Economic Adversity and Entrepreneurship-led Growth - Lessons from the Indian Software Sector
Suma Athreye
#2010-008
It is commonly believed that the business environment in developing
countries does not allow productive technology-based entrepreneurship to
flourish. In this paper, we draw on the experience of Indian software
firms where entrepreneurial growth has belied these predictions. This
paper argues that the business models chosen by Indian firms were those
that best aligned the country’s abundant labour resources and advantages
to global demand. Many potentially higher value added opportunities
struggled to attain success, but the qualitative value of experimental
failures and the capability gaps they exposed was invaluable for
collective managerial learning in the industry. Second, the paper also
shows that the presence of growth opportunities and the success of firms
stimulated institutional evolution to promote entrepreneurial growth.
Last we show that the distinctive aggregate contribution of
entrepreneurial firms was that they outperformed business houses and
multinational subsidiaries in their more productive use of available
capital resources whilst achieving similar levels of growth in output
and employment.
This paper draws upon an earlier shorter paper co-authored with Mike
Hobday and titled ‘Overcoming Development Adversity: How Entrepreneurs
Led Software Development in India’.
Keywords: technology entrepreneurship, institutions and economic
development, Indian software, intellectual property rights
JEL classification: L26, L86, O10, 032, O34, I28
UNU-MERIT Working Papers
ISSN 1871-9872