Nature of the Firm,Relations of Exchange,and Objective of Production: A Field-Based Study of Micro Firms in India

Abstract

This article analyses the nature of firms, relations of exchange, and the objective of production of micro firms engaged in two types of manufacturing activities operating across West Bengal, India: handloom weaving and forging fabrication. Our primary data-based analysis shows that while the handloom is an entirely household labor-based activity, forging fabrication significantly uses hired labor. However, these micro firms are intrinsically non-capitalistic, having collaboration amongst the intra-firm actors—with a few exceptions. In the market, there are intermediaries, especially in the handloom industry, whereas in forging fabrication, firms operate independently. We find that while hierarchy does exist between firms and market agents, collaborative arrangements are also present, regardless of the pattern of market linkages. Despite the constraint of limited surplus needed for the firm’s growth, the willingness for expansion is evident. However, barring a few micro firms exhibiting tendencies toward accumulation, the majority produce to improve their living conditions, a typical characteristic of the “need economy”.

JEL Codes: D22, L22, 012, 017, P00