S1740877619000524jra 467..493Suresh Bhagavatula,1 Ram Mudambi,2 and
Johann Peter Murmann3
1
Temple University, USA, and 3
University of St.
Gallen, Switzerland
ABSTRACT India began the process of market liberalization that
opened it to significant interactions with the world economy in
1991. In this essay, we provide an overarching view of the
country’s journey toward integration with the global innovation and
entrepreneurship network. Major nodes in this global network have
two major components that may be metaphorically referred to as
‘pillars and ivy’. Globally connected multinational enterprises
(MNEs) form the pillars. Agile startups are the ivy, and their
success (metaphorically, the height to which they can climb)
depends on their symbiotic connections with the pillar MNEs. Both
components are essential and reinforce each other. Without MNEs,
the scaling of startups is hampered. Without a vibrant population
of startups, MNEs’ interest in a location remains driven by cost,
rather than capability and creativity. MNEs (mainly foreign)
provided the initial sparks for the formation of the Indian
innovation and entrepreneurship ecosystem. We chart the subsequent
growth of India’s startups. They began in the information
technology (IT) sector but now cover a much wider range of
industries. Today, India’s innovation and entrepreneurship
ecosystem is one of the largest in the world, with global
integration in terms of technology, financing, human capital, and
administration.
KEYWORDS connectivity, entrepreneurship ecosystems, global
linkages, multinational firms, national systems of innovation,
startups
WHY INDIA DESERVES MORE ATTENTION
In today’s global economy, the prospects of individual countries
are increasingly based on two parallel and mutually reinforcing
pillars: quality and functional coordination of the various
components of the local economic system and connect- ivity with the
global system (Bathelt, Malmberg, & Maskell, 2004; Cano-
Kollmann, Hannigan, & Mudambi, 2018). The twentieth century
‘managerial economy’ was driven primarily by local systems, so
differences in country outcomes were largely due to differences in
their local systems and resources. However, in the
Corresponding author: Johann Peter Murmann
(
[email protected])
Management and Organization Review 15:3, September 2019, 467–493
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twenty-first century ‘entrepreneurial economy’, the pillar of
global connectivity, has become so crucial as to be indispensable
(Audretsch & Thurik, 2001).
The Indian economy has many unique characteristics that continue to
puzzle scholars and policy makers, especially when it is compared
to the economy of the other Asian giant, China. Most scholars who
study China agree that its local systems, especially its
infrastructure (Fan & Zhang, 2004), developed in tandem with
its global connectivity (Breslin, 2007). Thus, it repeats the
pattern observed in advanced economies, albeit at a much faster
pace. In contrast, India’s develop- ment along these two dimensions
has been quite unbalanced, and the reverse of the pattern observed
in China (Huang & Khanna, 2003). The global connectivity of the
Indian economy has proceeded apace, especially in the service
sector – and particularly in knowledge-intensive services (Dahlman
& Utz, 2005), such as the IT, information technology enabled
services (ITES), health care, and financial ser- vices. However,
its manufacturing capabilities and physical infrastructure have
lagged behind (Agrawal, 2015).
China and India went through large political changes in the
aftermath of World War II. In China, the Chinese Communist Party
(CCP) won a protracted civil war that ended in 1949. Once in power,
the CCP set up a one-party system that remains in place, albeit
with some reforms, to this day. Two years earlier, India had won
inde- pendence from Great Britain in 1947 through a largely
non-violent struggle that lasted nearly half a century. In contrast
with China, it set up a multi-party democ- racy. India’s free
democratic system became institutionalized and thrived, surviving
some challenges over the decades. The country now organizes the
largest political elections in the world with 900 million people
going to the polls.
Even though they started from very different political systems,
both India and China initially turned to socialism for ideas about
how to run their economies. Both adopted five-year plans modeled
after those in the Soviet Union, where they had been in use since
1928 and were credited with enabling rapid industrial- ization.
Hence, both countries hoped that socialism and planning would help
them achieve rapid economic growth. Both were disappointed.
In China, the failure of its socialist planned economy was
exacerbated by large-scale political experiments. The country’s
ailing economy was one of the factors that strengthened the hands
of the reformers within the CCP. In 1978, they launched a sweeping
program whose main plank was the rolling back of government control
of the economy. The reforms included allowing more private
enterprise to help jump-start growth.
India, in turn, initiated reforms to liberalize its economy
starting in 1991. To show how far India has moved away from
socialist ideas, the government officially abandoned five-year
plans after the 2012-2017 plan and dissolved the Planning
Commission that created these plans. It replaced the commission
with a new policy think tank called Niti Aayog. With a 15-year road
map, Niti has started many initiatives to improve policies to
nurture entrepreneurship, digital and phys- ical infrastructure,
and skills development. Niti Aayong is setting up numerous
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incubators across the country and launching a USD 1.5 billion fund
of funds to nurture startups.[1]
A big challenge in India that differs from China’s concerns
demographics. In 2017 the population of India was 1.339 billion and
that of China was 1.386 billion (World Bank, 2019b). But the
population growth rate in China declined substan- tially because of
the one-child policy that began in 1979, was modified in the mid-
1980s, and finally ended in 2015. As a result, the proportion of
young people stead- ily declined, which means that unless Chinese
women start having more babies or the country attracts immigrants,
the labor pool will shrink over time. Thus, China is challenged by
the fact that its economic development cannot depend on the large
cheap labor pool as it did previously. By contrast, India currently
has a much higher proportion of young people who need to find first
jobs. For this reason, the Indian government faces the urgent task
of creating 10 million new jobs annu- ally, which has proved
challenging in recent years.
The CCP continues the practice of five-year plans even though most
of the growth in the past few decades has come mainly from private
firms. The CCP maintains its belief that the state has an important
role in directing attention to aspirational goals, the realization
of which depends on bottom up and top down trial and error
experiments (Heilemann, 2018). The technological upgrading ini-
tiative that was first mentioned in the 10th FYP and lasted through
the 11th and 12th FYPs is a recent example (Lewin, Kenney, &
Murmann, 2016). Other recent initiatives include the development of
sectors of the economy that are pro- jected to play an important
role in the future (e.g., supercomputers, artificial intel-
ligence, and electric vehicles). The aspirational goal of becoming
an innovation economy has led to increased investments in R&D
since 2005 (Lewin et al., 2016). China now spends 2.11% of its
gross domestic product (GDP) on R&D. In India, the government
also accounts for a substantial share of R&D spending, but the
corresponding figure is only 0.62% of GDP (World Bank, 2019c). In
the US the figure is 2.74% of GDP (World Bank, 2019c).
