A review of strategic management research on India

Abstract

In 1991 India embarked on far-reaching economic, financial and regulatory reforms, which led to not only a surge in economic growth, but also spurred scholarly interest in Indian firms, their strategies, and their business environment. As it has been almost three decades since the reforms were initiated, we believe that it is an appropriate time to take stock of the research on strategic management in the Indian setting. Our scoping review finds three dominant themes in extant research: impact of environment (specifically liberalization) on firms, strategies of firms, and the different ownership structures of firms. We discuss the key findings within these domains and identify the theories and methods that scholars have used to address their research questions. We assert that the unique Indian context — a mix of public and private economy operating within a democratic system — provides a rich environment for not only testing existing theories in strategic management but also generating new theories. We conclude by identifying several important areas of research and urging strategy scholars to engage with the opportunities offered by the evolving Indian business environment.

Appendices

Appendix 1: Brief background: Economy, government and business

The evolution of India’s industry structure and firm strategies can be better understood by reviewing its history in terms of pre- and post-British colonization, which we briefly summarize below.

Early history

Prior to the arrival of British East India Company in 1608, India had its own organic system of trade and commerce. Merchants from the subcontinent were actively involved in trading silk, jewelry and spices across the world along the silk route for millennia (Behera, 2002). The Indian Ocean contained the most extensive trade routes of the day (McCloskey, 2010). An extensive review of early Indian business history is beyond the scope of this paper; we thus refer the reader to Hawk’s (2015) extensive analysis of law and commerce in pre-industrial societies, in which the author describes the various sophisticated markets (such as “haats” and “mandis”), trading structures, and trade routes that emerged in medieval India under various kingdoms.

Arrival of the British

With the arrival of the British East India company, some of these traditional practices changed. The British East India Company was initially established to trade with India, but gradually expanded its scope of operations to eventually control and govern a substantive part of the country. After a series of laws passed by Parliament to reform the East India Company, its monopoly rights were eliminated in 1813, which allowed for the entry of private merchants, traders and agencies into the economy (Goswami, 2016; Webster, 1990).⁸ In 1858, the governance of the Indian subcontinent was fully taken over by the British Crown. The operations of the British East India Company and later the direct rule by the Crown led to the introduction of Western technology, education, legal system, institutions, business practices, and the founding of several industries. The development of ports and railroads and the establishment of the Bombay Stock exchange in 1875 further led to the growth of Indian enterprises (DeLong, 2003; Tomizawa et al., 2020).

India after independence

After independence, Indian leaders Gandhi, Nehru, and Patel had distinct visions for the economic development of the new country. Gandhi preferred an economic development model that was village-based, supported by small-scale enterprises relying on the widely available pool of labor (Rivett, 1959). In contrast, Nehru emphasized the need to embrace advanced technology and establish large-scale factories, with the public sector and central planning playing a dominant role in the economy. Patel, on the other hand, preferred the private sector to play a leading role in the economy (Kudaisya, 2014). Nehru’s vision prevailed (Ramesh, 1991), and in 1950 India adopted a path of centrally planned economic development (Das, 2016), along the lines of the former Soviet Union, through a series of five-year plans (Jalan, 1996). Due to the competing visions offered by cooperatives, small scale and private sectors had an important role in the Indian economy, resulting in a hybrid system where state-owned entities co-existed with a regulated private sector (Kaushik, 1997; Li & Nair, 2007). Even after his death in 1964, Nehru’s policies and the five-year plans were supported by several successive administrations (Dandekar, 1988). Yet by the early 1980s, as the success of the East Asian economies such as South Korea, Malaysia and Singapore became undeniable, some scholars and policy makers started acknowledging that India’s planned model of growth had failed (Tayeb, 1996). Between 1950 and 1980, India realized an average real economic growth rate of 3.5 percent – well under that of the rapidly growing East Asian economies such as Taiwan, Hong Kong, and Singapore. The government-dominated and over-regulated system had led to inefficiencies, shortages, and corruption (Ahlstrom, 2010; Ahlstrom et al., 2004; DeLong, 2003).

