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Institutions and Innovation: A Study of ICT-MSMEs in India

In: Globalization and Standards

Author

Listed:
  • Kaushalesh Lal

    (Society for Development Studies)

  • Shampa Paul

    (Society for Development Studies)

Abstract

The huge base of manufacturing in India is characterized by the predominance of micro, small and medium enterprises (MSMEs), the export performance of which has been far from impressive. Poor product quality has often been attributed to inadequacy in institutional framework supporting innovation in MSMEs, even those in the knowledge-based information and communication technology (ICT) subsector that holds much promise for its global presence. Recognizing the ICT sector’s sensitivity to the global industrial environment, this chapter investigates the relationship between innovation activities and firm performance. They attempt to identify factors influencing innovation related to product quality and, in the process, investigate the role of institutional support in innovation activities of MSMEs of ICT clusters. In addition to traditional variables representing size and CEO characteristics, the study includes variables representing innovation strategies. The results show that firm-specific characteristics influence innovation activities and supporting institutional policies stimulate innovation; firms formally associated with state facilities (as the Software Technology Parks of India) pursued better innovation strategies than those which did not. The role of the state in terms of providing for both technological and infrastructural support is seen as a broad-based approach to improve innovation potential of MSMEs and, in turn, ensuring higher product standards through endogenous efforts.

Suggested Citation

  • Kaushalesh Lal & Shampa Paul, 2014. "Institutions and Innovation: A Study of ICT-MSMEs in India," India Studies in Business and Economics, in: Keshab Das (ed.), Globalization and Standards, edition 127, chapter 10, pages 193-208, Springer.
    • Handle: RePEc:spr:isbchp:978-81-322-1994-1_10
    DOI: 10.1007/978-81-322-1994-1_10
    as

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