Between 1890 and 1938 Japan experienced rapid economic growth. India stagnated. This national divergence was reflected in the performance of both countries' leading modern industiy, cotton textiles. The parallels between national and industry performance suggest the problems of the Indian textile industry may have been those of India as a whole. Weak management is widely blamed for poor performance in textiles. An analysis of managerial decisions in Bombay shows, however, that on all measurable dimensions Indian managers performed as well as they could. The problem instead was one factor they could not change—the effort levels of Indian workers.