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Management International Review
Erschienen in: Management International Review 2/2015

01.04.2015 | Guest Editors' Introduction

Leveraging India: Global Interconnectedness and Locational Competitive Advantage

verfasst von: Farok J. Contractor, Vikas Kumar, Charles Dhanaraj

Erschienen in: Management International Review | Ausgabe 2/2015

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Abstract

This paper reviews India’s place in the international economy by identifying areas of its comparative advantage, characteristics of the Indian market and institutional environment, capabilities of Indian companies as global players, India’s human resource base and demographics, and industry and knowledge clusters which already are, or have the potential to become, globally competitive. Drawbacks, such as labor laws, inadequate infrastructure, and the less than complete participation of women, that currently constrain the development of the Indian market and companies in India, are also alluded to. A later section summarizes the other papers in this special issue. We conclude with recommendations for future economic policies in terms of which portions of the value chain India may emphasize, to best utilize its competitive strengths in international business.
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Fußnoten
1
The distinction between natural endowments or comparative advantage of a nation, and a created advantage, is a matter of historical timing. Indian entrepreneurial and administrative skills go back into pre-history, exhibited in international trade links between India, Rome, China and Southeast Asia that go back at least two millennia (Thapar 2002). By contrast, the formation of the IT cluster in Bangalore and other Indian cities dates mainly from the 1990s (Lorenzen and Mudambi 2013).
 
2
While India’s primary education badly lags that of other emerging countries like China, its tertiary or higher education institutions produce a goodly supply of trained human capital, which at its best is comparable to any in the world.
 
3
This represents a compound annual growth rate of 41 percent, but from an initially very low base because of earlier restrictions imposed by the Indian government on outbound FDI. Outward FDI from India declined after 2011 to average around $ 10 billion with signs of a renewed surge in 2014. The overall picture is still one of rapid outward internationalization by Indian companies.
 
4
The Tata companies are no longer family controlled, and are individually listed on public stock exchanges. However, a holding company (Tata Sons) controls the biggest single bloc of shares in each Tata firm, the rest being widely dispersed over the public and financial institutions. The holding company wields power by retaining enough voting shares, by the fact that other blocks of shares are held by investors who are content to take a passive role, by the cultural acceptance, or tradition, of ultimate authority being centralized, and by charging a royalty to each group company for the use of the Tata brand name. The royalties earned are, in turn, used to purchase even more shares in each group company, or start new ventures.
 
5
Dwivedi (2010) also suggests that another ingredient of business success in Gujarati-owned motels in the US is the use of family members and immigrants as employees.
 
6
The US is also the world’s second biggest manufacturer by value of output.
 
7
The selection algorithm is biased against firms located in rapid-growth economies on the grounds that part of such emerging nation company dynamism can be explained simply by the growth rates of their markets.
 
8
Admittedly, some innovations may not have much applicability beyond other developing countries. Examples include a non-mechanical refrigerator which consists of a special Indian mud covering a sealed box that serves as a refrigerator. This special Indian mud coating has porosity characteristics that allow for significant evaporative cooling—provided, of course, that the user regularly replenishes the water in the pan—an idea unlikely to appeal to affluent consumers. For millennia, Indians have been using charcoal as a dentifrice, and such preparations are sold commercially. It was thought impossible that consumers in other nations would be willing to put charcoal in their mouths—until in 2014 Colgate introduced Colgate Total Charcoal toothpaste and activated charcoal toothbrushes.
 
9
An alternative ex post hypothesis could be that the firms in their sample being relatively early internationalizers, the benefits of early internationalization are exceeded by the incremental costs of early internationalization as proposed by the general theory (Stage I international expansion) in Contractor et al. (2007), resulting in a negative slope for the performance-internationalization relationship in the case of early international expansion.
 
10
The expression of the “smiling curve” is attributed by Bartlett and Ghoshal (2000) to Stanley Shih, former CEO of Acer.
 
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Metadaten
Titel
Leveraging India: Global Interconnectedness and Locational Competitive Advantage
verfasst von
Farok J. Contractor
Vikas Kumar
Charles Dhanaraj
Publikationsdatum
01.04.2015
Verlag
Springer Berlin Heidelberg
Erschienen in
Management International Review / Ausgabe 2/2015
Print ISSN: 0938-8249
Elektronische ISSN: 1861-8901
DOI
https://doi.org/10.1007/s11575-015-0239-6

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