1980s reforms

India made some attempts at economic reform starting in the mid-1980s (Rosen, 1992). Although the Indian middle-class welcomed the reforms as it led to increased choices in consumer markets such as autos, consumer electronics and packaged goods, the same reforms received stiff resistance from the leaders steeped in socialist, nationalist, or communist ideologies as well as from business leaders who had profited from the Nehruvian protectionist regime. These interest groups stalled the reforms (Kohli, 1989).

1991: The second attempt at reforms

In 1991, Narasimha Rao was elected to serve as prime minister. Rao nominated the Cambridge- and Oxford-trained economist Manmohan Singh as finance minister in his new administration.

The Gulf War of 1991 led to declining remittances from Indian expatriates in the Middle East, and rising cost of importing oil. As a result, the Rao government faced a severe foreign exchange reserve crisis. The crisis led to an assistance from the IMF, which imposed several terms and conditions for structural reforms. Rao and Singh used the crisis to justify the introduction of far-reaching multi-faceted economic reforms that continued through the 1990s despite changes in administration (Bajpai, 2002). These reforms included initiatives in the following area (Srinivasan, 2003): lowered tax rates, subsidies (especially for fuel, fertilizer, electricity), reformed banking system and capital markets, opening of reserved sectors to private business, reduced controls on capacity creation, production and prices, market-determined exchange rate, diluted import controls by reducing tariffs, eased restrictions on portfolio and direct investment, and privatization and sale of state-owned firms.

The collapse of the Soviet Union and China’s accelerating economic development provided further legitimacy to a more market-based economy; yet legacies from the past continued to hinder the reforms (Bardhan, 2006).

