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1 Reflections on comparing China and India1
Tarun Khanna
It’s a privilege to have the opportunity in this essay to reflect on two decades of comparative scholarship on the trajectories of modern China and India, with a lens that emphasizes the actions of individual entrepreneurs in these very different milieus.
I began this comparative exercise in the mid-1990s when I first began to travel to China. Of course, India was always familiar to me as the country of my birth and adolescence. In 2003, I published my first piece comparing the two countries, with my colleague Huang Yasheng (now at MIT). That beginning propelled me to explore the comparison in the years to come, a saga that remains ongoing (Huang and Khanna 2003). Harvard University, and Harvard Business School (HBS) in particular, has provided a salubrious platform through which to indulge in this comparison. Fortunately for me, the university has come to respect a variety of forms of intellectual inquiry, as practiced by those steeped in its myriad scholarly traditions. This open-mindedness is, ultimately, the precondition needed to achieve a full understanding of complex phenomena.
Comparisons of China and India have become something of a cottage industry these days, though when I began, I was aware of but a few works. Harold Isaacs’ book, Scratches on my Mind, exploring why Americans knew so much more about China than they did about India, was particularly instructive to me (Isaacs 1958). The economist Angus Maddison’s estimates of the contribution of the two countries to world Gross Domestic Product (GDP) were in the academic air, so to speak. Of course, even outside the academy, individuals were prone to compare China and India. Think also of John F. Kennedy’s determination, as far back as 1959, to ensure that India won what he characterized as a “race” with China (Kennedy 1959). Of course, if one wants to go further back, one must at least mention Max Weber’s (1951, 1958) explorations of religion in China and India in his celebrated work The Protestant Ethic to stress-test the boundary conditions of his thesis on Protestantism and the emergence of proto capitalism in the US.2
In recent years, there have been many new efforts. In 2012, the political economist Pranab Bardhan (2012) wrote his own comparative study, Awakening Giants, Feet of Clay, four years after I published my book, Billions of Entrepreneurs (Khanna 2008). The last year alone has seen two edited volumes, one by Prasenjit Duara and Elizabeth Perry (2018), scholars of Chinese history, and another by a historian of China, Benjamin Elman, and a scholar of Sanskrit, Sheldon Pollock (2018). Indeed, as I write this, my colleague Michael Szonyi, also a historian of China, and I are editing an interdisciplinary volume on meritocracy as an organizing principle of Chinese and Indian societies (see The Lakshmi Mittal and Family South Asia Institute 2018b).
But my task here is not to add to this comparison. Rather it is to reflect on what I’ve learned over more than two decades by the act of comparing. I do this by first asking, “Why compare?” I then share my own emergent approach to this comparison, emphasizing my rather non-traditional immersion in the world of practice alongside my scholarly endeavors, as a way of honing insights. After all, as the preeminent social psychologist Kurt Lewin (1951) said, “There is nothing so practical as a good theory.” Finally, I reflect on what I feel has, or has not, changed in the past two decades, including things that I think I got right and those that I did not.
So, onward, without further ado.
In all forms of science, we run controlled experiments, typically guided by theory. So, what does one do when one is interested in the evolution of a society, writ large, where controlled experiments of the sort one encounters in laboratories are infeasible? Of course, we can study aspects of society’s evolution and aggregate insights over time from such narrower-but-precise studies of different parts thereof. But what of the society as an ensemble?
It seemed to me, when I became interested in the role that entrepreneurs played in the process of economic and social development in the mid-to-late 1990s, that it would be expedient, and perhaps necessary, to find a geographic setting to anchor my scholarship. India seemed logical as my country of origin and one with which I remained intimately familiar—but I would need to find one or more comparisons. Without counterfactuals—the “what-if” generators—the descriptive study of entrepreneurs in India appeared to me to risk becoming unmoored.3
I picked contemporary China by reasoning that it, along with India, constituted two large, populous, proximate Asian countries with civilizational histories that had suffered the depredations of European powers. They had emerged in their modern nation-state forms roughly contemporaneously—1949 in the case of the People’s Republic of China and 1947 in the case of India—and yet had embarked on quite radically different development paths reasonably soon thereafter. The comparison seemed intriguing enough to me. Of course, at a practical level, it didn’t hurt that Harvard Business School had started running an executive education program—Managing Global Opportunities—which took executives interested in both China and India to those countries and then met for a synthetic experience in Singapore, affording them a means to begin to engage with these countries. It turns out that our teaching program wasn’t particularly salient in the long run, but it did provide a fillip to my nascent effort.
