Internationalization strategies for Indian firms

Abstract

Indian firms are increasingly looking beyond the domestic markets – whether it be to further their growth objectives, to learn the international best practices, or to hedge their risks by operating in economies with different business cycles. Thus, policy makers of the country as well as firms going global are facing the tough decision regarding the internationalization strategy to follow. The export data of Indian industries is one of the salient indicators that can be used to judge the globalization of Indian firms. Examining the history of the structure of Indian exports, and the drivers for the same, would throw more light on the shifts in the nature of internationalization efforts of Indian firms. Historically, Indian firms had been exporting traditional products like tea, iron ore, leather, apparel, gems and jewellery, etc., presumably due comparative advantages that India had in terms of endowment of these resources. However, there were hardly any individual companies that could compete on the global scale. More recently, there has been an emergence of world-class Indian companies in industries like software, pharmaceuticals, and auto ancillaries, which are competing head-on with other multinationals in the global arena. Does this point to a paradigm shift from county-level advantages or policy initiated benefits for competing internationally, to competitive advantages of individual firms? A more detailed study of export performance of different industries and assessment of their competitiveness in the global setting would help answer this question to a certain extent. Judging the extent to which national policy frameworks facilitate export performance will also provide some insights. If the patterns revealed from such an analysis do indeed indicate a move towards competitive advantage, it makes a case for India’s policy makers and other aspiring firms/industries to look at them to evaluate and evolve their own strategies for internationalization. This CCS attempts to answer some of these questions, through the broad methodology described above.