The term ‘five-year plan’ might offer a misleading impression of
what the Chinese government has been doing since 1978 – namely,
conducting large eco- nomic experiments. These experiments started
in the early 1980s with the creation of a special economic zone in
Shenzhen, which aimed to imitate the capitalist success of Hong
Kong. The Economist (2018) reports that ‘in 2010—two years before
[President] Xi took over—around 500 policy-related pilot projects
were being carried out at the provincial level, reckons Sebastian
Heilmann of the University of Trier in Germany’, but by 2016 the
number had dropped to about 70, which raises questions about how
China will move from a middle- income to a high-income
country.
In the past two decades, the Indian economy has performed well in
terms of overall averages. Its GDP growth rate in this period has
been 5% or more, one of the fastest rates in the world among major
economies (World Bank, 2018). The country’s poverty rate – based on
the international poverty line of US$1.90 per
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day per capita (2011 purchasing power parity) – declined from about
40 percent in 2004 to 13.4 percent in 2015, whereas in China this
rate fell from in 31.7 percent in 2002 to 0.7 percent in 2015
(World Bank, 2019a). Estimates by the World Poverty Clock (2019),
an initiative funded by the German Federal Ministry of Education
that draws on World Bank data, show that India has continued to
improve its poverty rate since 2015. Thus, while India’s GDP growth
rate has lagged China’s over the past 30 years, it has nonetheless
grown at a sustained rate and lifted a large proportion of its
population out of poverty.
India’s economic growth since 1991 is driven primarily by two
groups of firms. The first group consists of domestic firms that
are members of business groups, particularly those that have taken
advantage of the country’s rising global connectivity to look
abroad for knowledge, inputs, and markets (Kedia, Mukherjee, &
Lahiri, 2006; Mudambi, Saranga, & Schotter, 2017). The second
group consists of the subsidiaries of multinational enterprises
(MNEs), mainly those that employ local highly skilled workers to
service their global operations (Mudambi et al., 2017). In this
paper, we argue that the Indian entrepreneurship ecosystem was
largely sparked by this second group of firms.
THE GENESIS OF THE INDIAN ENTREPRENEURSHIP ECOSYSTEM
Like almost everything about India, its entrepreneurship ecosystem
is a study in contrasts. The outward orientation of its innovation
system has generated a kind of dual economy, in which globally
connected sectors have diverged from the inwardly focused sectors
in terms of performance and outcomes. The globally con- nected
campuses of MNE knowledge-intensive subsidiaries in Indian cities
are vir- tually indistinguishable from their counterparts in the
most advanced countries. But they exist cheek by jowl with
appalling poverty. In spite of India’s efforts at poverty
reduction, as of 2019 about 48 million people still live below the
inter- national extreme poverty line of $1.90 per day (World
Poverty Clock, 2019).
For several years, the number of tech startups in India (estimated
at 7,200 to 7,700 between 2013 and September 2018) as well as the
number of startups that have achieved substantial market
capitalization, have increased rapidly (NASSCOM, 2018). India ranks
fourth in the world in terms of the number of uni- corns (startups
that achieved a market capitalization in excess of US$1 billion)
(Table 1). It ranks fifth in the number of startups that have
achieved market cap- italization in excess of US$10 billion (called
decacorns) (Table 2). When startups reach this size, founders often
become very wealthy. According to Forbes (2019), India currently
has 106 billionaires with a total wealth of USD 405.3 billion. By
comparison, China has 324 with a total wealth of USD 980.7 billion,
and the US has 607 with a total wealth of USD 3.111 trillion. The
entrepreneurship eco- system is part of the broader economy to
which it contributes and draws from.
While the above data reveal substantial growth in Indian innovation
and entrepreneurship, this growth has been achieved despite
systemic problems in
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Table 1. Number of unicorns by country, August 2018
Rank Country Number of unicorns
1 United States 126 2 China 77 3 United Kingdom 15 4 India 13 5
Germany 6 6 Israel 4 7 South Korea 3 8 Indonesia 3 9 France 2 10
South Africa 2 11 Colombia 2 12 Switzerland 2 13 Singapore 1 14
Sweden 1 15 Malta 1 16 Brazil 1 17 Japan 1 18 United Arab Emirates
1 19 Luxembourg 1 20 Nigeria 1 21 Canada 1 22 The Netherlands 1 23
Australia 1 24 Estonia 1 25 Portugal 1 26 The Philippines 1 27 Hong
Kong 1
TOTAL 270
Note: Unicorns are companies with a market capitalization exceeding
US$1 billion. Source: CB Insights (2018).
Table 2. Number of decacorns by country, August 2018
Rank Country Number of decacorns
1 United States 9 2 China 6 3 Singapore 1 4 United Kingdom 1 5
India 1
Note: Decacorns are companies with a market capitalization
exceeding US$10 billion. Source: CB Insights (2018).
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The Spark Provided by Foreign MNE Subsidiaries
The Indian economy opened to the world in 1991. The origins of the
catch-up process can be traced to the establishment of foreign MNE
subsidiaries in the IT industry in Bangalore, beginning with Texas
Instruments in 1985. By the end of the twentieth century, virtually
every major advanced-economy MNE was operating in the Bangalore
cluster (Patibandla & Petersen, 2002). The Y2K phenomenon in
the 1990s, in which (mainly) Western companies realized that they
had to rewrite literally millions of lines of code, led to a sharp
increase in the demand for the cost-effective services of these
Bangalore-based subsidiaries.
Over time, the foreign MNE subsidiary cluster underwent what has
been called ‘subsidiary evolution’ (Cantwell & Mudambi, 2005),
moving up the software development value chain from implementation
and testing to design and post- production client support (Lewin,
Massini, & Peeters, 2009; Lorenzen & Mudambi, 2010).
Undertaking complex tasks in a cost-effective manner influenced
foreign MNE subsidiaries to increasingly outsource more routine
components to local entrepreneurial firms (Prashantham & Yip,
2017). Many of these local firms were spinouts led by enterprising
former employees (Klepper & Sleeper, 2005), who understood the
parent MNE’s systems and culture. This systematic ‘spillover
process’ led to the development of a thriving population of Indian
start- ups that clustered like vines on the tree trunks provided by
the MNE subsidiaries (Mudambi, 2008). The spillover process that
spawned the population of Indian startups ensured that the
entrepreneurship hotspots (Bangalore, Delhi, Mumbai, Chennai,
Hyderabad, and Pune) in the country were co-located with clusters
of foreign MNEs, initially in the IT industry.
