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Book part
Publication date: 11 November 2014

Naveen Kumar Jain, Nitin Pangarkar and Yuan Lin

Research on international experience notes its positive influence on subsequent international expansion by firms. We test this relationship in the context of the Indian

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.

Details

Emerging Market Firms in the Global Economy
Type: Book
ISBN: 978-1-78441-066-7

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Details

Emerging Market Firms in the Global Economy
Type: Book
ISBN: 978-1-78441-066-7

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Article
Publication date: 6 March 2017

Pamela Meil and Hal Salzman

Is the rise of the Indian software industry simply another Asian state-dominated industrial growth story or is India distinctive, an economy where small technology…

Abstract

Purpose

Is the rise of the Indian software industry simply another Asian state-dominated industrial growth story or is India distinctive, an economy where small technology entrepreneurs also find niches for development and can be drivers of innovation? Research has focused on the large integrated Indian and international service providers. This study examines the opportunity for growth among smaller innovative technology entrepreneurial firms. Two areas of inquiry are: What factors have been responsible for spurring growth in the Indian IT industry? What type of work is being carried out at Indian firms and is this profile changing? This paper aims to examine the emergence of technology entrepreneurs, particularly in terms of their links to multinational firms and their role and position in global value chains. The paper takes a multi-level approach to understanding development trajectories in the IT sector in India: a global value chain approach to the extent that company processes are seen in their larger networked context across organizations and an institutional approach in terms of state policies that influence the creation of infrastructure that, in turn, shapes organizational development trajectories. Additionally, it examines the role of the various actors within IT sector organizations – the workers, the managers and, in the case of the small companies in our sample, the owners – on the outcome of growth trajectories in the Indian IT sector. We find that the various levels of change and policy all contribute to the outcome in company trajectories: the dominance of multinational enterprises on the market, the entrepreneurial vision and survival strategies of returned technology expatriates, and the changing policies of the government in promoting indigenous business.

Design/methodology/approach

Qualitative research interviews; comparative case study; literature review; multi-tier analysis.

Findings

The technology entrepreneurial development in India appears to represent quite a distinctive path in terms of both firm development and broader economic development. It is focused on the IT sector, in which high skill “knowledge work” is carried out and which has been able to develop despite lack of basic infrastructure (roads and reliable electricity).

Research limitations/implications

After the opening up of the business environment to large Western multinational enterprises (MNEs), it was difficult for indigenous Indian entrepreneurs to compete in innovative product development markets. Developing such companies depended on individual risk taking, as no specific infrastructure existed for niche production. However, the knowledge base and innovation clusters did offer opportunities for obtaining contracts. The Indian entrepreneurs did have to make a lot of compromises about defining their business and the tasks they could undertake. More research is needed on the paths and development opportunities for these smaller Indian-owned firms.

Practical implications

Unique opportunities are emergent and defy easy policy prescriptions, other than precluding change that does not foreclose emergent possibilities (e.g. such as strong state controlled business development).

Social implications

Indian-owned innovative companies, although having difficulties competing with large Indian and Western MNEs, do put pressure on these MNEs to move work up the value chain, thereby providing more interesting and challenging opportunities for Indian knowledge workers.

Originality/value

This paper provides a unique company-level perspective about entrepreneurialism in the Indian software sector from the perspective of different actors in the process. It then links this company-level perspective to a larger context both in terms of trajectories of development at the macro level, as well as the role that the company’s place in multinational value chains has in its development perspectives. It gives a special insight into the motivations and obstacles facing entrepreneurs in India’s dynamic software sector.

Details

Journal of Entrepreneurship in Emerging Economies, vol. 9 no. 1
Type: Research Article
ISSN: 2053-4604

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Article
Publication date: 19 September 2016

Rajneesh Narula and Tiju Prasad Kodiyat

This paper aims to discuss the opportunities and limitations that the location-specific advantages of the home country represent for infant multinational enterprises (MNEs

Abstract

Purpose

This paper aims to discuss the opportunities and limitations that the location-specific advantages of the home country represent for infant multinational enterprises (MNEs). The systemic weaknesses of the home country can constrain the long-term competitiveness of its firms and, ultimately, the competitiveness of its MNEs. Many emerging countries have a constrained set of location-specific (L) assets from which their firms are able to develop ownership-specific assets.

