Introduction to the Special Issue: Towards a theoretical understanding of innovation and entrepreneurship in India
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Over the past few decades, India has become one of the world’s most vibrant economies (Chari & Banalieva, 2015). While the first forty years after India’s independence in 1947 was characterized by a sluggish annual growth rate (of approximately 3%), economic reforms initiated in 1991 have resulted in the GDP growing at a rate of around 6.8% in the last quarter century (Chari & Banalieva, 2015; McCloskey, 2010). Conversely, while the pre-reform institutional environment generally underemphasized and undermined entrepreneurial and innovative activity (Bardhan, 1994; Baumol, Litan, & Schramm, 2009; Sivaraman, 1991), the post-reform period has been characterized by a much wider acceptance of the value of innovation and entrepreneurship. Moreover, many Indian firms and entrepreneurs have emerged as global leaders in information technology (IT) services, auto, steel and generic drug production as well as medical services (Chari & Banalieva, 2015). India’s emergence as a significant player in the global business landscape has been accompanied by a boom in discourse about Indian economy and management, with academics, journalists, consultants and managers alike studying and chronicling these in numerous articles and books (e.g. Das, 2000; Nilekani, 2008; Chandler & Zainulbhai, 2013; Sharma, 2015)—all of these constituting the first draft of this exciting phase in India’s development.
A number of researchers have turned their attention to understanding various interesting features of the Indian business scene. These include relatively new developments such as the emergence of the domestic software services (Arora, Arunachalam, Asundi, & Fernandes, 2001; Garud, Kumaraswamy, & Sambamurthy, 2006), the pharmaceutical sector (Chittoor, Sarkar, Ray, & Aulakh, 2009), and the location of strategically significant R&D centers in India by multinational firms (Asakawa & Som, 2008; Tellis, Prabhu, Chandy, & Eisengerich, 2013). In addition, research is also taking a renewed look at long-existing phenomena such as the ubiquitous presence of family-based business groups in India (Khanna & Palepu, 2000). More recently, some researchers have also started to turn their attention to exploring whether certain business strategies and practices are uniquely Indian, and if these can be ported to other contexts (Cappelli, Singh, Singh, & Useem, 2010; Govindarajan & Trimble, 2013; Khanna, 2007; Prahalad & Mashelkar, 2010; Radjou, Prabhu, & Ahuja, 2012). These seemingly unique Indian approaches have been articulated in terminology such as the “Indian Way” (Cappelli et al., 2010), “jugaad innovation” (Prabhu & Jain, 2015; Radjou et al., 2012), “Gandhian innovation” (Prahalad & Mashelkar, 2010) and “reverse innovation” (Govindarajan & Trimble, 2013), among others. Taken together, these strands of scholarship reflect the beginnings of a vibrant and insightful set of conversations that can enable us to make deeper sense of the remarkable socio-economic changes taking place in India as well as enhance existing theories of strategy and organizations (Bruton, Ahlstrom, & Obloj, 2008; Peng, Wang, & Jiang, 2008; Young, Tsai, Wang, Liu, & Ahlstrom, 2014).
In this spirit, the editors of APJM expressed the need for developing a deeper understanding of two closely related academic domains that are vital to India’s sustained economic growth: innovation and entrepreneurship (Aghion & Howitt, 1992; Ahlstrom, 2010, 2015; Alvarez, Barney, & Newman, 2015; Radjou et al., 2012). In 2012, the then Editor-in Chief of APJM David Ahlstrom started assembling a team of scholars, including Senior Editor Anil Nair and Professor Sanjay Jain, who had an interest in India as well as in innovation and entrepreneurship to edit this Special Issue. Announcements for submission of manuscripts related to this topic were sent out on the Academy of Management (AOM) and Asia Academy of Management (AAOM) list-servers. We received more than 50 manuscripts in response to this call for papers. The review process finally led to selection of the papers you find in this issue. Several other papers that had good promise and potential do not appear in this Special Issue because the authors were unable to submit revisions on time. The five papers that do appear in this Special Issue, including this introductory paper, provide consolidation and expansion of the themes identified in prior work related to entrepreneurship and innovation within the Indian context.