Two other processes arose to reinforce these spillover processes.
First, Indian entrepreneurial firms began to use the valuable
knowledge they had absorbed from their MNE partners to move up the
value chain, developing and offering increas- ingly sophisticated
services, generating ‘catch-up processes’ (Mudambi, 2008). In so
doing, they found higher value niches within global value chains
(GVCs) (Parthasarathy & Aoyama, 2006; Prashantham &
Birkinshaw, 2008). Second, falling global coordination costs,
largely traceable to the steep decline in the cost of computing
power, led smaller firms in advanced economies to take advantage of
the services available in India in general and Bangalore in
particular.
Bangalore as India’s dominant entrepreneurial hub. As the first
major cluster of high-tech MNE subsidiaries, Bangalore became
India’s first knowledge hotspot and retains its dominance in the
country’s entrepreneurial landscape to this day (see
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Figure 1). However, vibrant entrepreneurial ecosystems have emerged
in several other cities. The National Capital Region (Delhi, Noida,
Gurgaon, etc.) is the second most active location for startups.
Ever since the establishment of the T- Hub incubator in Hyderabad
by the state government, the entrepreneurship eco- system in that
city has blossomed. In contrast, the country’s commercial capital
of Mumbai has lagged behind these newer centers. The spread of
startups across cities in India is illustrated in Figures 2 and
3.
Figure 2. Industry-wise funding of startups in India by city,
2000–2017 (in percent)
Figure 1. Cumulative number of startups in top 10 cities through
2018 Source: Traxcn database.
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As in the rest of the world, numerous Indian startups were
established in the dot-com era. Only a few survived the subsequent
meltdown. In any event, with very poor internet facilities and low
credit card penetration, it would have been virtually impossible
for internet-based businesses to grow. In the immediate post
dot-com period (1999 to 2005), India had very few startups.
According to Sabarinathan (2019), about 19 startups were funded by
the top angels in India between 1999 and 2005, compared with 21 in
2006 and 16 in 2014. One of the main reasons could have been poor
support for ventures because of the dot-com meltdown as well as an
extremely buoyant job market due to the rapid growth of larger
firms in the IT enabled services (ITES) sector.
The more recent startup developments are in sharp contrast to the
IT and ITES ventures in earlier periods. Recent startups are more
focused on addressing India’s problems (inward facing) while most
IT and ITES ventures in the earlier periods mainly related to
global issues (outward facing). This change in perspective can be
seen in ventures such as RedBus, which was one of the earliest
startups to leverage technology to address one of India’s major
issues: bus ticketing. Before RedBus, it was virtually impossible
to purchase bus tickets remotely. RedBus aggregated thousands of
bus operators across the country and enabled the pur- chase of
tickets across the country over the internet.
The start and subsequent popularity of RedBus, established by
quintessential techies in their twenties, popularized startups as a
career option once again. This was also the time when Web 2.0
(peer-generated content such as Wikipedia) was becoming popular, so
starting a company did not require large amounts of funding. Events
such as Proto attempted to create a platform to connect Web 2.0
entrepreneurs with angel investors. BarCamps and Startup Saturday
created
Figure 3. Emerging market city patents, 1976–2017 Source: US PTO
data analyzed by Snehal Awate of the Indian School of
Business.
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spaces for networking among the small entrepreneurial community to
share knowledge.
The Indian entrepreneurial landscape was significantly changed by
the cash-on-demand (COD) business model. Before the introduction of
this model, e-commerce was restricted to the few who had credit
cards, whereas COD enabled those without credit cards to engage in
e-commerce. It was introduced by FlipKart, an e-commerce startup
launched in 2007. After working at Amazon, the two co-founders of
FlipKart decided to innovate the payment system mainly because they
did not see any growth in online transactions. Although access to
the internet as well as credit card penetration in India was high
in large cities (and higher than it was in the dot-com era),
customers were still reluctant to engage in transactions online.
COD, however, enabled customers to pay from their home when the
product was delivered. This model was not an entirely new concept.
India Post had a service called Value Payable Post, which was a
similar concept but failed to achieve widespread acceptance. Thanks
to COD, online transactions on FlipKart increased by 30% in a very
short period. This business model completely changed the
perspective of India as a market. Because most of the business in
India is conducted in informal markets,[2] ventures such as
FlipKart were seen as instrumental in centralizing them. Thanks to
a high level of investment, FlipKart and some of its clones were
able to attract talent that had previously sought jobs at MNEs and
their subsidiaries.
In recent years, investors have started to believe in India and
invest heavily in local ventures, many of which were importing
successful business models from else- where in the world. Uber was
imitated by Ola, PayPal by PayTM, Yelp by Zomato, Monster by
Naukri, and so on. By the time global players such as Amazon, Uber,
and Monster entered India, these Indian counterparts were large
enough to attract the attention of global investors such as
Misoyashi Son and Jack Ma and compete successfully in local Indian
markets. Because of this competition, some of these Indian startups
(Zomato, Book My Show, Ola) not only have survived in India but
have started to expand their operations to other parts of the
world. An issue that many startups in India face is the shortage of
suit- able talent. One tactic that is becoming popular is the
acquisition of smaller local companies by larger startups to gain
access to their engineering and business talent. This trend is
likely to have positive effects on the ecosystem.
After the establishment of a national startup policy, many
ministries have started to support startups and provide grants for
establishing incubators. The Department of Science and Technology
alone has established over 140 incubators in many smaller cities
(Surana, Singh, & Sagar, 2018). Many state governments are also
designing new startup policies and incubators to support new
ventures. Despite this startup growth across the country, Bangalore
remains the main region for entrepreneurial talent. Many ventures
with headquarters in other cities have development centers in
Bangalore. MNE subsidiaries in Bangalore have been active in
establishing accelerators, which now number about 17
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THE RISE OF A GLOBALLY CONNECTED ENTREPRENEURAL/ INNOVATION
ECOSYSTEM
The Indian National System of Innovation
After 1985, even as Indian-based foreign MNE subsidiaries, along
with their entre- preneurial suppliers, and other local firms,[3]
moved up the value chain, their main strategy remained one of
imitation and cost-based competition. In other words, while they
engaged in sometimes rather complex tasks in GVCs, they mainly imi-
tated processes that had been developed in advanced economies at
lower cost. These have been called ‘output capabilities’ (Awate,
Larsen, & Mudambi, 2012).