Design/methodology/approach

The authors examine data for the case of India, an economy regarded as having considerable potential to expand to knowledge-intensive sectors, using a “systems of innovation” framework, merged with an analysis of L advantages.

Findings

At the macro level, India’s performance is not different from countries of similar economic structure, and its current pockets of excellence are a reflection of its L assets. The analysis suggests that the failure to foster and upgrade the L assets of emerging economies is likely to stunt the growth of their domestic firms and, ultimately, any new MNE activity in the long-term.

Research limitations/implications

In the case of India, systemic policy changes are needed to upgrade the knowledge infrastructure and institutions to support a shift in the competitive advantages to new sectors outside existing pockets of excellence. Indian firms are unlikely to be able to rely on the knowledge infrastructure of their home economy and will “exit” the Indian milieu because of weaknesses in L assets, as much as to seek markets and customers elsewhere. There will be few opportunities for new generations of firms to venture abroad from a position of strength, rather than as a means to overcome their home country disadvantages.

Originality/value

The evidence would suggest that – like other emerging economies – Indian firms are unlikely to be able to rely on the knowledge infrastructure of their home economy and are “exiting” the Indian milieu because of its weaknesses in L assets, as much as to seek markets and customers elsewhere. Most importantly, India faces a potential shortage of skilled human capital in the medium term.

Details

Multinational Business Review, vol. 24 no. 3
Type: Research Article
ISSN: 1525-383X

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Article
Publication date: 20 July 2012

Leonard Lynn, Pamela Meil and Hal Salzman

This paper seeks to explore the processes by which the offshoring of technology development to India and China by Western and Japanese multinationals has evolved from the…

Abstract

Purpose

This paper seeks to explore the processes by which the offshoring of technology development to India and China by Western and Japanese multinationals has evolved from the localization/simplification of technology for local markets to the development of advanced technology in India and China for global markets.

Design/methodology/approach

Case studies were developed based on 190 interviews conducted in China, India and several other countries. Respondents included multinational home country and offshore managers, as well as local entrepreneurs.

Findings

Rather than following carefully thought out corporate strategies, the offshoring of technology development by multinationals is more often incremental and driven by the ambitions and expectations of Chinese and Indian entrepreneurs and managers. Meanwhile “technology competition” policies proposed in the USA and elsewhere are not taking sufficient account of the processes by which technology development is being offshored.

Originality/value

Techno‐nationalistic policies designed to allow one country to win a race with others in developing and monopolizing new technologies are increasingly dysfunctional. The identification of multinationals with “home countries” continues to weaken. At the same time, technologies and technology workers are more mobile than ever before. Better policies would allow nations to seek mutual benefit through today's more globally dispersed technology development capabilities. Multinational managers in our study were not sufficiently accounting for the costs of offshoring and outsourcing technology, nor were they giving much thought to the longer term implications of their diminishing capabilities to develop or even control the development technology. More thought should be given to what aspects of technology constitute “core competencies” and which provide sustainable competitive advantage in the emerging global environment.

Details

Journal of Asia Business Studies, vol. 6 no. 2
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 7 January 2019

Indrajit Roy and Narayanan K.

This paper aims to analyse the change in performance of parent Indian firms (home effects) who have invested in overseas locations in recent times.

Abstract

Purpose

This paper aims to analyse the change in performance of parent Indian firms (home effects) who have invested in overseas locations in recent times.

Design/methodology/approach

Difference-in-difference (DiD) estimate of home effects using farm level data.

