Co-evolution of policies and firm level technological capabilities in the Indian automobile industry

Abstract

Innovation in form of new products, processes or forms of productive organisation brings growth to firms and development to economies and therefore it is important to understand sources of innovation and technological capabilities. In this context this paper explores sources of innovation and technological capability in the Indian automobile industry. In last decade Indian auto industry emerged as one of the fastest growing industry with increasing levels of technological sophistication in auto industries amongst emerging countries. This paper shows that industrial policy set up challenges for firm in form of constraint to develop products with higher local suppliers and helped development of auto component supplier industry. It also points out important role played by factors such as nature of demand and firm ownership in innovative capability development. Paper reveals key attributes of firm ownership which include managerial vision and diversified nature of businesses. The diversified nature of businesses has helped Indian auto firms in innovative capabilities by facilitating inter-sector learning.2

Mediating Role of Entrepreneurship in Explaining the Association Between Income Inequality and Regional Economic Performance

“…Hierarchical preferences posit that (a) some goods might not be purchased because of affordability and (b) additional income is used to consume high priority goods (Foellmi & Zweimüller, 2008). With these assumptions, one can infer that high-income consumers induce high-quality and differentiated products with high acquisition costs, whereas low-income consumers stimulate products with relatively low price and low acquisition costs (Kale, 2011;Kaplinsky, 2011). Thus, this pattern creates heterogeneity in the income elasticity of demand (Fajgelbaum, Grossman, & Helpman, 2011).…”

Marketing innovation: a resource‐based view of international and local firms

“…As a result, firms operating in emerging markets are offering various options to customers, making the markets highly aggressive with features such as competitive pricing and access to availability of finance with long‐term return options. In the case of the automobile industry, Kale (2011) reported that the Indian market is skewed towards mini, compact and fuel‐efficient vehicles instead of luxury cars: as per Sagar and Chandra (2004), the segment preferring mini and compact cars contributes to 80 per cent of total car sales in India.…”

“…Suzuki responded to the requirement for affordable passenger vehicles in India by offering low‐cost cars to Indian customers. Considering the stage that the economy of India was at in 1983 and the operational requirements of the Indian market, Suzuki decided to join hands with the local authorities through a public‐private partnership under the name of Maruti Suzuki (Kale, 2011). Following its entry into the Indian market, Suzuki associated with local firms to understand the key attributes of the market at the micro level.…”

“…As reported by Kale (2011) business associations improve the capabilities of partners in association by facilitating the transfer of knowledge, smoothing the flow of talent and capital without any cost of transaction being levied on either of the two partners. Maruti Suzuki creatively and innovatively used the resources and networks of their local associations to expand in the Indian market, ensuring flexibility and openness in its operations.…”

“…The supply of technologically advanced products and knowledge about local market allowed Maruti Suzuki to cross‐cultural barriers by inducing innovation in the marketing of its products for creating a pull‐based demand (Rasiah, 2011). Mutual strengths and capabilities improved the business efficiency of both types of firms and induced innovation in marketing (Kale, 2011).…”