Development and international business : an application to India
The issue of development in emerging markets has moved on from the polarized debates along ideological lines about the state vs. markets, to focusing mainly on economic indicators. Increasingly, as knowledge becomes the main focus of development, it is acknowledged that the state can play a positive role in promoting its growth. To try and analyse these developments, it is imperative that we appreciate the role of differing business systems that impose constraints on development, especially in influencing capital allocation in the system. The emergence of cybercities in impoverished developing countries like India need to be analysed to appreciate the factors that will influence the trends in development - the success of such cities can be attributed to the positive role played by the state and the clustering of software industries around centres of knowledge. We develop frameworks to analyse to compare the existing forms of corporate governance, and a third system for emerging economies such as Asia or Europe. We also develop frameworks to analyse market exchange and alternative frameworks from modern and pre-modern societies, in order to understand the nature of exchange in intangible and inalienable assets such as knowledge. We apply these frameworks to Indian software industry to give us an insight into how India has managed to emerge as a significant player in the software industry. We conclude that the political embeddedness of the various institutions and organisations are playing a critical role in shaping its business systems which is at the crossroads between a pluralist shareholder and corporatist stakeholder system. Also, these factors are forcing the Indian software industry to focus on the lower end of the value chain.