Evidence of true innovation capabilities in the Indian
entrepreneurship eco- system began to appear about two decades
after the initial establishment of the Bangalore cluster, in
interviews (Parthasarathy & Aoyama, 2006) as well as in the
more objective data presented here. Using the US patent record as
the indica- tor of world-class innovation output, the first
significant output from Bangalore- based inventors began to appear
in about 2005 (Figure 3). Thereafter, the pace of increase has been
nothing short of stupendous. Between 2015 and 2017, Bangalore-based
inventors produced output roughly equal to their total produc- tion
between 1975 and 2015.[4] Most of this production was in the IT
sector, both hardware and software. However, the biopharmaceutical
sector increasingly contributes to both innovation output and the
startup population.
The Indian pharmaceutical industry has a long history, with some
firms founded in the nineteenth century (Brandl, Mudambi &
Scalera, 2015) and foreign MNEs entering to sell drugs and drug
formulations beginning in the early twentieth century. Throughout
the post-1947 period, the sector experienced continual entry and
expansion. This growth was spurred by the government’s
encouragement of the development of local drug manufacture through
the produc- tion of generic drugs, i.e., the imitative reverse
engineering of formulations of molecules developed in advanced
countries. This ensured that the industry’s innov- ation output
remained so low as to be nonexistent, as local firms had no
incentive to invest in innovation capabilities, and foreign firms
were deterred from undertak- ing R&D in India.
Beginning with government leadership at the Council of Scientific
and Industrial Research (CSIR) in the 1990s, this sector
transformed itself into a truly world-class innovation-driven
constellation of large firms and startups (Brandl et al., 2015).
The spark in this case was the government’s opening of the economy,
culminating with its accession to the World Trade Organization’s
(WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS)
in 1995.
476 S. Bhagavatula et al.
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Between its founding in 1950 and 1993, the CSIR produced only 27
patents regis- tered with the United States Patent and Trademark
Office (US PTO). In contrast, between 1994 and 2015, it produced
540 (Brandl et al., 2015). This generated a leadership and a
demonstration effect that local firms followed, especially because
they were now subject to the new TRIPS regime. The effect of this
dem- onstration effect, reinforced by the new TRIPS regime, is
clearly seen in Table 3, which shows a discontinuous change in the
output of US patents around the mid- 1990s.
We see a similar TRIPS-driven innovation pattern in wide range of
Indian industries, from automotive to heavy electrical and
construction sector. In the automotive sector, Mahindra &
Mahindra transformed itself into an innovative global MNE with
R&D facilities in Troy, Michigan, a suburb of Detroit. The firm
was granted its first US patent in 2004, and by the end of 2018 it
had been granted 61. Larsen and Toubro, an Indian MNE in the heavy
electrical and con- struction sector, has also achieved significant
innovation output.
Startups and Financing
The Indian venture capital market is relatively young and remains
in its infancy. Figure 4 shows the various rounds of VC funding
that startups raised since 2000. Even in its short history, two
inflection points can be identified: the first one
Table 3. The Indian pharmaceutical industry: US Patents
Company Sept. 2018 Dec. 2014 Year of first US patent Company
Founded
Ranbaxy* 160 48 1990 1964 Panacea 55 45 1992 1984 Cadila 126 60
1994 1952 Lupin 129 9 1996 1968 Dr Reddy’s 194 78 1997 1984 Dabur
44 44 1998 1884 Torrent 25 21 1999 1959 Wockhardt 113 38 1999 1960
Biocon 97 70 2001 1978 Aurobindo 32 28 2002 1986 Jubilant 27 21
2002 1978 Cipla 132 14 2005 1935 Ipca 16 13 2005 1949 Glenmark 95
20 2005 1977 Emcure Pharma 18 9 2006 1983 Divi’s 23 20 2007 1990
Sun Pharmaceuticals 38 23 2008 1983 GlaxoSmithKline** 13 0 2015
1924
Notes: * Acquired by the Japanese MNE Dai-Ichi Sankyo in 2008, sold
to the Indian firm Sun Pharma in 2014. ** Indian subsidiary of the
global bio-pharma MNE headquartered in the UK. Source: US PTO data
and company annual reports.
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around 2009 and the second around 2014. Lee Fixel of Tiger Global
was in some ways responsible for the first inflection point, as one
of the first to spot potential in India. He invested in JustDial,
an investment that multiplied 20-fold when JustDial launched its
IPO. Subsequently, he invested in most major Indian startups,
including FlipKart, which went on to become the first unicorn in
India. His invest- ments in e-commerce and IT have played a
significant role in raising India’s profile as a potential market
for goods and services. Before then, the Indian IT sector addressed
problems in the Western world, primarily through the cost arbitrage
model. This inflection point marked the beginning of India’s
attractiveness as a market for both national and international VCs
(see also Mudambi et al., 2017).
The second inflection point around 2014 was a surge in the volume
of funding, brought about by events outside India. A report by Bain
& Co and the Indian Private Equity and Venture Capital
Association (Sheth, Singhal, & Taneja, 2014) noted that over US
$10 billion was invested in Indian startups in 2013, a 16% increase
over the previous year. One of the main reasons for the increase
was the success of the Chinese firm Alibaba. While many investors
in China and Japan consider India some years behind China in terms
of the develop- ment and maturity of its economy, they expect its
trajectory to follow that of its more advanced neighbor. Hence
startups in India with business models similar to those of
successful Chinese ventures began to receive more funding.
Figure 4 also shows the number of new startups receiving funds has
started to decline, perhaps because investors are concentrating on
backing unicorns such as Ola, Oyo, and InMobi through participating
in larger funding rounds led by Chinese VCs, instead of directly
investing in startups. In 2017, 97% of the $2.8 billion in Chinese
investment went to just three unicorns: Ola, FlipKart, and PayTM
mall. The trend continued in 2018, when 49% of the $1.7 billion in
Chinese investment went to two unicorns, Zomato and PayTM (Poojara,
2018). Many in the Indian entrepreneurship ecosystem thought that
the funding and the scale at which these well-funded startups
operated was irrational. However, Walmart acquired FlipKart in 2018
for $16 billion, which provided some evidence that these Indian
valuations were widely shared.