Appendix 2: Brief summary of articles on strategy in Indian context

Year	Authors	Journal	Article Summary
Liberalization and its impact on firm strategies
2012	Chari and David	Strategic Management Journal	This study finds that pro-market reforms in India bring significant threats to incumbents because of the greater availability of production factors and greater freedom to enter an industry and that firm-level resources (R&D, marketing and advertising) provide a measure of protection against the erosion in the sustainability of superior profits associated with pro-market reforms
2013	Lamin and Livanis	Journal of International Business Studies	Investigating the location choices of 501 domestic and 68 foreign firms for their R&D laboratories in India in a post market liberalization environment, this study finds that domestic firms exhibit a stronger preference for cities with high agglomeration (co-locating with other firms) as compared to the preference of foreign firms and that this co-locating fosters knowledge spillovers and reduces the liability of foreignness; however, domestic firms that are trying to upgrade their capabilities (or ‘catch up,’) may also prefer locations with foreign firms do again to the knowledge spillover potential (identifying the importance of different types of knowledge spillover)
2014	Singla, Veliyath and George	Strategic Management Journal	This study finds that blockholders with both ownership and management control in family firms have different goals compared to blockholders with only ownership control but no management control, leading to the negative moderating effect (no effect) that family-controlled and family-managed firms (family-controlled, and nonfamily-managed firms) have on the relationship between internationalization and governance mechanisms
2015	Chittoor, Kale and Puranam	Strategic Management Journal	This study argues that while the absence of well-developed capital markets may indeed have stimulated the emergence of business groups, where business groups acts as an alternative to poorly developed economic institutions, the very affiliation with business groups and the scrutiny that maturing capital markets impose on the individual firms within a business group can play a complementary role in influencing firm performance
2020	Kuman, Singh, Purkayastha, Popli and Gaur	Journal of International Business Studies	In a sample of 8,163 Indian listed firms, this study shows that younger firms founded in the liberalized era (post-1991) and unaffiliated firms are more likely to pursue aggressive internationalization by conducting their first cross-border acquisitions faster
2020	Scalera, Mukherjee and Piscitello	Asia Pacific Journal of Management	In the context of knowledge-intensive cross border acquisitions of Indian and Chinese MNEs between 2000 and 2014, Chinese MNEs are found to be more cautious than Indian MNEs in their ownership strategy and that Chinese MNEs prefer lower equity control than their Indian counterparts, but this preference for lower equity is found to decrease with higher home-host institutional distance and host country-specific previous experience
2020	Chattopadhyay & Bercovitz	Strategic Management Journal	In a chronicle of the Indian pharmaceutical industry from 1970 to 1995 via pre- and post-intellectual property law changes, this paper finds that having T‐shaped assets (i.e., broad knowledge scope yet narrowly focused knowledge expertise) allows firms to pursue process‐based innovation in areas close to their existing areas of expertise, while T-shaped assets are not necessary if new product development is engaged
2021	Gopal, Manikandan and Ramachandran	Journal of Management Studies	This article studies a 15-year period following India's economic liberalization, finding that while all firms including business group affiliates reduced unrelated diversification scope to negotiate product and capital market pressures, business groups took advantage of the opportunity‐rich post‐reform environment to enter into new unrelated businesses by setting up new affiliates
Strategies of Indian firms: Business, corporate, and international
1985	Shrivastava and Grant	Strategic Management Journal	Across 32 businesses in India; (4) prototypical patterns in the strategic decision-making process are identified [(1) managerial autocracy model, (2) systemic bureaucracy model, (3) adaptive planning model, and (4) political expediency model], and (6) types of organizational learning systems are found to be supporting the decision processes [(1) one-person institution, (2) mythological learning system, (3) information-seeking culture, (4) participative learning system, (5) formal management system, and (6) bureaucratic learning system]
2001	Ramaswamy	Strategic Management Journal	In an analysis of 110 Indian firms, this paper proposes a model to show that competitive intensity moderates the relationship between ownership and performance
2002	Ramaswamy, Li and Veliyath	Strategic Management Journal	While financial economists hold that manager-controlled firms tend to reflect higher levels of diversification, strategy researchers argue that ownership and diversification are not systematically related, and this study finds that in the Indian context, heterogeneity is observed in monitoring and/or influencing organizational diversification versus the use of more focused strategies
2005	Farrell	The Journal of Management Studies	From the perspective of wealth creation, this study analyzes the economic and managerial advantages and disadvantages of offshoring, focuses on the challenge to make the transition to a global economy easier for workers, and suggests that the cost savings of offshoring are short-sited and that companies are potentially leaving billions of dollars behind when they do engage in offshoring
2005	Chacar and Vissa	Strategic Management Journal	By comparing the U.S. and Indian manufacturing firms and their efficiency in achieving profits, this study shows that while there is no noticeable difference in firm performance between emerging and developed countries, when an emerging country firm experiences poor performance, the reversal of that poor performance takes longer in emerging economies than in more developed countries
