Strategic entrepreneurship in a globalising economy: evidence from emerging economies

Abstract

Over the past few years, the nature and character of the engagement of Indian firms with global markets have undergone a transformation. Like firms from other emerging economies, Indian firms were traditionally engaged in the export of commodity products or they competed in international markets that were similar to Indian markets in terms of their competitive and regulatory characteristics. However, in the last decade, many Indian firms, especially from the software, pharmaceutical and auto-component sectors have been successfully participating in global markets that are knowledge intensive and technologically sophisticated. Several of them have created unique organisational competencies that have enabled them to move beyond cost competitiveness — the traditional forte of firms from emerging economies — and create sustainable positions in global markets, including the most advanced markets of the world. In this paper, based on our case study research, we analyse the internationalisation efforts of two firms from the Indian pharmaceutical industry, Ranbaxy Laboratories Limited (Ranbaxy) and Dr Reddy’s Laboratory (DRL). Certain inherent features of emerging economies such as resource constraints, absence of a suitable ecosystem and liability of origin substantially increase the degree of difficulty in internationalisation for Indian firms. However, their vision of becoming international pharmaceutical companies motivated Ranbaxy and DRL to undertake the risky process of internationalisation and the novelty that they exhibited in execution enabled them to succeed in the highly competitive international markets. Their initial success in the global market led the incumbents in these markets to adopt tough competitive postures. How Ranbaxy and DRL were able to cope with the challenges and convert the initial opportunity into a viable business proposition makes their journey a compelling example of firms from emerging economies competing successfully in global markets. This paper is broadly divided into the following four sections. In the first section we describe the unique challenges faced by firms from emerging economies in their efforts at internationalisation. This is followed by an analysis of Ranbaxy and DRL’s internationalisation process. We then compare and contrast the two cases and analyse their differences. In the fourth section, we introduce the notion of strategic entrepreneurship to locate the efforts of the two firms and to derive lessons for firms from emerging economies that are competing in global markets. We conclude by discussing our contributions and the scope for future research.