Entrepreneurs, Multinational Enterprises and Policy
Edited by Maureen McKelvey and Sharmistha Bagchi-Sen
Chapter 16: Tapping into India’s innovation potential: consequences for a Western multinational enterprise and the case of SKF
This chapter addresses how a European multinational corporation (MNC) accesses, but is also changed by, moving into research and development (R & D) to support production and new products, within innovation space in India. Today, India receives a sizeable and increasing chunk of foreign direct investment (FDI) in R & D by MNCs (Basant and Mani, 2012).The number of innovations emanating from India is rising (Kumar and Puranam, 2011). Since the liberalization of India’s economy in 1991, not only have FDI inflows to India exploded from US$75 million to US$36 500 million 20 years later, but also, since 2004, there is a remarkable trend of foreign companies outsourcing R & D activities to their Indian subsidiaries as well as to other Indian R & D firms (Basant and Mani, 2012; Reddy, 2011). The R & D units not only support adaptations and further developments of products and services developed for the mature markets (Dossani and Kenney, 2007; Lewin et al., 2009), but they also develop products and services adapted to the local market to a lower cost, perhaps eventually-to be able to reach the bottom-of-the-pyramid segment (Prahalad, 2004). The major concern is then not to strip the product or service of “unnecessary and costly” features, but rather to develop a product or service with the right features and to the right cost to fit in emerging markets; that is, frugal engineering.
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