Findings

Home effects of Indian outward foreign direct investment (OFDI), in general, are insignificant. However, in the case of OFDI directed only to non-offshore financial centre (OFC), some firms did enjoy beneficial home effects with respect to turnover, current ratio and leverage ratio. In the case of OFDI directed purely to OFC locations, some of the parameters exhibited negative home effects. In the subsample of Indian OFDI directed to combination of OFC and non-OFC locations, the results show positive home effects with respect to export, operating profit margin and forex earnings; however, impact on turnover seems to be negative for all the quartiles.

Research limitations/implications

Estimation of home effects using data over longer horizon may yield robust outcome.

Practical implications

These results make a strong case to draw a distinction among OFDIs to OFC, non-OFC and combination of OFC and non-OFC locations in studying the beneficial home effects of OFDI.

Originality/value

To the authors’ knowledge, this is the first paper which estimates home effects of different groups of Indian firms (based on their investment locations and size class) using difference-in-difference estimate.

Details

Journal of Asia Business Studies, vol. 13 no. 1
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 29 April 2020

Geetika Jaiswal and Jung E. Ha-Brookshire

The aim of this study was to investigate how Multinational Enterprises (MNEs) enforce Code of Conduct (CoC) policies, as well as how they affect suppliers' motivation to…

Abstract

Purpose

The aim of this study was to investigate how Multinational Enterprises (MNEs) enforce Code of Conduct (CoC) policies, as well as how they affect suppliers' motivation to engage them in managing CoC compliance mechanisms of monitoring, enforcement and transparency in the Indian apparel industry.

Design/methodology/approach

A quantitative survey was conducted using face-to-face surveys. Overall, 210 usable data points were collected and analyzed by use of structural equation modeling.

Findings

Study findings highlighted that hard power strategies currently used by MNEs in the apparel Indian market were primarily coercive in nature. A clear power imbalance between MNEs and suppliers from India was evident. Results suggested that when MNEs attempted to use their powerful position to advance compliance goals, higher level of CoC monitoring was required and suppliers were only extrinsically motivated. Lack of intrinsic motivation in suppliers' resulted in under-developed suppliers' transparency mechanisms. Therefore, findings suggested that MNEs should use hard powers consciously considering the long-term and unintended consequences.

Originality/value

The paper proposes a buyer-supplier power-motivation interaction model that clarifies what MNEs can do to motivate apparel suppliers to implement CoCs successfully in the apparel supply chain. This relationship has not previously been empirically tested.

Details

Journal of Fashion Marketing and Management: An International Journal, vol. 24 no. 2
Type: Research Article
ISSN: 1361-2026

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Book part
Publication date: 24 June 2015

Sumon Kumar Bhaumik, Nigel Driffield and Ying Zhou

The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from factors such as economies of scale, and that they…

Abstract

The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from factors such as economies of scale, and that they internationalise, in large measure, to access technology. However, support for this framework typically comes from analysis of static data, comparing EMNEs and OECD MNEs at a point in time. Little attention is paid to their development paths in a dynamic setting. We examine these propositions directly using an approach that enables us to decompose productivity growth of firms into its components, namely, changes in scale economies, technological progress and technical efficiency. We compare Chinese MNEs with their non-MNE domestic counterparts and developed country MNEs that have operations in China. We demonstrate that Chinese MNEs continue to derive much of their productivity growth from changes in scale economies, while developed country MNEs continue to have an advantage with respect to technical progress. Both these types of MNEs have a significant advantage over Chinese non-MNE domestic firms.