Another aspect of scholarship in the pure sciences is the value placed on description. Yet, several social sciences—certainly economics, the social science with which I am most familiar—place much less value on description than on formal hypotheses formulation and their attempted refutation.4 In fact, description is sometimes a bit of a stepchild of several forms of scholarship. I cannot imagine a more intellectually retrograde position for the academy to embrace. How can theory be informed by anything other than rich description? I’ve always resisted this theory-first “wisdom” in my field, choosing instead to present description as a way to generate hypotheses (so as not to appear wantonly contrary). So, my immersion-via-much-travel into China and India was, for me, a latecomer to this area of research, a common-sense way to start.
Perhaps reminiscing about my colleagues’ reactions when I started is also appropriate, not to highlight any individuals, but rather as a summary statistic, perhaps, of the mainstream response, with no ostensibly direct path-to-publication in my field! Other than some risk-embracing academics fairly well-advanced in their fields, most folks advised me, in their perception of my best interest, not to embark on this folly, but instead to stay true to my preexisting and what they characterized as promising program of research (game theoretic models applied to understand competition between technologies). Some of them explicitly thought that studying China and India was a colossal waste of time and articulated this view without mincing words. After all, these weren’t exactly cutting-edge societies in the vanguard of advance. They were poorer societies trying to make up for lost time, or so the thinking went; sooner or later, they’d understand that institutional imitation of the “advanced” West was the way to go, a process which the charitable West would help catalyze. So why study something that is, per that worldview, an anachronism? They thought my project was at best misguided and at worst downright silly.
It must also be said that special skepticism was reserved for studying India, which was seen as a true backwater. At least China, by the mid-1990s, had begun to emerge as economically vibrant, and some scholarship in the social sciences had attempted to put forward an internal logic for its underlying reform process.
One evening, after a member of the club of the great-and-good had delivered such a sobering response to me, I remember now recalling Ozymandias, the Shelley sonnet published in 1818, which describes a traveler encountering a statue in the desert (remember Ozymandias was the Greek name for an Egyptian pharaoh). The inscription in the time-ravaged statue reads:
My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!
The obvious decline of a probably once-grand symbol of a once-grand king is a parable on the kind of hubris I felt was displayed by some of my well-intentioned but discouraging colleagues. I was also reminded of a scholar’s characterization of the transition from the predominance of Rome to the disorder that came after: “Un grand destin commence, un grand destin s’acheve.” If, in fact, Asia—of which China and India were no small part—were to emerge, it would, to my mind, count as the transition from one destiny to another.5 So, I determined that I too would transition, leaving behind my game-theoretic, applied mathematical past and embracing an empirical study of China and India for which I had no formal training.
My comparison of the roles that entrepreneurs played in shaping modern China and India emerged through a series of overlapping efforts, unfolding over the years. I think of this a bit like painting on a canvas, one brush stroke at a time.
The first project on which I embarked was an inquiry into an empirical anomaly that I encountered while teaching in India. Among empirical economists, and in business schools, there was much credence given to homilies directed at managers and entrepreneurs like “stick to your knitting” and value the “core competence of the corporation,”—that is, an admonition not to be excessively spread out in the range of enterprises with which one is engaged. This was of course based on some decades of empirical work, largely set in the US and a bit in other OECD (Organization for Economic Co-operation and Development) countries, which argued that whatever efficiency one could achieve via diversifying into different areas could usually be achieved more effectively by investing through the market in multiple entities, each focused on one sharply delimited area of activity. Of course, this presumed the existence of a market. In India, my colleague Krishna Palepu and I observed that the ability to deploy capital thus was compromised by the rudimentary state of the financial markets—we coined the term “institutional void” to describe the paucity of sp...