Figure 5 shows the percentage of invested funds by round between
2000 and 2015. Until 2004, most of the funds in India went into
Series A funding (the first stage of VC financing). Beginning in
2005, a few startups raised Series C funding, the third stage of VC
funding for young firms with a proven track record, typically aimed
at building scale. Late-stage funding such as Series F and even H
were raised only after 2013, indicating a significant change in the
amount of funding received by startups in India. YCombinator
recently announced that it would conduct inter- views in India in
summer 2019 to identify interesting startups (YCombinator, 2019).
This will enhance the legitimacy of the startups that are selected
and of the Indian entrepreneurship ecosystem as a whole.
The entrepreneurship ecosystem in India is developing in many large
cities. Based on the funding received by each city, around seven
areas are receiving
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most of the funds (Figure 2). The National Capital Region around
Delhi (Gurgaon and Noida) has emerged in the area outside Bangalore
to receive the largest funding. Unicorns, such as Zomato, PayTM,
Oyo, and Delhivery, are all located in and around Delhi. Several
SaaS (software as a service) startups have emerged in Chennai.
Zoho, which is a bootstrapped giant (its revenue is $300 million)
operates from here. These new city-nodes in the Indian
entrepreneurship ecosystem are beginning to show spinout activity,
such as when Girish Matrubootham started FreshDesk after working
for many years at Zoho. FreshDesk, which also operates from
Chennai, is now a unicorn. These two large startups now form the
nucleus of an ecosystem for other SaaS startups to emerge from this
city. Mumbai, which is India’s traditional business capital, does
not have a large and thriving startup
Figure 4. Angel investment in India by number of funding rounds
Source: Traxcn database.
Figure 5. Funding amount by round in India, 2000–2017 (in
percent)
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scene. However, it has great potential for growth, given that the
nearby city of Pune has several large IT companies and a large
population of engineers.
In the early years of the Indian entrepreneurship ecosystem (from
2000 to 2005), most startups that were funded were in the B2B
(business-to-business) space, as can be seen in Figure 6. However,
over time funding has shifted to start- ups in multiple industries.
Startups in the automotive, education, tourism, and fintech sectors
have received financing support. Health care also appears to be
popular with investors. The B2C (business-to-consumer) space
started receiving funds beginning in 2007. Given India’s large
population and the increasing pene- tration of the internet and
smartphones, the B2C space is likely to be attractive in the
future. Further, given the fact that India has a large informal
sector, startups focused on logistics support have started to
receive investment.
The lack of funding support in some sectors is puzzling. India has
a sophisti- cated film, media, and entertainment industry that has
achieved global connectiv- ity (Lorenzen &Mudambi, 2013). The
country has a large number of scientists and engineers. However,
ventures in media and entertainment and in science and tech- nology
do not seem to be receiving much support. Further, sectors such as
food and beverage and real estate do not seem to be very attractive
to investors.
Comparisons with China
Any discussion of Indian economic performance must benchmark it
against its giant neighbor to the north. While the growth and
performance of Indian
Figure 6. Funding amount in each sector, 2000–2017 (in
percent)
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performance has been strong along most dimensions, it lags
corresponding achievements in China. India opened its economy to
world about a decade later than China, and this head start may be
one of the reasons for the current yawning gap between the two.
However, when considering this ‘head start’, it is important to
bear in mind that when China opened its economy in 1978, it was
emerging from 10 years of the cultural revolution during which
large parts of its economy were destroyed. Further, it is difficult
to sort out whether British colonial rule and the institutional
imprints it left independent India helped or hindered India’s
economic growth performance compared to China’s one-party
governance system.
The Chinese entrepreneurship ecosystem, however, is both more
mature as well as more focused than the Indian one. This
corresponds to a smaller number of startups, along with a much
higher success rate in terms of increasing scale (Tables 1 and 2).
Not surprisingly, this gives China a significant advantage in terms
of funding (Table 4). In 2018, funding for startups from all
sources, both domestic and foreign, was over ten times higher in
China than in India. Hence, China produces gigantic emerging
economy MNEs (EMNEs) at a much higher frequency than India, and
that trend is likely to persist well into the future.
A MODEL OF INDIAN INNOVATION AND ENTREPRENEURSHIP
India has long been characterized as a dual economy that fits very
well with the original Lewis model (1954). The backward or
‘traditional’ sector consists of signifi- cant portions of
agriculture along with small businesses in the informal sector.
Domestic business groups and subsidiaries of foreign MNEs comprise
the bulk of the advanced sector. Although migration of the large
labor surplus from the backward sector to the advanced sector has
been a feature of the Indian economy for at least a century, in
recent years this flow has become a torrent involving literally
millions of people.
Table 4. Startup funding: India vs. China (US$ billion)
Year India China
2014 5.21 12.30 2015 8.80 45.70 2016 4.71 53.80 2017 12.66 58.80
2018* 3.34 43.40
[Cited on 12 September 2018]. Available from URL:
https://www.techinasia.com/china-startup-funding-set-to-
smash-records-2018 Notes: * Through June. Sources: Inc42, Indian
Tech Startup Funding Report; Custer (2018). China startup funding
on pace to smash records in 2018. TechiInAsia.com.
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The economy was highly regulated before 1991, but even during this
period both groups of firms in the advanced sector brought in
technology from advanced economies, albeit a generation or two
behind the technology frontier. In the regu- lated period, their
main objective was inward facing, that is, to serve the domestic
market. Even before 1991, they did undertake significant investment
‘in activities demanding complex technologies, large-scale
production and intensive manage- ment’ (Lall & Mohammad, 1983:
143). The dual economy had a geographic dimension, in which the
relatively advanced sector was primarily urban, whereas the
backward sector was mostly rural.
This dualism has been exacerbated in the years following the
opening of the economy in 1991. However, a very significant
proportion of the internal migrants from the rural to the urban
areas found higher paying jobs and saw their living stan- dards
rise rapidly, leading to a large expansion of the middle class. In
the process, India’s advanced sector has lifted millions out of
poverty, an achievement that rivals China’s in terms of reducing
the extent of human deprivation. In the following discussion, we
present a model consisting of three distinct but interlocking
processes that together present an analytical picture of the
innovation and entrepreneurship ecosystem that drives the advanced
sector of the Indian economy.
