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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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    File URL: http://www.eastwestcenter.org/fileadmin/stored/pdfs/ECONwp051.pdf
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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. 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.
    3. Cantwell, John, 1995. "The Globalisation of Technology: What Remains of the Product Cycle Model?," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 155-174, February.
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    Cited by:

    1. 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.
    2. Jorge Niosi & Suma Athreye & Ted Tschang, 2012. "The Global Computer Software Sector," Chapters,in: Economic Development as a Learning Process, chapter 3 Edward Elgar Publishing.

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