Do Service Firms Prefer Domestic Expansion despite Prior International Experience: The Case of Indian Software MNEs

Abstract

Purpose

Research on international experience notes its positive influence on subsequent international expansion by firms. We test this relationship in the context of the Indian software industry whose offerings, unlike many other services, are storable implying that delivery can be separated from production.

Design/methodology/approach

We analyzed the domestic expansion of a sample of publicly listed Indian software firms over the period 2000–2009 with help of Poisson regression.

Findings

We find that even internationally experienced Indian software firms might prefer to expand domestically because of limited financial and managerial resources and concerns about diluting their cost advantage. The storable and separable nature of software services will support this strategy of serving clients remotely. The domestic expansion of assets will, however, be slower for firms with the highest level of industry accreditation. It will also be slower if there are institutional pressures in the form of rivals locating development centers near clients in developed countries.

Originality/value

Our results demonstrate that international experience alone is not sufficient for firms to expand overseas.

Citation

Jain, N.K., Pangarkar, N. and Lin, Y. (2014), "Do Service Firms Prefer Domestic Expansion despite Prior International Experience: The Case of Indian Software MNEs", Emerging Market Firms in the Global Economy (International Finance Review, Vol. 15), Emerald Group Publishing Limited, Leeds, pp. 181-206. https://doi.org/10.1108/S1569-376720140000015008