Spillover Processes
MNE subsidiaries in India take two generic forms. The first,
domestic market seeking, is exemplified by the operations of
Hindustan Unilever, the sub- sidiary of the Anglo-Dutch MNE that
has operated in India since 1933. In terms of traditional
international business theory, this is a classic downstream-
oriented market-seeking subsidiary (Dunning & Lundan, 2008),
whose spillovers to domestic competitors occur through several
channels. These include: (a) dem- onstration effects; (b)
co-operative upgrading of local suppliers of marketing ser- vices
like advertising and logistics capabilities to manage of supply
chains with a backward physical infrastructure; and (c) the labor
market as when managers transition to employment in domestic
competitors, taking valuable knowledge with them.
The second generic form is typified by the operations of
information technol- ogy subsidiaries in Bangalore, that support
the global R&D and client support of their parent firms. These
upstream-oriented MNE subsidiaries have virtually no connection to
the domestic economy other than through the hiring and employee
retention function. They view India as a specialist base to service
their global R&D and innovation networks. The lion’s share of
the significant patent output of the Bangalore metro area can be
traced to the globally focused R&D efforts of these
subsidiaries. In terms of international business theory, these are
strategic asset- seeking subsidiaries (Dunning & Lundan, 2008),
whose spillovers to the domestic economy occur through supplier
partnerships, labor market turnover to domestic competitors, and
spinoff processes, when employees depart to launch their own
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Catch-up Processes
Domestic firms in India had heterogeneous responses to the
liberalization of the economy beginning in 1991. Leading firms
viewed the new policy regime as an opportunity and aggressively
partnered with advanced-economy MNEs, typically with their
subsidiaries, taking advantage of the resulting knowledge
spillovers to upgrade their capabilities. Lagging firms viewed
liberalization as a threat and lobbied the government to delay or
derail its provisions. In the event, many of the leading firms
survived and thrived, while the lagging firms, by and large, dis-
appeared (Kumaraswamy, Mudambi, Saranga, & Tripathy,
2012).
Beginning as partners of MNE subsidiaries, many of the leading
firms upgraded their capabilities, a variant of the ‘learning by
supplying’ paradigm (Alcacer & Oxley, 2014). As they upgraded
and were viewed as more of a competi- tive threat, these
partnerships often dissolved with one party buying out the other.
Alternatively, domestic firms that grew beyond this initial
cooperative phase, hit a ‘glass ceiling’, beyond which their
partners would no longer support their upgrad- ing efforts. If
further progress occurred, it often occurred through the Indian
firm acquiring knowledge-rich targets in advanced economies (Awate,
Larsen, & Mudambi, 2015). The eventual outcome of catch-up
processes is the rise of EMNEs. Major Indian giants such as
Infosys, TCS, and Bharat Forge all got their start as
partners/suppliers of MNE subsidiaries in India.
The Analytical Model
Catch-up and spillover processes are symbiotically related,
complementary and are both either inward- or outward-facing (Awate
et al., 2012; Fu, Pietrobelli, & Soete, 2011; Kumaraswamy et
al., 2012). Putting the spillover and catch-up processes together
yields the model summarized in Table 5. The model illustrates
coopera- tive processes in the short run that lead almost
inevitably to competitive processes in the long run.
MNEs that serve the Indian market have local partners as suppliers
or distri- butors. These cooperative relationships were in place
for decades, as the economy grew very slowly (less than 4 percent
per year) between independence in 1947 and the opening of the
economy in 1991 (Mukherji, 2009). This more-or-less fixed pie was
conducive to stable, cooperative relationships. Domestic firms
could not justify investing significant resources in upgrading
activities, thereby risking their MNE relationships, in such a slow
growing market.
However, this all changed in the post-1991 period. As the economy
began to grow much more rapidly, domestic firms’ expectations of
gains from upgrading continually increased. Hence, existing Indian
firms with MNE subsidiary
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relationships (boxes S1 and S2 in Table 5) were encouraged to
invest in R&D and innovation. Over time, this inexorably led
them into competition with their erst- while partners. The
inward-facing MNEs faced new competitors, who developed competing
products and services aimed at the domestic market, often with
better local fit and lower cost (movement from S1 to L1 in Table
5). The outward-facing MNEs that serviced their global operations
from India found new competition from new Indian EMNEs that had
moved up to value chain (movement from S2 to L2 in Table 5).
Spillover processes also spurred domestic ventures. As the domestic
market expanded, it gave rise to new and profitable niches that
were well suited to small, entrepreneurial firms. Often these firms
began by collaborating with MNE subsidiaries to enhance their
products and services, either locally (S1 in Table 5) or globally
(S2 in Table 5) (Prashantham & Birkinshaw, 2008). Over time,
many of these entrepreneurial firms became engaged in catch-up
processes. Increasingly, entrepreneurial startups are launched to
compete directly with advanced-economy MNEs (directly into L1 and
L2 in Table 5), emulating knowledge-based entrepreneurial activity
in advanced economies. Examples of such entrepreneurial firms are
FlipKart, which was in direct competition with Amazon in India, and
Ola, a competitor with Uber. SaaS firms, such as FreshDesk and
Zoho, are competing with global players, such as SalesForce and
Google. Zomato, a restaurant discovery and delivery startup,
competes in the same space as Yelp; it now operates in 24 countries
and is a top app in 19 of them.
Finally, some leading advanced-economy MNEs are beginning to
realize that the disjointed inward- and outward-facing strategies
inherent in the model in Table 5 are suboptimal. They are
recognizing that integrating local and global strategies (the
strategic opportunity in Table 5) offers the greatest promise to
develop long run competitive advantage in the rapidly growing
Indian market (Mudambi et al., 2017).
Table 5. Advanced-economy MNEs and local ventures’ spillover and
catch-up
MNE subsidiaries
Inward facing
S1. Low-tech suppliers/distri- butors of MNEs selling locally
S2. Local suppliers of specia- lized services to MNEs’ global
operations
Long-run Competition
L1. Launch of local brands/ MNEs face increased local
competition
L2. Mature into emerging economy MNEs, compete globally
Integration Strategic opportunity. Integrate inward market supply
with service of global operations
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However, implementing these integrated strategies is a difficult
task that calls for high-level boundary-spanning capabilities
(Schotter, Mudambi, Gaur, & Doz, 2017). All three types of
firms – advanced-economy MNE subsidiaries, large domestic firms,
and domestic entrepreneurial startups – increasingly use members of
the large Indian diaspora in a targeted manner to implement this
boundary-spanning function. These individuals often have the
cross-cultural as well as cross-organizational knowledge to bridge
the divide between inward market-supplying and outward
global-servicing operations.