2006	Zhao	Management Science	In a sample of 1,567 U.S.-headquartered innovating firms, technologies (R&D) developed in countries with weak IPR protection are used more internally and have stringer internal linkages, while firms may use internal organizations to substitute for inadequate external institutions to take advantage of the arbitrage opportunities presented by the institutional gap across countries
2007	Elango and Pattnaik	Journal of International Business Studies	In a sample of 794 Indian firms, this study investigates firms’ ability to draw on the international experience of their parental and foreign networks to build capabilities to operate in international markets to show that (1) network scope is beneficial for increasing exposure to international markets only in the case of networks that are either small or medium, and that (2) firms lacking market power in their home market benefit through foreign partnerships when internationalizing
2008	Tiwana	Strategic Management Journal	This study analyzes 209 knowledge-intensive outsourcing alliances between U.S. firms and software firms in Russia, Ireland and India by examining the tension between simultaneously sharing enough private knowledge to accomplish alliance goals and safeguarding such knowledge against misappropriation
2008	Asakawa and Som	Asia Pacific Journal of Management	This paper suggests that while MNCs should not forget the conventional wisdom of managing their innovative R&D policies (findings derived from studying the traditional Western business environments), MNCs should also learn from the unique challenges and capabilities in the Chinese and Indian contexts
2008	Peng, Wang, and Jiang	Journal of International Business Studies	After reviewing four diverse areas of substantive research (antidumping as entry barriers; competing in and out of India; growing the firm in China; and governing the corporation in emerging economies), this study argues that the institution-based view of IB strategy, in combination with industry- and resource-based views, will not only help sustain a strategy tripod, but also shed significant light on the most fundamental questions confronting IB, such as "What drives firm strategy and performance in IB?"
2009	Meyer, Estrin, Bhaumik and Peng	Strategic Management Journal	This paper studies the institutional impact on foreign entry in emerging markets (India, Vietnam, South Africa, and Egypt), finding that JVs are (are not) used to access resources in weaker (stronger) institutional frameworks, whereas acquisitions can play a more important role in accessing resources that are intangible and organizationally embedded
2009	Vissa and Chacar	Strategic Management Journal	Using data from Indian software ventures, this study finds that team demographics and team networks complement (rather than substitute) each other and that network ties are not uniform in their effect but are instead contingent on two distinct features of entrepreneurial teams: (i) their strategic consensus (the extent of agreement on key goals and strategies within the team), and (ii) their internal cohesion (the extent of interpersonal friendships within the team)
2010	Gubbi, Aulakh, Ray, Sarkar and Chittoor	Journal of International Business Studies	International acquisitions made by Indian firms create more value when target firms are located in advanced economic and institutional environments and facilitate the internalization of tangible and intangible resources that are both difficult to trade through market transactions and take time to develop internally
2010	Nadkarni and Herrmann	Academy of Management Journal	In a sample of 195 small and medium-sized firms from the Indian business process outsourcing industry, this study finds that certain CEO personality characteristics drive strategic flexibility and that strategic flexibility mediates the effect of certain CEO personality characteristics on firm financial performance
2012	Rabbiosi, Elia and Bertoni	Management International Review	Across 808 South-North acquisitions undertaken in Europe, Japan and North America between 1999 and 2008 by firms from the emerging economies of Brazil, Russia, India and China, this paper shows that emerging market firms undertake acquisitions in developed countries in an incremental fashion and that acquisition experience in developed markets increases the likelihood of exploitative expansion, while acquisition experience in developing markets does not appear to have any effect
2012	Sun, Peng, Ren and Yan	Journal of World Business	By using a dataset of 1,526 cross-border M&As made by by Chinese and Indian MNEs from 2000 to 2008, this paper integrates the comparative advantage theory with Dunning's OLI paradigm to develop a comparative ownership advantage framework characterized by five attributes: (1) national-industrial factor endowments, (2) dynamic learning, (3) value creation, (4) reconfiguration of value chain, and (5) institutional facilitation and constraints
2015	Prashantham and Birkinshaw	Management International Review	Based on a mixed-method study in the context of 102 Indian software firms and using social capital theory as well as reference group theory, this paper proposes that internationalization is in general adversely affected by home-country relationships, and is instead facilitated by a specific networking strategy (e.g., joining an aspirational local industry group in the home market)
2015	Dau, Ayyagari and Spencer	Academy of Management Journal	This article studies strategic decisions made by local firms in the face of increasing foreign direct investment into emerging markets via investment announcements made by MNEs and by local firms in India from 1995 to 2010 and finds that firms that are in the group’s identity domain–that is, those holding more prominent positions within their group (especially as measured by centrality in the group's directorship network)–appear more likely to respond to MNE investment announcements
