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Multinational Firms and the Evolution of the Indian Software Industry

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  • Suma S. Athreye

    (Economics, Open University, United Kingdom)

Abstract

The Indian software industry appears to provide a startling confirmation of the benefits of multinational investment in a fledging industrial sector. The main question explored in this paper is how and why this happened. We find that multinational firms had an important catalyzing effect on the industry's evolution, even though foreign firms established by expatriate Indians probably exerted more competitive pressure. We do not accept a popular view, which ascribes this benign influence to the development of human capital. We argue is was tight labour markets due to foreign competition, which induced domestic firms to both acquire unique organizational capabilities and to improve the value-adding strategies of multinational firms.

Suggested Citation

  • Suma S. Athreye, 2003. "Multinational Firms and the Evolution of the Indian Software Industry," Economics Study Area Working Papers 51, East-West Center, Economics Study Area.
    • Handle: RePEc:ewc:wpaper:wp51
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    References listed on IDEAS

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    1. Arora, Ashish & Arunachalam, V. S. & Asundi, Jai & Fernandes, Ronald, 2001. "The Indian software services industry," Research Policy, Elsevier, vol. 30(8), pages 1267-1287, October.
    2. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Multinational Corporations and Spillovers," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 8, pages 101-133, Palgrave Macmillan.
    3. Rakesh Basant & Pankaj Chandra & Lynn Mytelka, 2001. "Inter-Firm Linkages and Development of Capabilities in the Indian Telecom Software Sector," Economics Study Area Working Papers 14, East-West Center, Economics Study Area.
    4. Michael Hobday, 1995. "Innovation In East Asia," Books, Edward Elgar Publishing, number 226.
    5. Ashish Arora & Jai Asundi, 1999. "Quality Certification and the Economics of Contract Software Development A Study of the Indian Software Industry," NBER Working Papers 7260, National Bureau of Economic Research, Inc.
    6. Cantwell, John, 1995. "The Globalisation of Technology: What Remains of the Product Cycle Model?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 155-174, February.
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    1. Cheng-Hua Tzeng, 2021. "Executing absorptive capacity: a case study of spillover utilization by a domestic firm in China’s hotel industry," Asian Business & Management, Palgrave Macmillan, vol. 20(3), pages 409-434, July.
    2. Upadhyayula, Rajesh S. & Dhandapani, Karthik & Karna, Amit, 2017. "The Role of Cluster Presence and Quality Certification in Internationalization and Performance of Offshore Service Providers," Journal of International Management, Elsevier, vol. 23(1), pages 72-86.
    3. Eapen, Alex & Yeo, Jihye & Sasidharan, Subash, 2019. "Finance constraints and technology spillovers from foreign to domestic firms," Economic Modelling, Elsevier, vol. 76(C), pages 50-62.
    4. Arti Grover Goswami & Sebastián Sáez, 2014. "Trade in services competitiveness: An assessment methodology," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(01), pages 1-31.
    5. Athreye, Suma S., 2004. ""Role of Transnational Corporations in the Evolution of a High-Tech Industry: The Case of India's Software Industry"--A Comment," World Development, Elsevier, vol. 32(3), pages 555-560, March.
    6. Jorge Niosi & Suma Athreye & Ted Tschang, 2012. "The Global Computer Software Sector," Chapters, in: Franco Malerba & Richard R. Nelson (ed.), Economic Development as a Learning Process, chapter 3, Edward Elgar Publishing.

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