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The Rise of Indian Multinationals : Perspectives on Indian Outward Foreign Direct Investment - Karl P. Sauvant

The Rise of Indian Multinationals

Perspectives on Indian Outward Foreign Direct Investment

By: Karl P. Sauvant (Editor), Jaya Prakash Pradhan (Editor), Ayesha Chatterjee (Editor), Brian Harley (Editor)

Hardcover Published: 19th January 2011
ISBN: 9780230108448
Number Of Pages: 284

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The surge in outward foreign direct investment (FDI) by Indian firms in the past ten to fifteen years raises a host of interesting questions. This edited volume is a valuable resource for all scholars interested in India’s emerging multinational enterprises.  The contributors explore the rapid growth of Indian multinationals and provide valuable insights into the patterns and trends of their outward investments and the factors that led to their emergence in the global FDI market. They also look at their continuously evolving strategies the in global economy and what the outcome has been for their host country in trade, technology, and employment.

"Nine papers analyze the rise of Indian outward foreign direct investment (OFDI)." - Journal of Economic Literature

"India is growing a set of world class multinationals. These range from Tata's ownership of Jaguar to nimble entrepreneurial firms in high tech and knowledge based businesses. This book is an eye opener to those who still think that globalization is driven solely by Western multinationals: in fact emerging economies like India are now full partners in world economic development." - Alan M Rugman, Henley Business School, University of Reading

"This remarkable collections essays by some of the sharpest analysts in the field sheds new light on the emergence of Indian multinational enterprises, a phenomenon of growing relevance for both global business and international political economy." - Mr. AndreaGoldstein, Deputy Director, Heiligendamm L'Aquila Process Support Unit, OECD, France.

"The Rise of Indian Multinationals provides a sharp analysis of trend and issues pertaining to Indian MNEs. The contributors explore the rapid growth of Indian MNEs and provide different perspectives in terms of patterns and factors that led to their increasing presence in global economy. Some of the chapters throw light on the some of the interesting issues that have come up pertaining to the surge in outward FDI from India particularly during 2000s." - Reserve Bank of India Occasional Papers

"These two edited volumes (Foreign Direct Investments from Emerging Markets and The Rise of Indian Multinationals) represent a timely addition to the growing collection of books on emerging market Multinational Companies (EMNEs). The two volumes add to this literature in several important ways. Perhaps most noteworthy of which is by explicitly tackling what is probably the major challenge in discussion of EMNEs, namely what is different about them theoretically. Several contributors these volumes address this question head on." - Journal of International Business

"Overall, this is a marvellous book that succinctly connects the evidence with the arguments to demonstrate the huge leap in Indian OFDI, as well as, provides concrete evidence of a shift in the focus of Indian MNEs to technology-related activities since the 1990s." - Institutions and Economics

