensions which are always bubbling away in Pakistan.

          1. Also Turco-Persian ancestry is not particularly relevant in the hierarchy now. The past four chiefs of army staff in Pakistan, the most powerful man in the country, have been Jatt, Rajput, Jatt and Syed Muhajir.

        2. Ok seems like you are missing some facts:

          1) The riots in Sindh were caused because Sindhi language was made as the ”sole” official language, which for one was entirely impractical, and second it basically meant that all muhajir civil servants in Sindh (constituting the majority) would be replaced overnight with Sindhis. The entire scheme was completely impractical, let alone targeted at a specific community. Then Bhutto compromised and allowed both Urdu and Sindhi as official languages. To this day, both languages are taught in Sindh’s schools till matric.

          2) Hindi and Urdu were same languages in the 19th century (including their high vocabulary), the difference then was in the script only. Historically, Hindi was written in the Persian Nastaliq script in official documents, which the contemporary educated Hindus knew as well (due to Farsi, and then Urdu being the official language originally in these provinces), however the reverse was not true. Basically wanting the Devanagari script to replace the Nastaliq script was an attempt by the Hindu elite to replace the Muslim elite in the new British era, since after 1857, the British put the blame of the rebellion squarely on the Muslim elite and wanted to punish them. It was an opportunistic move, which divided the language & created woulds that festered and resulted in 1947.

          in both examples, you will see that the party that was attempting to ‘rent seek’ was the opposite party.

          1. The Sindh bill clearly mentioned no prejudice to the status of the national language Urdu even initially. But this accommodation was not acceptable to the Muhajirs, who rioted for giving Urdu the same status as Sindhi even at the provincial level. And even this was followed by decades of Muhajir violence in Karachi.

            If Hindi speakers were rent seekers, they would be rioting to give Hindi the same status as Marathi in Maharashtra. That nothing like this has even been suggested tells you how different their attitudes were to the Urdu Ashrafis. Historically, making Devanagari the official script in UP was logical since thats what the majority of primary schools taught. The majority identified with it. This is democracy, not rent seeking.

          2. //The Sindh bill clearly mentioned no prejudice to the status of the national language Urdu even initially. //

            A provincial bill cannot decide national issues like the determination of a ‘national’ language. So that is a moot point.

            //who rioted for giving Urdu the same status as Sindhi even at the provincial level.//

            Which is the correct thing to do, since making Sindhi ***sole*** official language in a province where an overwhelming majority of civil servants were Urdu speakers and the national language was Urdu, was simply a rent seeking power move that sought to target and displace one community. A joint official status was therefore the correct move.

            //And even this was followed by decades of Muhajir violence in Karachi.//

            Unfortunately, I think you know very little about this topic so it’s a bit fruitless to argue here.

            //Historically, making Devanagari the official script in UP was logical since thats what the majority of primary schools taught.//

            Are you putting the cart before the horse? This is simply not true in 1857 or even in 1900. Primary schools were almost non-existent, and most learned people wrote in Nastaliq, not Devanagari if they were not learning English.

            This is an east Indian company coin minted in 1835

            https://i.etsystatic.com/11657529/r/il/2c39ac/3432986776/il_1140xN.3432986776_3u7m.jpg

            It has only two scripts, latin and nastaliq.

            After 1857, the British dropped Nastaliq and only retained English

            https://images.vcoins.com/product_image/55/F/6/Fb66j5QB2sM4a29DTk7R9YtQZC8n3t.jpg

            But Nastaliq made a reentry by 1904, and in 1918, you still only see one script

            https://i.ebayimg.com/images/g/sxwAAOSwTNFfP-ve/s-l1600.jpg

            This changed by 1940 where both devanagari and nastaliq were represented on the coin, representing the successful split of the language.

            https://i.ebayimg.com/images/g/CX8AAOSwZUNf0zMv/s-l1600.jpg

            ——–

            As I said, I think you should reevaluate your position and readjust your theories.

          3. This is simply not true in 1857 or even in 1900. Primary schools were almost non-existent, and most learned people wrote in Nastaliq, not Devanagari if they were not learning English.

            This is data from the Agra district of the erstwhile NWP in the mid 1840s,
            “Hindi schools (128) outnumbered all the rest put together. …. A quarter of the Hindi schools included Sanskrit in their curriculum, the great majority taught simple arithmetic, the keeping of agricultural or commercial accounts, and the reading and writing of the Devanagari script along with its cursive variants Kaithi and Mahajani.”

            http://www.columbia.edu/itc/mealac/pritchett/00urduhindilinks/king/04_chapter.pdf

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