Innovation and competitiveness among the firms in the Indian automobile cluster

Automobile original equipment manufacturers are expanding their production bases to emerging economies to expand their market reach and leverage the existing capacity for auto-component manufacturing and provide opportunities for suppliers and subcontractors to build innovation capabilities leading to better performance. The innovation systems perspective and global value chain perspective contributes to develop important framework for evaluating innovation performance and maintain competitiveness of firms. These firms utilize external source of innovation and knowledge spillover externalities at cluster. This study explores firm's innovation capabilities and economic performance in the Indian automobile cluster. Empirical evidence shows that how firms can interact with Innovation Systems and Global Value Chains to build innovation capabilities (technological capability, manufacturing capability, organizational capability, strategic planning capability and marketing capability). The structured equation modeling has been performed to test hypotheses and our analysis shows that how firms' utilize external source of innovation and enhance their innovation capabilities and achieve global competitiveness.