Details

Emerging Economies and Multinational Enterprises
Type: Book
ISBN: 978-1-78441-740-6

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Book part
Publication date: 24 November 2017

Srishti Goyal and Vasudha Chopra

The investment development path of emerging markets’ MNEs is significantly different from the developed (TRIAD) world’s MNEs; BRIC MNEs seem to have taken a different…

Abstract

Purpose

The investment development path of emerging markets’ MNEs is significantly different from the developed (TRIAD) world’s MNEs; BRIC MNEs seem to have taken a different trajectory on account of various political and economic reasons, ranging from the ‘forms of entry’ to ‘country-specific advantages’ (Tulder, R. V. (2010). Toward a renewed stages theory for BRIC multinational enterprises? A home country bargaining approach. In K. P. Sauvant, G. McAllister, & W. A. Maschek (Eds.), Foreign direct investments from emerging markets: The challenges ahead (pp. 61–74). New York, NY: Palgrave Macmillan). Yet, some believe that in the long run the internationalization strategy of the developed world MNEs and BRIC MNEs will converge. Internationalization strategies as measured by OFDI depend on various macroeconomic determinants such as income, interest rate, openness of the economy, etc. The chapter intend to highlight, the significant difference between these two groups of countries on account of diverse political reforms towards internalization of firms, yet see if these different countries might converge.

Methodology/approach

Regression analysis examines the significance of the role of home government by testing the effect of governance indicators; that is voice and accountability, on OFDI. It further, tests for convergence of internationalization strategies of the two historically divergent groups, also, it tests convergence amongst the BRIC nations. Along with forecasting, time series analysis is also employed to examine convergence using univariate sigma convergence techniques.

Findings

Impact of voice and accountability is significant but it hinders OFDI for BRIC nations, while it promotes OFDI for TRIAD & ALL. Moreover, the analysis found the existence of convergence, that is BRIC will catch up with TRIAD, but though convergence exists amongst BRIC if we take a long span of time (45 years), it is absent in short span of time (19 years), as lately BRIC have shown divergent tendency.

Research limitations/implications

Small sample size in multivariate regression analysis. Also, the governance indicator, that is voice and accountability, is perception based, and missing gaps in data for governance indicator is filled using interpolation.

Originality/value

Empirically testing the convergence of BRIC nations with the developed world. A univariate time series analysis is undertaken to understand each country’s heterogeneous FDI outflows and to address the research gap in existing forecasting literature. In addition, the comparison specifically between the Emerging Market Economies, that is the BRIC nations and the developed world gives some useful insights. This chapter ascertains the impact of governance indicator on OFDI; empirical literature shows such analysis for IFDI & FDI, but OFDI is rarely been dealt with.

Details

The Challenge of Bric Multinationals
Type: Book
ISBN: 978-1-78635-350-4

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Article
Publication date: 27 February 2020

Suranjan Bhattacheryay

The purpose of the study is to heighten intrinsic advantages, dis-advantages, being enjoyed by emerging country firms and the motivational factors that influence…

Abstract

Purpose

The purpose of the study is to heighten intrinsic advantages, dis-advantages, being enjoyed by emerging country firms and the motivational factors that influence multinational enterprises (MNEs) to establish long-lasting relationship with emerging economies. The study also highlights the steps initiated by India by executing reform friendly foreign direct investment policy to attract foreign investments.

Design/methodology/approach

The study is descriptive in nature, based on secondary data, sourced from various reports of India Government and the Central Bank of India.

Findings

The Indian economy has undergone profound and substantial liberalization and made sweeping reforms in most of its sectors besides adopting internationalization policy agendas to upkeep their domestic firms in “going global”. However, India needs to amend the existing restrictive labour and land laws besides providing efficient employable workforce. India further needs a less cash economy, which ultimately marches into digitized credit system to build India as one of the best attractive countries in the eyes of global investors.

Research limitations/implications

As the study is based on secondary data, it may be general, in explicit and may not be perfect in concluding decision.

Social implications

MNEs play a major force in driving globalization of the world economy. However, MNEs face a variety of complex and multiple challenges in establishing strategic control over emerging economies. In spite of all odds, MNEs generate and capture value to host country firms by applying unique business models besides combining with or buying a foreign business.

Originality/value

Investment flows to India for the past 15 years (2005-2019) are critically analysed to justify research questions. Further, in the literature “Preparedness of India”, a lot of new interesting insights, incorporated.

Details

Journal of Financial Economic Policy, vol. 12 no. 4
Type: Research Article
ISSN: 1757-6385

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