List of Figures and Tablesp. xv
List of Contributorsp. xix
Forewordp. xxiii
Acknowledgmentsp. xxvii
Introduction: The Rise of Indian Multinational Enterprises: Revisiting Key Issuesp. 1
Introductionp. 1
Origin and Growth: A Brief Historyp. 4
Why Do Indian Firms Go it Alone Now?p. 9
Why Do Indian Firms Acquire Overseas Companies?p. 12
What Explains the Distinct Regional Specialization of Indian Firms?p. 13
Why do Knowledge-based Industries Dominate Indian Outward Foreign Direct Investment?p. 14
This Volume and Its Contributionp. 15
Analytical Perspectives on the Rise of Indian MNEsp. 15
Industry Analysis of Indian Outward FDIp. 17
Regional Studies on Indian MNEsp. 18
Conclusionsp. 19
Notesp. 20
Referencesp. 21
In Search of the "Indianness" of Indian Multinational Enterprises: is There Anything Special about the Indian Path to Outward Foreign Direct Investment?p. 25
Introductionp. 25
The Rise of Indian Multinational Enterprisesp. 26
Explaining the Indian OFDI Pathp. 30
The Investment Development Path Theoryp. 31
Main Propositions of the IDP Theoryp. 31
Relevance to Indiap. 33
The Latecomer Theoryp. 34
Main Propositions of the Latecomer Theoryp. 35
Relevance to Indiap. 37
The "India Inc." Country-Specific Theoryp. 39
Country-Specific Explanations for OFDIp. 40
Relevance to Indiap. 40
Summary and Discussionp. 43
The Speed and Direction of FDIp. 43
The Role of Home Country Context in Shaping Ownership Advantagesp. 44
Motives for Investmentp. 45
Assessment of Theoryp. 45
Conclusionsp. 48
Notesp. 48
Referencesp. 51
Political Factors Behind the Rise of Indian Multinational Enterprises: An Essay in Political Economyp. 57
Introductionp. 57
The Debate on Foreign Direct Investment and Multinational Enterprisesp. 58
Conventional MNE Theoryp. 58
The Political Economy Perspectivep. 60
The Rise of Indian Multinational Enterprises: The Role of Home Country Government Activitiesp. 63
Creating a Supportive Environment and Institutional Facilitiesp. 64
Shaping the Domestic Development of Ownership Advantagesp. 65
Direct Regulationp. 66
Direct Participation in OFDIp. 68
Summing Up: The Role of the State in the Outward Investment Processp. 69
A Theoretical Reinterpretationp. 70
Conclusionsp. 73
Notesp. 73
Referencesp. 75
When a Great Industry Globalizes: Indian Conglomerates Pioneering New Trends in Industrial Globalizationp. 79
Introduction: Not Just Followers; Indian Multinationals are Changing the Global Business Modelp. 79
Indian Multinational Enterprises Out to Conquer the World? Going Global Because of Domestic Challenges as well as Global Opportunitiesp. 82
Technology-Focused Geographic Patterns in OFDI Distributionp. 82
The Imperatives of Globalization and Internal Transformations in the Indian Economy: Financial Advantages and Growing Domestic Competitionp. 84
The Need to Scale up Technology and Build Brand Namesp. 85
Indian Groups on the Global Stage: Firm-Level Bridging of Low National Integration into Global Tradep. 85
Changing Regime, Changing Business Models: From Licenses to Production Efficiencyp. 87
Integration of Multinational Enterprises into Global Ties the Indian Way: Industry Trajectories, Schematic Models, and Cases of Conglomerate Synergiesp. 89
Towards Models or Diversity?p. 91
Three Key Business Models for MNEs within the IT Industryp. 91
Three Key Business Models in the Biotechnology Industry: A Sector Halfway into its Multinationalizationp. 93
Summarizing India's Business Modelsp. 95
An Indian Specificity: The Synergetic, Innovative Conglomeratep. 96
Summing up Industrial Trajectories, Modes of Entry, Technological Emancipation, Value Chains, and Internationalizationp. 97
On Building New Models: From Constraints to Partnership?p. 99
Overall Global Competitionp. 99
From All-out Competition to Partnershipsp. 100
Partnerships and New Value Chainsp. 101
Partnerships and Technological Innovationp. 102
Business Recomposition: Globalization and Concentration of Suppliersp. 103
Conclusions: From Indian Multinational Enterprises to a Mixed Developed-Emerging Model of Capitalism?p. 104
Notesp. 107
Referencesp. 108
Acquisition of Technologies and Multinational Enterprise Growth in the Automotive and the Pharmaceutical Industries: Drivers and Strategiesp. 111
Introductionp. 111
Theoretical Frameworks on Emerging Market Multinationalsp. 112
The Imbalance and the Springboard Approachesp. 112
The Linkage, Leverage, and Learning Theoryp. 113
An Alternative Approach: Alliances, Acquisitions, Leverage, and Learningp. 113
Empirical Evidence on Indian MNEs: Two Case Studies from the Pharmaceutical Industryp. 116
Nicholas Piramal and Sun Pharmaceutical Industries: Structure and Evolutionp. 118
Competitive Advantages: Technological Innovationp. 121
Competitive Advantages: Differentiationp. 125
Competitive Advantages: Financial Resources and Managerial Skillsp. 127
Linkage and Leverage: The External Networkp. 129
The Internationalization Process: Exportsp. 131
Internationalization through OFDI: The Internal Networkp. 132
Conclusions From the Case Studies on Nicholas Piramal and Sun Pharmaceutical Industriesp. 134
Empirical Evidence on Indian Multinational Enterprises: Two Case Studies from the Automotive Industryp. 136