2016	Iriyama, Kishore and Talukdar	Strategic Management Journal	This study finds that while Indian IT firms are likely to engage in corruption when faced with informal threats, they are more likely to invest in HR training to build capabilities to respond to threats from foreign firms
2017	Bhaumik, Estrin and Mickiewicz	Asia Pacific Journal of Management	Across 5,152 multi-industry Indian firms, this study shows that risk-taking in business group affiliated firms leads to higher performance compared to independent firms and that proactivity also enhances performance
2017	Singh and Delios	Journal of World Business	In a sample of 2,152 publicly-listed Indian firms from 2002 to 2009, this paper examines the individual and joint effects of board structure, network centrality through board interlocks and ownership structure on firm’s growth strategies and finds that firms with more independent board members and CEO duality are more likely to pursue growth through new domestic ventures or new foreign investments while firms that are more central in the network of other firms (based on director interlocks) are more likely to pursue growth in domestic as well as international markets
2017	Mithani	Journal of International Business Studies	This study examines how philanthropy can mitigate liability of foreignness (LOF) in the aftermath of a national disaster
2018	Buckley	Management International Review	Across three case studies (on the topic of Chinese outward FDI, Indian foreign acquisitions, and investment in tax havens), this paper examines four approaches to multinational enterprises from emerging countries: (1) international investment strategies, (2) domestic market imperfections, (3) international corporate networks and (4) domestic institutions
2019	Chatterji, Delecourt, Hasan and Koning	Strategic Management Journal	In a randomized field experiment of 100 high-growth technology firms in India, this study shows that entrepreneurs who initially received advice from peers with a formal approach to managing people (via instituting regular meetings, setting goals consistently, and providing frequent feedback to employees) grew 28 percent larger and were 10 percentage points less likely to fail than those who received advice from peers with an informal approach to managing people; 2 years after this intervention, however, entrepreneurs with MBAs or accelerator experience did not respond to this intervention, implying that formal training can limit the spread of peer advice
2019	Agnihotri and Bhattacharya	Management International Review	In a sample of 218 Indian firms from 2010 through 2015, this article shows that CEO narcissism encourages higher growth of internationalization by emerging market firms and that this relationship is contingent on CEO power and CEO celebrity status
2019	Natarajan, Mahmood and Mitchell	Strategic Management Journal	This paper analyzes middle-managerial decision-making (reward vs. control) for ATM and bank branch allocations in Indian banks from 2011 to 2014 and finds that higher income growth uncertainty (rewards) and lower monitoring (controls) increase resource allocation most strongly when middle managers are more involved in decisions
2020	Chan and Subramaniam	Asia Pacific Journal of Management	This study advances a multi-level model of ethical decision-making from in-depth interviews with 40 senior executives within Indian MNCs to illustrate poorly understood ethical challenges and identifies the strategies that MNCs use to overcome these institutional-level challenges at the regulative, normative and cognitive levels
2020	Elia, Munjal and Scalera	Management International Review	In an analysis of sourcing technological knowledge from abroad, this study finds that augmenting technological knowledge through foreign licensing enables emerging market firms to (1) access state-of-the-art technological knowledge, (2) reduce operational costs and risks associated with the innovation process, and (3) develop a knowledge-based competitive advantage to ultimately boost their financial performance
2020	Zhu and Sardana	Journal of World Business	In the context of MNEs in contemporary China and India, this paper draws from institutional perspectives and March’s theoretical concept of political coalition to offer different types of risk mitigation strategies under various institutional contexts
2021	Puthusserry, Khan, Nair and King	British Journal of Management	This paper analyzes multiple case studies of Indian Fintech SMEs and their role in overcoming psychic distance (PD) faced by internationalizing small and medium‐sized enterprises (SMEs) originating from an emerging market and reveals that the human and social capital of board of directors play important yet distinctly different roles in mitigating PD at pre‐ and post‐internationalization phases
2021	Ahammad, Basu, Munjal, Clegg and Shoham	Journal of World Business	Analyzing proprietary data from firms operating in India, this study finds that exploration and exploitation help these firms develop strategic agility; interestingly, explorative agility improves international performance in competitive environments, while exploitative agility enhances it in dynamic ones
2021	Hawn	Strategic Management Journal	A quantitative analysis of 4,087 cross‐border acquisition announcements made by by firms from Brazil, Russia, India, China, and South Africa (1990–2011) shows that while media coverage of corporate social responsibility (CSR) is not important, media coverage of corporate social irresponsibility (CSI) is associated with a lower likelihood of completing the acquisition and a longer duration until acquisition completion
Structure: Organizational forms
2002	Ramaswamy, Li and Veliyath	Strategic Management Journal	This paper adds to the scholarly dialogue between ownership and diversification within the Indian context, finding that diverse ownership groups adopt different postures in monitoring and/or influencing organizational diversification, suggesting that context-specific variation among ownership groups is germane to our enhanced understanding of diversification strategy
