Based on a survey of Indian software firms, this paper analyses whether export dependence locks Indian firms into a dependent non-innovative growth path. The author argues that lock-in effects operate, placing Indian firms into a non-innovative dependent path because higher-end services are difficult to outsource. More importantly user- feedback linkages critical to innovation cannot develop with a distant client and a still more distant final user. Consequently, domain knowledge vital for innovation is not accumulated by Indian firms. He recommends diversification of export markets away from over-dependence on the USA and development of a vibrant home market.
Get full access to this article
View all access options for this article.
References
1.
Amin, A. and F. Wilkinson (1999), 'Learning, Proximity and Industrial Performance: An Introduction', Cambridge Journal of Economics, 23 (2), pp. 121-25.
2.
Arthur, W.B. (1994), Increasing Returns and Path Dependence in the Economy. Ann Arbor: University of Michigan Press.
3.
Balasubramanyam, A. and V.N. Balasubramanyam (1997), 'Singer, Services and Software ', World Development, 25 (11), pp. 1857-61.
4.
Cantwell, J. and G.D. Santangelo (1999), 'The Frontier of International Technology Networks: Sourcing Abroad the Most Highly Tacit Capabilities', Information Economics and Policy, 11 (1), pp. 101-203.
5.
Cohendet, P., F. Kern, B. Mehmanpazir and F. Munier (1999), 'Knowledge Coordination, Competence Creation and Integrated Networks in Globalized Firms', Cambridge Journal of Economics, 23 (2), pp. 225-41.
6.
Computers Today (1998), 'Where is India's Windows or Java?', April.
7.
Coombs, R. and R. Hull (1998), "'Knowledge Management Practices" and Path-Dependency in Innovation', Research Policy, 27 (3), pp. 237-53.
8.
Dataquest (1999), 31 July.
9.
D'Costa, A.P. (1999), The Global Restructuring of the Steel Industry: Innovations, Institutions and Industrial ChangeLondon : Routledge.
10.
— ( 2000a), 'Technological Leapfrogging: The Software Challenge in India', in P. Conceição, D.V. Gibson, M.V. Heitor , G. Sirilli and F. Veloso, eds, Knowledge for Inclusive Development. New York: Quorum Books.
11.
— (2000b), 'Software Outsourcing and Policy Implications: An Indian Perspective', International Journal of Technology Management (forthcoming).
12.
David, Paul and S. Greenstein (1990), 'The Economics of Compatibility of Standards: A Survey', Economics of Innovation and New Technology, 1 (Fall): pp. 3-41.
13.
Dedrik, J. and K.L. Kraemer (1998), Asia 's Computer Challenge: Threat or Opportunity for the United States & the World? New York: Oxford University Press.
14.
Drèze, J. and A. Sen (1998), India: Economic Development and Social Opportunity . Oxford: Clarendon Press.
15.
Ernst, D. (1999), 'How Globalization Reshapes the Geography of Innovation Systems: Reflections on Global Production Networks in Information Industries '. Unpublished paper (first draft), Copenhagen Business School, Denmark.
16.
Evans, P. (1995), Embedded Autonomy: States and Industrial Transformation . Princeton: Princeton University Press.
17.
Hamel, G. and C.K. Prahalad (1994), Competingfor the Future. Boston : Harvard Business School Press.
18.
Heeks, R. (1996), India's Software Industry: State Policy, Liberalisation and Industrial Development. New Delhi: Sage Publications.
19.
Information Products and Research Services (INFAC) (1998), 'Software Industry: Market Status'. Consultancy report, INFAC, Mumbai.
20.
Kogut, B. and A. Turcanu (1999), 'Global Software Development and the Emergence of E-Innovation'. Unpublished paper, Carnegie Bosch Institute , Pittsburgh, USA.
21.
Lohr, Steve (1999), 'IBM Plans a Supercomputer that Works at the Speed of Life', New York Times, 6 December.
22.
Mariani, M. (1999), 'Next to Production or to Technological Clusters? The Economics and Management of R&D Location'. Unpublished paper, University of Maastricht, Maastricht, the Netherlands.
23.
Maskell, P. and A. Malmberg (1999), 'Localised Learning and Industrial Competitiveness ', Cambridge Journal of Economics, 23 (2), pp. 167-85.
24.
Mowery, D.C. (1996), 'Introduction', in D.C. Mowery, ed., The International Computer Software Industry: A Comparative Study of Industry Evolution and Structure, pp. 3-14. New York : Oxford University Press.
25.
Narula, R. (1999), 'In-House R&D, Outsourcing or Alliances? Some Strategic and Economic Considerations'. Unpublished paper, University of Oslo, Oslo, Norway (http://www.bigfoot.com/∼r.narula [first draft, 27 January 1999]).
26.
National Association of Software and Services Companies (NASSCOM) (1998), Indian Software Directory, 1998. New Delhi: NASSCOM.
27.
— (1999), The Software Industry in India: A Strategic Review . New Delhi: NASSCOM.
28.
New York Times (1999), 23 December.
29.
Nooteboom, B. (1999), 'Innovation, Learning and Industrial Organisation ', Cambridge Journal of Economics, 23 (2), pp. 127-50.
30.
Okazaki, T. (1999), 'The Productivity of the Indian Software Industry ', Konodai Bulletin of Economic Studies, 11 (1) (Special volume on 'Indian Industrial Development in Asian Perspective'), pp. 135-48.
31.
Reddy, P. (1997), 'New Trends in Globalization of Corporate R&D and Implications for Innovation Capability in Host Countries: A Survey from India', World Development, 25 (11), pp. 1821-37.
32.
Rosenberg, N. (1982), Inside the Black Box: Technology and Economics . Cambridge: Cambridge University Press.
33.
— ( 1994), 'Path-Dependent Aspects of Technological Change', in Exploring the Black Box: Technology, Economics and History, pp. 9-23. Cambridge: Cambridge University Press.
34.
Rosenberg, N. and C. Frischtak , eds (1985), International Technology Transfer: Concepts, Measures, and Comparisons. New York: Praeger.
35.
Schmitz, H. (1999), 'Collective Efficiency and Increasing Returns ', Cambridge Journal of Economics, 23 (4), pp. 465-83.
36.
von Hippel, E. (1988), The Sources of Innovation. New York: Oxford University.