Mahindra & Mahindra and Bharat Forge: Structure and Evolutionp. 137
Competitive Advantages: Technological Innovationp. 140
Competitive Advantages: Financial Resourcesp. 142
Competitive Advantages: Management Skills and Differentiationp. 143
Alliances and Leverage: The External Networkp. 145
Internationalization Process: Exportsp. 148
Internationalization Through FDI: Can We Talk about an "Internal Network"?p. 149
Conclusions from the Case Studies on Mahindra & Mahindra and Bharat Forgep. 152
Conclusions: From Learning and Acquisition of Capabilities to Multinational Growthp. 154
A Two-stage Pattern of Multinational Growthp. 154
Firm-Specific Competitive Advantagesp. 155
Country-Specific Competitive Advantagesp. 156
Specialization, Diversification, and Trajectoriesp. 157
Notesp. 157
Referencesp. 161
Outward Investment by Indian Pharmaceutical and Software Multinational Enterprises: Are the Factors Different?p. 167
Introductionp. 167
Outward Foreign Direct Investment Policy Regime in India: Evolutionp. 168
Policy Evolution Facilitating OFDI in the Software Industryp. 170
Policy Evolution Facilitating OFDI from the Pharmaceutical Industryp. 171
Determinants of the Extent of Outward Foreign Direct Investment: An Analytical Frameworkp. 172
OFDI from the Pharmaceutical and Software Industriesp. 172
MNE Size (GFA or SIZE)p. 173
Accumulated Learning and Managerial Skills (AGE)p. 173
Profitability (PAT or ROA)p. 173
Empirical Estimationsp. 174
Features and Performance of the Two Selected Industriesp. 174
The Indian Pharmaceutical Industryp. 174
The Indian Software Industryp. 176
Outward Foreign Direct Investment by Pharmaceuticals and Software Multinational Enterprisesp. 178
Factors Influencing Outward Foreign Direct Investment: Econometric Resultsp. 180
Comparison between MNEs in the Software and Pharmaceutical Industriesp. 180
Econometric Resultsp. 180
Conclusionsp. 182
Notesp. 183
Referencesp. 184
Indian Companies Investing in the United States: An Inquiry into Recent Patterns and Trendsp. 187
Introductionp. 187
Pattern of Indian Outward Foreign Direct Investment Flows to the United Statesp. 190
Volume of Indian OFDI Flows to the United Statesp. 192
Composition of Indian OFDI in the United States by Industryp. 194
The Age of Indian MNEs Investing in the United Statesp. 195
Size Distribution of Indian MNEs Investing in the United Statesp. 197
Entry Routes for Indian OFDI into the United Statesp. 200
Greenfield OFDI from Indiap. 200
The Indian M&A Scenariop. 200
Factors Driving OFDI from India to the United Statesp. 203
Push Factors Driving OFDI from Indiap. 204
Changes in Indian OFDI Policiesp. 204
Attitudinal or Behavioral Change among Indian Firmsp. 204
The Impact of OFDI Inflows into Indiap. 205
Generation of Corporate Fundsp. 206
Capacity to Raise Funds through Domestic and Foreign Borrowingsp. 206
Pull Factors Driving OFDI from Indiap. 207
The IFDI Policy Regime in the United Statesp. 207
Size of the Host Country Marketp. 209
Access to New Markets through the United Statesp. 210
Low Value of the U.S. Dollarp. 210
Proximity to Client Basep. 210
Technology, Knowledge, and R&Dp. 211
Search for Natural Resourcesp. 212
Indian OFDI Projects in the United Statesp. 212
Agriculturep. 213
Automotivep. 213
Bankingp. 213
Chemicalsp. 213
Computer Peripheralsp. 214
Fast-Moving Consumer Goodsp. 214
Food and Beveragesp. 215
Hotelsp. 216
Information Technologyp. 216
Irrigation Componentsp. 217
Jewelryp. 218
Life Sciencesp. 218
Media and Entertainmentp. 219
Metalsp. 219
Packagingp. 220
Pharmaceuticalsp. 220
Printing/Publishingp. 221
Telecommunicationsp. 221
Textilesp. 222
Travelp. 222
Observations from the Case Studiesp. 222
Conclusionsp. 223
Notesp. 225
Referencesp. 228
The Emergence of Indian Multinationals: An Empirical Study of Motives, Current Status, and Trends of Indian Investment in Germanyp. 233
Introductionp. 233
Indian Outward Foreign Direct Investment in Germanyp. 234
Survey of Indian Subsidiaries in Germanyp. 237
Characteristics of Respondentsp. 238
Activities in Germanyp. 239
Characteristics of the Parent MNEp. 239
Size and Modes of Investmentp. 241
Investment Motivesp. 241
Realization of Investment Objectivesp. 242
Criteria of Location Selectionp. 243
Job Shiftsp. 244
Indian Expatriatesp. 245
Technology Transferp. 245
Investment and Operational Challenges in Germanyp. 246
Performance of Indian Subsidiaries in Germanyp. 247
Planned Investmentsp. 247
Summary of Survey Resultsp. 248
Conclusionsp. 249
Notesp. 250
Referencesp. 251
The Surge in Indian Outbound Foreign Direct Investment to Africa: A New Form of South-South Cooperation?p. 255
Introductionp. 255
Indian Investment in Africap. 256
Why Chinese and Indian MNEs Are Investing in African Host Countriesp. 261
The Benefit to Africap. 267
Conclusionsp. 270
Notesp. 271
Referencesp. 272
Indexp. 277
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780230108448
ISBN-10: 023010844X
Audience: Tertiary; University or College
Format: Hardcover
Language: English
Number Of Pages: 284
Published: 19th January 2011
Publisher: Palgrave Macmillan
Country of Publication: GB
Dimensions (cm): 23.5 x 15.88  x 1.91
Weight (kg): 0.57
Edition Number: 1