2010	Bhaumik, Driffield and Pal	Journal of International Business Studies	In the context of Indian automotive and pharmaceutical industries, family firms and firms with concentrated ownerships are less likely to invest overseas, while strategic equity holdings of foreign investors facilitate outward FDI
2012	Kumaraswamy, Mudambi, Saranga and Tripathy	Journal of International Business Studies	Joint ventures that allow the domestic suppliers to ‘catch-up’ through licensing and collaboration strategies yield benefits such that successful catch-up strategies lay the foundation for knowledge creation during the integration of domestic industry with the global value chain
2012	Kumar, Guar and Pattnaik	Management International Review	In a sample of foreign direct investment of 482 business groups and 4,038 firms from India, this study finds that high product diversification has an adverse effect on the international expansion of emerging market business groups, and that international orientation and group resources positively moderate this relationship
2012	Bangara, Freeman and Schroder	Journal of World Business	This study demonstrates that founder/managers in smaller service firms in the emerging market of India are able to use planned and unplanned strategies simultaneously in order to quickly prepare themselves to take advantage of transient international opportunities and that the strategic behavior of founders/managers are not always passive recipients of their environment, but that their selections of locations are dependent on the vision and stretch goals of the founder along with their ability to gain legitimacy quickly to move that vision to a reality
2015	Manikandan and Ramachandran	Strategic Management Journal	Across all Indian firms in the Bombay Stock exchange over the period 1994–2010, the value-adding potential of portfolio diversity and multi-entity organizational form are analyzed to suggest that the portfolio diversity affords affiliates privileged access to opportunities hidden by incomplete strategic factor markets, whereas the multi-entity organizational form enables superior sensing and seizing of these growth opportunities by affiliate firms; these characteristics are strengthened in the context of institutional reforms
2016	Venkataraman, Vermeulen, Raaijmakers and Mair	Organization Studies	This article investigates how a Northern India intermediary organization (PRADAN) introduced and promoted market-based activities in tribal villages as a means to improve the social and economic conditions of rural women and their families and how the simultaneous enactment of both community and market logics was critical in the development of new social structures (Self-Help Groups)
2018	Fuad and Sinha	Asia Pacific Journal of Management	In an analysis of merger waves in eight industries from 2000 to 2014 of business groups to examine the timing of entry and early-mover advantage, this paper finds that the multi-entity characteristic is positively associated with early entry, whereas board interlocks are negatively related with entry-timing; further, early moving acquirers reap superior post-acquisition performance
2019	Panda	Asia Pacific Journal of Management	Across 112 respondents, this inductive study investigates the competitive aggressiveness and long-term survival of not-for-profit organizations in the Indian subcontinent
2019	Panicker, Mitra and Upadhyayula	Journal of World Business	Empirical results from a sample of 2,364 Indian firms during the 2005–2014 time period show that ownership stake of different types of institutional investors is associated with firms' international investments differently; while pressure-sensitive institutional investors, such as banks and insurance companies, do not support firms' foreign investment decisions, pressure-resistant institutional investors, such as foreign institutional investors and mutual funds, are supportive of this strategic decision
2019	Hu, Cui and Aulakh	Journal of International Business Studies	Contrasting the types of state capitalism in China and India, this paper finds that the effect of business group affiliation on firms' superior performance persistence is stronger in a state-led system of state capitalism (e.g., China) than in a co-governed system (e.g., India) and that this divergence of the business group effect is weakened as affiliated firms internationalize
2020	Pathak and Kandathil	Asia Pacific Journal of Management	This study compares the competitive advantage of small informally organized family-owned grocery retailers (‘kiranas’) with that of large formally organized retailers and finds that the kiranas can obtain a competitive advantage via a sustained enactment of strategic practices such as free-of-charge home-delivery, but this significantly depends on contextually rich and reciprocity-based social exchange relationships with customers, which itself is found to evolve
2021	Dau and Yeung	Journal of International Business Studies	Enlisting two concepts (fallacies of composition/ decomposition and time inconsistency), this paper proposes a unifying definition for business groups accounting for a list of stylized historical observations across different parts of the world, and constructs a Coasean framework to harmonize seemingly disparate views from the literature by building upon recent surveys and the stylized historical patterns of business groups
2021	Gopal, Shaleen; Manikandan and Ramachandran	Journal of Management Studies	This paper studies a 15-year period following India’s economic liberalization, finding that while all firms including business group affiliates reduced unrelated diversification scope to negotiate product and capital market pressures, business groups took advantage of the opportunity‐rich post‐reform environment to enter into new unrelated businesses by setting up new affiliates
2021	Mondal, Lahiri and Ray	Management International Review	This paper examines inward FDI (IFDI) and outward FDI (OFDI) in a sample of Indian family firms over a six-year time-period by using a variety of theoretical perspectives such as competitive dynamics of emerging market firms and finds that family firms increase existing ODFI in response to IFDI announcements made by foreign MNCs