Why do Indian firms go abroad?
Overseas investments by the emerging economies are a feature of globalisation. Investments <br/>by Indian firms, though not large in volume, differ from that of other emerging economies <br/>such as China in their composition, destination and modality of investments. A relatively <br/>high proportion of their investments are in the manufacturing and services sectors of the <br/>developed economies such as the UK and the USA. A number of statistical studies have <br/>attempted to identify the factors motivating Indian firms to invest abroad. Most of these <br/>studies attempt to ground the analysis in the received theory of foreign direct investment <br/>centred on the ownership advantages, location and internalisation (OLI) paradigm. This paper <br/>argues that statistical tests cannot fully account for the unique nature of India’s investments <br/>abroad. The pattern of investments that differs from that of the other emerging economies is <br/>to be attributed to India’s endowments of entrepreneurial skills centring on exploration of <br/>investment opportunities and astute management of complex organisations. These <br/>endowments are an inheritance from history augmented by the contribution of India’s <br/>diaspora abroad. The lukewarm investment climate at home may also be a factor in the <br/>decision of Indian firms in technology and skill intensive firms to venture abroad. <br/>Explanations for the unique nature of overseas direct investments by Indian firms have to be <br/>sought in the organisational structure and history of Indian business houses.
Year of publication: |
2013
|
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Authors: | Balasubramanyam, Vudayagi ; Forsans, N |
Institutions: | Department of Economics, Management School |
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