Studying the 1200 samples of M&A deals from the year 2000-2017, revealed that caste plays a dominant role in India for sealing business deals as compared to profits.
According to a study conducted by IIM Bangalore, a large number of mergers and acquisitions in India (M&As) take place between businesses/companies whose directors are from the same caste group.
The study further revealed that around 50% of the cases, board members with a higher representation of Brahmins had opted for mergers with businesses whose boards members were also dominated by the members of the same community or caste.
The IIM Bangalore paper titled - Firms of a Feather Merge Together: Cultural Proximity and Firms Outcome revealed that caste bias in the corporate world was also common in other castes such as Shudra, Vaishyas, Kshatriya etc. Castes within the castes (Jatis) also had a similar pattern.
The study also found that caste plays a significant role in sealing business deals, sometimes at the cost of a profitable outcome.
The IIM Bangalore study further revealed that merging with businesses which have a similar caste representation can be harmful to the businesses and its future prospects. The value generation and target in the same caste mergers are lower as compared to other deals. The negotiation between the firms or the time taken to complete the deal is also lower.
However, the mergers between the same caste groups are beneficial on the personal front. The directors who belong to the dominant/upper castes of the board get to enjoy higher compensation. An average 400% increase in comparison to 200% of directors belonging to a different caste.