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Traditional theories from the international business and strategy literatures have posited that institutional distance constrains firm internationalization and that slack financial and managerial resources can be redeployed to help overcome this distance and facilitate growth. However, are slack resources equally effective when entering host markets of different institutional quality? Combining an institutional economics’ view of distance with a Penrosean perspective on resources, we argue that financial slack allows firms “to pay their way” into more institutionally developed markets, whereas managerial slack allows firms “to work their way” into less institutionally developed markets. From data on the internationalization of 307 Indian computer software companies over 16 years, we find support for our hypotheses when considering formal institutional distance. We also find that managerial slack mitigates informal institutional distance, irrespective of the direction of internationalization. Additional robustness tests, using propensity score matching, and an alternative sample of 3600 manufacturing firms from 49 countries, support our main results. Our findings suggest that slack is not a generic panacea for overcoming institutional distance, in that the effectiveness of each type of slack is dependent on both the direction of entry and the type of institutional distance to be overcome, formal or informal.

We examine the role of the Indian diaspora in the outsourcing of work to India. