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Economic Adversity and Entrepreneurship-led Growth - Lessons from the Indian Software Sector

Author

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  • Athreye, Suma

    (UNU-MERIT, and Brunel University)

Abstract

It is commonly believed that the business environment in developing countries does not allow productive technology-based entrepreneurship to flourish. In this paper, we draw on the experience of Indian software firms where entrepreneurial growth has belied these predictions. This paper argues that the business models chosen by Indian firms were those that best aligned the country's abundant labour resources and advantages to global demand. Many potentially higher value added opportunities struggled to attain success, but the qualitative value of experimental failures and the capability gaps they exposed was invaluable for collective managerial learning in the industry. Second, the paper also shows that the presence of growth opportunities and the success of firms stimulated institutional evolution to promote entrepreneurial growth. Last we show that the distinctive aggregate contribution of entrepreneurial firms was that they outperformed business houses and multinational subsidiaries in their more productive use of available capital resources whilst achieving similar levels of growth in output and employment. This paper draws upon an earlier shorter paper co-authored with Mike Hobday and titled 'Overcoming Development Adversity: How Entrepreneurs Led Software Development in India'.

Suggested Citation

  • Athreye, Suma, 2010. "Economic Adversity and Entrepreneurship-led Growth - Lessons from the Indian Software Sector," MERIT Working Papers 2010-008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2010008
    as

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    File URL: https://www.merit.unu.edu/publications/wppdf/2010/wp2010-008.pdf
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    References listed on IDEAS

    as
    1. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    2. Suma S. Athreye, 2005. "The Indian software industry and its evolving service capability," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 393-418, June.
    3. Tarun Khanna & Krishna Palepu, 2000. "Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian Business Groups," Journal of Finance, American Finance Association, vol. 55(2), pages 867-891, April.
    4. Michael Hobday, 1995. "Innovation In East Asia," Books, Edward Elgar Publishing, number 226.
    5. Dossani, Rafiq & Kenney, Martin, 2002. "Creating an Environment for Venture Capital in India," World Development, Elsevier, vol. 30(2), pages 227-253, February.
    6. Ashish Arora & Alfonso Gambardella, 2005. "The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries," NBER Chapters, in: Innovation Policy and the Economy, Volume 5, pages 1-32, National Bureau of Economic Research, Inc.
    7. Baumol, William J., 1996. "Entrepreneurship: Productive, unproductive, and destructive," Journal of Business Venturing, Elsevier, vol. 11(1), pages 3-22, January.
    8. Abhijit V. Banerjee & Esther Duflo, 2000. "Reputation Effects and the Limits of Contracting: A Study of the Indian Software Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 989-1017.
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    Cited by:

    1. Wim Naudé, 2009. "Out with the Sleaze, in with the Ease: Insufficient for Entrepreneurial Development?," WIDER Working Paper Series RP2009-01, World Institute for Development Economic Research (UNU-WIDER).
    2. Pankaj Sharma & Srinivasa B. S. Nookala & Anubhav Sharma, 2012. "India's National and Regional Innovation Systems: Challenges, Opportunities and Recommendations for Policy Makers," Industry and Innovation, Taylor & Francis Journals, vol. 19(6), pages 517-537, August.
    3. Asmita Goswami & K. Narayanan, 2023. "Productivity and Exports: An Industry-Level Analysis of the Service Sector in India," Millennial Asia, , vol. 14(3), pages 379-405, September.
    4. Knut Blind & Tim Pohlmann & Florian Ramel & Sacha Wunsch-Vincent, 2014. "The Egyptian Information Technology Sector and the Role of Intellectual Property: Economic Assessment and Recommendations," WIPO Economic Research Working Papers 18, World Intellectual Property Organization - Economics and Statistics Division.
    5. Akcomak, Semih & Stoneman, Paul, 2010. "How novel is social capital: Three cases from the British history that reflect social capital," MERIT Working Papers 2010-015, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    technology entrepreneurship; institutions and economic development; Indian software; intellectual property rights;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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