THE FIVE CONTRIBUTIONS TO THIS SPECIAL ISSUE
The five articles in this Special Issue cover a variety of
phenomena connected with the innovation and entrepreneurship
ecosystem in India. Collectively, the articles paint a variegated
and nuanced picture of the Indian innovation and entrepreneur- ship
landscape. The first two investigate the role of clusters in
accelerating innov- ation. The next article focuses on how academic
incubators in India differ from Western models. The fourth
contribution investigates the knowledge acquisition strategies of
Indian pharmaceutical firms and the export performance of the
Indian pharmaceutical industry in the face of a changing innovation
ecosystem. The fifth and final article focuses on how connections
to other agents in society and the economy enhance the legitimacy
of international new ventures (INVs) in India and other emerging
economies. The articles differ in their methods: three are mainly
empirical (articles 1, 2, and 4), employing descriptive statistics,
inter- views, network analyses, and community discover tools, and
two (articles 3 and 5) aim to make theoretical contributions.
The first article, ‘How Early Entrants Impact Cluster Emergence:
MNEs vs. Local Firms in the Bangalore Digital Creative Industries’,
by Lorenzen (2019), pre- sents an original exploratory analysis of
the emerging digital creative industries (DCI) cluster in
Bengaluru. Firms in the industry create animations, video special
effects, and electronic games. The DCI innovation system is
becoming global and a fundamental question for laggard countries
such as India is how it can compete with the highly capable MNEs
from advanced economies. The
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article relies on a manually collected dataset of entrants to the
DCI cluster by MNEs and local Indian firms. Like a detective,
Lorenzen (2019) pieces together the emergence of the DCI cluster
using multiple primary and secondary sources, including 19
extensive interviews with key players. The principal finding of the
article is that MNEs develop production and innovation capabilities
rapidly and in narrow parts of the value chain but that their
activities have very little local spillover to other firms. By
contrast, local firms develop these capabilities much more slowly,
but they also involve broader portions of the value chain. Most
importantly in terms of policy, local firms have much more
knowledge spillover than MNEs, and local firms have higher
participation in building a local entrepreneurial system. But local
firms clearly benefit from being connected to sources of knowledge
around the world even though their connections to MNEs within the
cluster are not as strong as might be expected.
As mentioned earlier, Bengaluru is a key innovation hub in India,
sometimes referred to the Silicon Valley of India (Arora &
Gambardella, 2005). The contri- bution by Turkina and Van Assche
(2019), ‘An Anatomy of Bengaluru’s ICT Cluster: A Community
Detection Approach’, systematically investigates the anatomy and
structure of the information communications technology (ICT)
cluster in the region using a variety of analytical methods,
including a voltage- based algorithm – a tool for community
discovery that that is relatively novel in regional studies. The
article is based on a hand-collected dataset of 1,823 firms from
different sources. The key analytical method used in the article is
to distin- guish horizontal ties between firms (these ties connect
firms at the same level of the value chain) and vertical ties
between firms (these ties connect firms across dif- ferent levels
of the value chain). We want to highlight a few of the interesting
find- ings from the study. The horizontal network in the Bengaluru
ICT cluster turns out to be decentralized and shows a number of
distinct technological communities within which firms cooperate
strongly. The vertical network is centralized around key firms and
a few key topological clusters. However, the core firms in both
types of networks are organized around key global technological
leaders, Autodesk and IBM in horizontal networks and HP and Dell in
vertical networks. The peripheral companies tend to be local Indian
firms. The most important lesson for regions in other emerging
economies that want to upgrade their techno- logical capabilities
is that the Bengaluru ICT cluster is no longer focused just around
firms that innovate in software-related technological fields but
now also focuses around firms that innovate in communications
technology and electronic devices. Precisely how this came about is
an important area of future research.
In their contribution, ‘The Institutional Context of Incubation:
The Case of Academic Incubators in India’, Narayanan and Shin
(2019) theorize on the differ- ences between academic incubators in
India (estimated to number from 120 to 140) and Western models.
Previous theoretical work on incubators identify market failure as
the key reason for the emergence of such incubators. Narayanan and
Shin (2019) argue that this Western theoretical framework for
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the emergence and success of incubators in developed market
economies is inad- equate for understanding the reasons for the
emergence of incubators in transform- ing countries such as India
and what is required for incubators to succeed in stimulating
entrepreneurship, especially among university graduates and other
young people. Building on Scott’s (2008) framework of institutional
analysis, Narayanan and Shin (2019) explain that many assumptions
taken for granted about the existence of regulatory, normative, and
cultural-cognitive elements are carried over from Western countries
to emerging economies. This implies that the functioning of
incubators in emerging economies will depend on alternative
processes and institutional features to make up for the absence of
Western institu- tional characteristics, such as strong
intellectual property regimes and clear bank- ruptcy laws. The
implications of Narayanan and Shin’s (2019) article go well beyond
incubators. They persuasively show what MOR has been advocating
since its inception – that in their theorizing scholars need to
consider the extent to which local context is important in
understanding a social phenomenon (Meyer, 2015; Murmann, 2014; Van
de Ven, Meyer, & Jing, 2018). Incubators in an emerging economy
such as India should not be assumed to be the same thing as
incubators in the West. By problematizing theoretically the
institutional infrastructure supporting incubators in India,
Narayanan and Shin (2019) raise many interesting questions for
empirical work on incubators there and in other emerging economies.
One might even learn something about Western incubators that
previously was not noticed because it was taken for granted (March,
2005).
In their article ‘Knowledge Sources and International Business
Activity in a Changing Innovation Ecosystem: A Study of the Indian
Pharmaceutical Industry’, Sahasranamam, Rentala, and Rose (2019)
examine the role of intellec- tual property (IP) institutions in
the development of India’s emerging economy. The focus is on the
pharmaceutical industry, which has been an export success story,
now shipping over 50% of its production to other countries. India
built up its capacity to reverse engineer Western drugs when India
moved to a process patent (Murmann, 2003: 88 ff, 185 ff; Penrose,
1951). This regime persisted for about a quarter-century until
India began negotiations to participate in the WTO and the TRIPS
agreement. India signed the TRIPS agreement in 1995, with a
ten-year adjustment period, with full compliance by 2005 (Brandl,
Darendeli & Mudambi, 2019). The article analyses how Indian
pharmaceutical firms changed their strategies from a transitional
period in 1995-2004 to a period when new TRIPS rules were in full
effect (2005-2014). The authors conjec- ture that if Indian
pharmaceutical firms wish to continue their strong export per-
formance in the post-TRIPS period, they will increasingly seek
access to knowledge from other players in the global knowledge
ecosystem, rather than focusing on their own R&D. In the
future, this conjecture can be tested with empirical data.
