Research Handbooks in Business and Management series
Edited by Hemant Merchant
Chapter 6: Mapping institutional influences on multinational firms’ R & D investments in emerging markets: the case of India
While the internationalization of corporate R & D in the 1990s was largely limited to the R & D triad of North America, Western Europe, and Japan (Florida 1997, Kuemmerle 1999, Kumar 1996), the last 20 years have seen an explosion of foreign R & D facilities in emerging markets, most notably in India and China. In terms of the total number of inbound foreign corporate R & D investments in a country, India ranks first in the world and China ranks second. The ability of a relatively poor country like India to attract a substantial number of foreign R & D investments has puzzled observers, especially given the long held dogma that only the wealthiest countries possess the scientific infrastructure necessary to conduct successful corporate R & D. The dearth of academic research examining the driving forces behind the rapid increase in foreign R & D activity in India has contributed to un-and/or mis-informed views which, unfortunately, the media has only reinforced. The media usually refers to lower labor costs and, to a lesser extent, access to highly skilled scientists and engineers as possible sources of India’s attractiveness to foreign multinational companies (MNCs). No other factors occupy a prominent place in the media’s narrative (Thursby and Thursby 2006a).
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