Technological entrepreneurship in India

Abstract

Purpose Is the rise of the Indian software industry simply another Asian state-dominated industrial growth story or is India distinctive, an economy where small technology entrepreneurs also find niches for development and can be drivers of innovation? Research has focused on the large integrated Indian and international service providers. This study examines the opportunity for growth among smaller innovative technology entrepreneurial firms. Two areas of inquiry are: What factors have been responsible for spurring growth in the Indian IT industry? What type of work is being carried out at Indian firms and is this profile changing? This paper aims to examine the emergence of technology entrepreneurs, particularly in terms of their links to multinational firms and their role and position in global value chains. The paper takes a multi-level approach to understanding development trajectories in the IT sector in India: a global value chain approach to the extent that company processes are seen in their larger networked context across organizations and an institutional approach in terms of state policies that influence the creation of infrastructure that, in turn, shapes organizational development trajectories. Additionally, it examines the role of the various actors within IT sector organizations – the workers, the managers and, in the case of the small companies in our sample, the owners – on the outcome of growth trajectories in the Indian IT sector. We find that the various levels of change and policy all contribute to the outcome in company trajectories: the dominance of multinational enterprises on the market, the entrepreneurial vision and survival strategies of returned technology expatriates, and the changing policies of the government in promoting indigenous business. Design/methodology/approach Qualitative research interviews; comparative case study; literature review; multi-tier analysis. Findings The technology entrepreneurial development in India appears to represent quite a distinctive path in terms of both firm development and broader economic development. It is focused on the IT sector, in which high skill “knowledge work” is carried out and which has been able to develop despite lack of basic infrastructure (roads and reliable electricity). Research limitations/implications After the opening up of the business environment to large Western multinational enterprises (MNEs), it was difficult for indigenous Indian entrepreneurs to compete in innovative product development markets. Developing such companies depended on individual risk taking, as no specific infrastructure existed for niche production. However, the knowledge base and innovation clusters did offer opportunities for obtaining contracts. The Indian entrepreneurs did have to make a lot of compromises about defining their business and the tasks they could undertake. More research is needed on the paths and development opportunities for these smaller Indian-owned firms. Practical implications Unique opportunities are emergent and defy easy policy prescriptions, other than precluding change that does not foreclose emergent possibilities (e.g. such as strong state controlled business development). Social implications Indian-owned innovative companies, although having difficulties competing with large Indian and Western MNEs, do put pressure on these MNEs to move work up the value chain, thereby providing more interesting and challenging opportunities for Indian knowledge workers. Originality/value This paper provides a unique company-level perspective about entrepreneurialism in the Indian software sector from the perspective of different actors in the process. It then links this company-level perspective to a larger context both in terms of trajectories of development at the macro level, as well as the role that the company’s place in multinational value chains has in its development perspectives. It gives a special insight into the motivations and obstacles facing entrepreneurs in India’s dynamic software sector.