The phenomenon of this century is that Chinese entrepreneurs –
after having studied and worked abroad – leverage their
international ties to gain resources and legitimacy for their new
ventures (Wang, Zweig, & Lin, 2011; Wright, Liu, Buck,
&
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CONCLUSION
This introductory essay represents one of the first comprehensive
attempts at taking stock of the Indian innovation/entrepreneurship
ecosystem. The rapid growth of the Indian economy after being
opened to the global trade and invest- ment in 1991 has received a
great deal of attention from scholar and policymakers. However, the
entrepreneurship/innovation engine that powers this growth, and
especially the symbiotic relationships between its domestic and
foreign-owned components, have received relatively less attention.
Our essay and the papers in this special issue are an attempt to
address this under-researched aspect of the Indian economy.
While our analytical model was developed with the Indian context in
mind, we believe that it applies well beyond this specific context.
Globally dominant entrepreneurship ecosystems have two major
components that may be metaphor- ically referred to as ‘pillars and
ivy’. Large globally networked MNEs, such as Google, Microsoft,
Daimler-Benz, and Siemens, are the pillars. As noted in the Indian
case, such firms provided the initial sparks that triggered the
formation of the Indian entrepreneurship/innovation ecosystem. The
process that began in Bengaluru in the 1980s is spreading around
the country in city after city. The start- ups are the ivy, and
their success (metaphorically, the height to which they can climb)
depends on their symbiotic connections with the pillars.
In the early phases, the pillars are typically foreign-owned MNEs
based in advanced economies, while the ivy is composed of local
startups. However, over time the startups often grow large enough
to become pillars, or EMNEs in their own right, and foreign
startups begin entering to tap into local knowledge. As
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the process of economy emergence continues, the MNE and startup
populations operating in the economy are both composed of locally
owned and foreign- owned firms.
The two components are both essential and reinforce each other.
Without MNEs, the scaling of startup ideation is hampered. Without
a vibrant population of startups, MNEs’ interest in a location
remains cost driven, rather than capability and creativity driven.
This remains true whether the context is India, China, Israel, or
Taiwan. Preliminary quantitative evidence is consistent with this
view (Awate & Mudambi, 2018). Emerging knowledge clusters tend
to gain access to global innov- ation systems through their breadth
of innovation (diversity that tends to be asso- ciated with
startups) whereas established knowledge clusters maintain their
centrality through their depth of innovation (specialization that
is typically asso- ciated with large MNEs).
NOTES
We thank the NS Raghavan Centre for Entrepreneurial Learning,
Indian Institute of Management Bangalore for supporting the Special
Issue Paper Development Workshop in Bangalore. We also thank
Sukanya Roy and Dalhia Mani for sharing data on Bangalore
Entrepreneurial Ecosystem. Last but not least, we would like to
thank Arie Lewin for critical comments and suggestions on earlier
versions of this essay and his support and advice on many aspects
of this special issue. [1] See
https://sidbi.in/en/venture-capital/. [2] The Indian economy has
traditionally been decomposed into the organized and
unorganized
sectors. Entry and many other aspects of he organized sector were
heavily regulated by the gov- ernment whereas entry in the
unorganized sector was not. Banks, the automotive sector, the
insurance industry, and central government run organizations
including the railways, for example, fall in the organized sector.
Small scale businesses, household production, and most need-based
entrepreneurship are in the unorganized sector. The organized
sector typically also has unions, which firms in the unorganized
sector do not have.
[3] Some of these local firms grew into emerging market MNEs (or
EMNEs) in their own right, such as TCS and Infosys.
[4] As can be seen in Figure 3, Bangalore and Shanghai based
inventors show nearly identical lon- gitudinal outputs of US
patents. These steeply rising trajectories of world class
innovation output contrast sharply with the much more modest
performance of the leading innovation centers in Russia (Moscow)
and Brazil (Sao Paulo). These data are suggestive of one possible
explanation for the so-called ‘middle-income trap’.
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Suresh Bhagavatula (
[email protected]) is an Associate
Professor at the Indian Institute of Management Bangalore and heads
the Entrepreneurship area. His research interests are in two partly
overlapping domains - entrepreneurship and social networks. In
entrepreneurship, his inter- ests are in low and high technology
firms in India. Within the social network domain, he is interested
in understanding the influence of social capital on per- formance
of entrepreneurs and teams. He has published in journals such as
Journal of Business Venturing, Entrepreneurship Theory and
Practice, Strategic
Entrepreneurship Journal, and International Small Business Journal.
He has trained as an engineer in India and Germany and has a PhD
from Vrije Universiteit, Amsterdam. Ram Mudambi
(
[email protected]) is the Frank M. Speakman Professor of
Strategy at the Fox School of Business, Temple University,
Philadelphia, USA. He received his PhD from Cornell University. His
current research focuses on the geography of innovation
particularly in the context of emerging economies. He is a Fellow
of the Academy of International Business (AIB) and of the European
International Business Academy (EIBA). He has published over 100
peer-reviewed research papers. His work has appeared in the Journal
of Political Economy, Journal of Economic Geography, Strategic
Management Journal, Journal of International Business Studies, and
Harvard Business Review among many others.
492 S. Bhagavatula et al.
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Research
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Bangalore, on 06 Mar 2020 at 07:30:51, subject to the Cambridge
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493Innovation and Entrepreneurship in India
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Research
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Bangalore, on 06 Mar 2020 at 07:30:51, subject to the Cambridge
Core
WHY INDIA DESERVES MORE ATTENTION
THE GENESIS OF THE INDIAN ENTREPRENEURSHIP ECOSYSTEM
The Spark Provided by Foreign MNE Subsidiaries
Bangalore as India's dominant entrepreneurial hub
THE RISE OF A GLOBALLY CONNECTED ENTREPRENEURAL/INNOVATION
ECOSYSTEM
The Indian National System of Innovation
Startups and Financing
Comparisons with China
Spillover Processes
Catch-up Processes
CONCLUSION
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