Cultural governance binds Indian diamond industry: IIMA study

File video: Surat diamond baron Govindbhai Dholakia addressing IIMA students


Cultural governance has helped the Indian diamond industry to succeed in shifting the global landscape of diamond business, says a study by Indian Institute of Management here.

Praising India’s diamond industry for being highly organised, it says the sector has its unique cultural governance, where the smaller cutting and polishing diamonds’ units have been flourishing like a “close-knit community”.

Despite little formal education, professionalism exists where verbal commitments are honoured and met, and a high order of integrity is exhibited, it said.

The study takes example of Surat- India’s Antwerp, as 11 out of every 12 diamonds set in the jewelery worldwide are polished in this city of Gujarat.

Surat manufactures 95 per cent of all the diamonds processed in the world where rough diamonds are procured from the countries like Russia, Canada, South Africa, Botswana and Australia by the Indian entrepreneurs.

“The firms in the Indian diamond industry are embedded in the so-called unorganized sector..the results of a survey interestingly suggest that they are in fact highly organized,” said the study done by K Indu Rao, Officer on Special Duty in Gujarat Technological University (GTU) and Visiting Research Scholar, University of Twente of Netherlands, for Research and Publications Committee of IIMA.

“In the Indian diamond industry, instead of using some documented strategies, structure and practices, the organizing occurs through cultural governance. In such case, members in the diamond industry align their values and beliefs in order to arrive to a common understanding of the way of doing things in their business and organization,” the study said.

“We found that the informal sector firms are not just local firms but also have global reach. They acquire diamond rough from global sources, and supply the finished diamonds to the global diamond industry,” it said.

“These informal sector firms, which have made it big on the global front, have flourished like a close-knit community.

They have accomplished it through a cultural governance where culture governs business practices,” it said.

The industry culture in the Indian diamond cutting and polishing business helps align the small, medium and large firms into a network, it said.


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