The article by Nair, Guldiken, Pezeshkan, and Fainschmidt (2015) offers a comprehensive review of the expanding literature on innovation in India. As highlighted in the review, the literature on innovation in India is fairly comprehensive and has taken on a vibrancy in recently years as India has reformed and pursued faster economic growth (Chari & Banalieva, 2015). The authors suggest that this research often did not get published in some of the top tier management and innovation journals (usually from the United States or the United Kingdom) because of minimal interest in India or because the studies did not adopt the positivistic empirical methodology favored by such journals. Many of the firm-level studies they found adopted a case study approach to either apply foreign theories in the Indian context, or explain processes that may be unique to Indian innovation; however, the macro country-level studies on patents were empirical and involved statistical analysis.
Nair and colleagues also describe the arc Indian innovation studies have followed in past years. Earlier studies largely examined the role of government institutions on innovation, while more recent studies have started examining the role of MNEs and liberalization on innovation. They further point out that the state of flux that India is in now with the gradual unfolding of liberalization across different sectors of the economy offers a rich eco-system from which to study the factors and contingencies that impact innovation.
Related to the above theme, the paper by Ashwin, Krishnan, and George (2015) examines the role of family ownership, business group membership, and industry characteristics on innovation. Thus, this is a study that captures some of the uniqueness of the Indian business setting (Ahlstrom, Chen, & Yeh, 2010). Several scholars have noted the importance of family firms (van Essen, Carney, Gedajlovic, & Heugens, 2015), and business groups (Carney, 2008) and their extensive participation in the Indian economy (Gedajlovic, Carney, Chrisman, & Kellermanns, 2012). While these organizational forms have traditionally played significant roles in the Indian economy, they are now subject to several internal and external cross-currents that were unleashed by the 1991 economic reforms (Chari & Banalieva, 2015). These include the arrival of MNEs from Asia, Europe, and North America with varying competitive priorities, strategies, and resources along with the threats/opportunities they pose; the creation of opportunities in markets abroad; and internally, the rise of professionally and/or foreign trained children into upper management ranks (Au, Craig, & Ramachandran, 2011; Hoskisson, Wright, Filatotchev, & Peng, 2013; Lu, Au, Peng, & Xu, 2013). Using the pharmaceutical industry as their setting, Ashwin et al. (2015) adopt stewardship and agency theories to develop and test hypotheses about the impact of family ownership on R&D and innovation outcomes. They find that family-owned businesses adopted a stewardship model in an environment characterized by opportunities.
The paper by Prabhu and Jain (2015) addresses issues that have generated considerable interest among scholars and practitioners in recent times, that is, the notions of jugaad and social entrepreneurship (e.g., Radjou et al., 2012). Despite India’s economic growth, a considerable proportion of its population still lives in conditions of poverty that is perpetuated by difficult socio-political and institutional conditions (Banerjee & Duflo, 2011; Bruton, Ahlstrom, & Si, 2015). Providing these underserved communities with the basic necessities—such as energy, health, education, and communication—involves, on the business side, developing products and services as well as associated business models and organizational forms that require high levels of ingenuity and empathy (Ahlstrom, 2010; Chari & Banalieva, 2015). At another level, years of socialist economic policies that limited competition and restricted access to technology created an environment of shortages and constraints—one in which resourcefulness became a necessity and a way of life. In response, numerous organizations operating in India—both formal and informal—have demonstrated an uncanny ability to engage in “jugaad” (pronounced ju-gaar) —which, roughly translated from its Hindi origins, means “making things happen” (Radjou et al., 2012). In their article, Prabhu and Jain document instances of jugaad innovation, provide a theoretical specification for this construct, and offer an agenda for future research on this topic. In doing so, they endeavor to take jugaad beyond mere detailed description and towards the subject of more systematic study—a move that in effect, foreshadows the need for developing more culturally informed theories of innovation and entrepreneurship that emphasize aspects of non-Western, indigenous approaches to management (Li, 2012).
