Export Growth and Path-Dependence: the Locking-in of Innovations in the Software Industry

Anthony P. D’Costa

Chapter 3 in India in the Global Software Industry, 2004, pp 51-82 from Palgrave Macmillan

Abstract: Abstract The Indian software industry is growing rapidly. Whether firms can actually sustain this high rate of growth remains an empirical question. The ability to maintain the momentum of software export growth will ostensibly be determined by innovative capability. Notwithstanding the immense benefits accruing from the external orientation of the Indian software industry, there are good theoretical reasons why innovation may not be a pervasive feature of Indian software firms. I use a structural argument to suggest that the sector’s overt export-dependence on one single (US) market contributes to a lower innovative trajectory (also Parthasarathi and Joseph, Chapter 4). The lock-in effects associated with serving a spatially distant market, albeit vibrant and profitable, detracts the Indian sector from undertaking a more long-term innovative strategy (D’Costa, Chapter 1). Interrelatedly, the sector’s weak domestic orientation truncates the immense technological spin-offs possible with finding software (IT) solutions to local problems (D’Costa, 2002a). An inescapable outcome is uneven development in its most pronounced form: a highly dynamic software sector in the midst of various lagging sectors and a few innovative software firms coexisting with numerous low end software service providers (D’Costa, 2003a, 2003b).

Keywords: Tacit Knowledge; Intellectual Property Right; Software Industry; Enterprise Resource Planning; Export Growth (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-4039-4384-2_3

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DOI: 10.1057/9781403943842_3

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