Long before “Slumdog Millionaire” won an Academy Award for Best Picture, Minnesota State Mankato colleagues Penny Herickhoff and Vicki Luoma witnessed first-hand the challenges and triumphs of life in India.
Both Herickhoff and Luoma teach business law. As part of their effort to present a global perspective, they are researching business cooperatives in India’s carpet industry. Carpets are the number one export of India and a great source of tourism. “And,” Luoma said, “to fully research the laws, we had to travel to India.”
In the relative comfort of Luoma’s campus office, the duo worked to describe the overwhelming poverty they witnessed—people without shelter huddled around open fires; a rug and chair on the side of the street serving as a dentist’s office; women in saris hauling rocks in baskets on their heads as members of a highway road crew. Judging by observation, they estimate that 20-30 percent of people in India live without any permanent shelter.
Herickhoff said, “The poverty is grinding. If you have seen “Slumdog Millionaire,” those slums are real. If you have a job, if your family has an income and you have food to eat, that is a victory.”
As crushing as the poverty is, by all accounts, life in India is much better now than it was a decade ago. In 1998, the government in India outlawed child labor—a sort of indentured servitude—in the carpet industry. Subsequent modifications to the law provide health care and education to entice families to send children to school rather than to work.
Indian culture places family at its center. More often than not, successful businesses have family roots, including Kingfisher Airlines and Tata Motors. The family co-op is a popular business model in many other cultures as well.
“If our students want to intersect internationally, they have to understand family business where it is at, whether it is large or small. And they can’t dismiss them as start-ups,” said Herickhoff.
While in India, Herickhoff and Luoma visited courts and government offices to review the history of the laws designed to eliminate child labor and improve living conditions for the poorest of the poor. In addition, the Minnesota State Mankato research team toured various carpet factory cooperatives.
In the larger cooperatives, Herickhoff and Luoma observed adults ranging in age from their mid-20s to mid-40s working at the looms. The conditions were good, and people seemed content.
Herickhoff and Luoma were also able to observe several smaller, and more common, family co-op carpet factories. The workers at the family co-ops seemed mostly to be girls younger than 18 years of age. Although it is legal for families to employ their own children, the government offers incentives—such as replacement workers, health care, and meals—for families to send these children to school.
“On average, a family of five can produce four rugs per year, earning an annual income of around $480. In contrast, one rug may sell for $5,000 in Delhi,” said Luoma.
With family business a primary delivery system for entrepreneurship in India, the government is working hard to support the model, giving people who used to be day laborers more ownership and control. The Indian government now provides raw materials as well as marketing and shipping assistance to family cooperatives. In addition, more local, government-supported markets allow families to sell their handicrafts directly.
After acting as observers of the carpet industry during their first visit, Herickhoff and Luoma plan to return and interview members of the family cooperatives. They are interested in learning whether the Indian model could be transferred to other parts of the world and hope to discover which government policies are working for the family co-ops and which are not.
“Because on their face, and I believe the intent of, the policies of the Indian government are quite progressive,” said Herickhoff.
