Internationalization of Indian software firms through establishment of global development centers: A contingency perspective

Abstract

Purpose

The purpose of this paper is to examine the inter-firm variation in the opening of international global development centers (GDCs), in a high commitment entry mode, by Indian software firms as a function of their past performance, degree of internationalization, possession of a valuable resource in the form of CMMI Level 5 certification and rivals’ establishment of GDCs.

Design/methodology/approach

The authors draw on the organizational learning theory, the resource-based view and the strategic behavior theory to analyze the variation in the number of GDCs opened by 32 leading Indian software firms between 2000 and 2009.

Findings

The authors find that strong past performance of Indian software firms leads to the establishment of a greater number of GDCs. The authors further demonstrate that non-financial resources, such as the possession of CMMI Level 5 certification, positively moderate the above relationship.

Research limitations/implications

The research is conducted in the context of a single industry and a single home country. The authors also focus on a subset of firms (large, listed firms) in the industry. The authors recommend future research to examine other knowledge-intensive industries.

Practical implications

An increasing number of Indian software firms and other emerging market firms wish to locate close to their overseas customers by choosing a high commitment entry mode. The research suggests that, prior to internationalizing, managers should build up critical and relevant resources through deployment of high commitment entry modes.

Originality/value

The research has many unique aspects including a rigorous model development, a robust empirical approach as well as an interesting empirical context. The authors believe that the results will be useful to academics and practitioners alike.

Citation

Jain, N.K., Pangarkar, N., Yuan, L. and Kumar, V. (2015), "Internationalization of Indian software firms through establishment of global development centers: A contingency perspective", Multinational Business Review, Vol. 23 No. 2, pp. 90-110. https://doi.org/10.1108/MBR-06-2014-0033