Prasantham and Dhanaraj (2015) address an issue that is very crucial to entrepreneurial new ventures in emerging economies: How to quickly internationalize? International new ventures (INVs) have generated considerable interest among international business (IB) scholars, with the pace, direction, and intensity of internationalization attracting research attention in recent years (Oviatt & McDougall, 1994, 2005; Rialp, Rialp, & Knight, 2005). Prasantham and Dhanaraj examine the internationalization process by investigating how the alliancing of new ventures impact their internationalization. Specifically, they examine how ties with MNEs and local SMEs impact new ventures’ expansion abroad. Employing a multi-method study to investigate the phenomenon, the paper uses a longitudinal case analysis and a survey of 102 firms. They find a positive relationship between local MNE ties and internationalization capability, but also find that ties with MNEs are necessary yet not sufficient for new ventures to internationalize; they require managerial action to exploit the knowledge acquired. In addition to the interesting results, the study reveals the advantages of adopting a multi-method approach in generating unique insights about phenomenon.
The papers published in this Special Issue capture only a slice of the fascinating work now in progress in Indian innovation and entrepreneurship (e.g., George, Rao-Nicholson, Corbishley, & Bansal, 2015; Jain & Sharma, 2013; Kumar, 2007; Nair & Ahlstrom, 2003). The papers in this Special Issue also provoke a number of additional research questions and directions. A number of emerging phenomena—the formation of multiple innovation clusters in the country, the explosion in mobile commerce based start-ups, a growing alternative energy sector, virtual and diverse work teams, social entrepreneurship, and new business models and organizational forms—represent exciting avenues for future research (Kleiner, 2014; Maheshwari & Ahlstrom, 2004; Nair, Ahlstrom, & Filer, 2007). Moreover, the growing presence of multinationals, an engaged Indian diaspora, and a number of recent exemplars (entrepreneurs and innovators) who have captured the country’s imagination—have all contributed to the growing ethos of innovation and entrepreneurship that now pervades the country (Jain & Sharma, 2013; Khanna, 2007; Kumar & Puranam, 2012; Radjou et al., 2012; Varma, 2004). This is particularly true in certain technologically vibrant regions such as Bangalore in the south (Nair et al., 2007), further suggesting the need for understanding regional differences in large, diverse countries such as India (cf. Gong, Chow, & Ahlstrom, 2011).
These developments are resulting in unique approaches—sometimes indigenous but often hybrid—for engaging in innovation and entrepreneurship. A deeper understanding of these phenomena should make for insightful extensions and reformulations of our existing theories in these domains (cf. Ahlstrom, Bruton, & Lui, 2000). Supporting these endeavors in recent years is an exponential growth in underlying research capacity, both in terms of faculty and doctoral students interested in examining these phenomena. A particularly noteworthy development along these lines is the significant expansion in doctoral programs—and associated research related activity such as conferences and workshops—that is now unfolding within India’s leading business schools and is likely to contribute to an increase in rigorous and relevant scholarship in these domains going forward. As we wrap up this Special Issue on India for Asia Pacific Journal of Management, we feel the future of innovation and entrepreneurship research in India is vibrant. We believe that scholarship in these domains can serve a vital function in informing practitioners, policy makers and citizens as to the role that innovation and entrepreneurial activity play in fostering socio-political and economic change in the Indian context and other emerging economy contexts (McCloskey, 2013; Wang, Ahlstrom, Nair, & Hang, 2008). Along these lines, we hope that this Special Issue both signals the importance of these research trajectories as well as fosters substantial scholarship in these areas going forward.
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