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The Viability of Sustained Growth by India’s MNEs: India’s Dual Economy and Constraints from Location Assets

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Abstract

This paper considers the longer-term viability of the internationalization and success of Indian multinational enterprises (MNEs). We apply the ‘dual economy’ concept (Lewis, Manch Sch 22(2):139–191, 1954) to reconcile the contradictions of the typical emerging economy, where a ‘modern’ knowledge-intensive economy exists alongside a ‘traditional’ resource-intensive economy. Each type of economy generates firms with different types of ownership advantages, and hence different types of MNEs and internationalisation patterns. We also highlight the vulnerabilities of a growth-by-acquisitions approach. The potential for Indian MNEs to grow requires an understanding of India’s dual economy and the constraints from the home country’s location advantages, particularly those in its knowledge infrastructure.

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Notes

  1. This is an oversimplification. For a discussion, see Eden and Dai (2010), Narula (2010, 2012).

  2. Although whether frugal innovation is fundamentally different to incremental innovations in products and processes is an open question.

  3. This distinction is an important one because it helps resolve the Ramamurti (2012), Madhok and Keyhani (2012) dispute.

  4. A significant exception to this is the Council of Scientific and Industrial Research (CSIR), which coordinates 40 subsidiary centres. CSIR employs 4,600 scientists and 8,000 technical personnel. It awards over a 1,000 doctorates annually, and is the single largest Indian US patent assignee in India.

  5. 75 % of India’s public R&D expenditures were directed towards atomic energy, space research, defence and agriculture. 15 % was accounted for by biotechnology, IT, ocean development, non-conventional and renewable energy sources, medical research and environment and forests. (NISTADS 2008).

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  1. Henley Business School, University of Reading, Reading, UK

    Rajneesh Narula

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  1. Rajneesh Narula
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Correspondence to Rajneesh Narula.

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Narula, R. The Viability of Sustained Growth by India’s MNEs: India’s Dual Economy and Constraints from Location Assets. Manag Int Rev 55, 191–205 (2015). https://doi.org/10.1007/s11575-015-0243-x

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