Divergence and convergence of firm-level best practices: the case of Bajaj and Hero-Honda in India s two-wheeler industry

Abstract

Literature in economic development shows how countries diverge and converge in economic growth owing to technological change and capital accumulation. This paper examines micro-level issues of competitive rivalry of firms and consequent convergence of best practices. Multinational investment in developing economies is one of the means of technology in- flows. If local firms have a critical level of capabilities and are able to compete with multinational firms this can lead to convergence of best practices and consequent economic growth. Some of the propositions of the literature are empirically tested with the case of rivalry between a local firm and a multinational firm in India's two-wheeler industry for a period of 15 years.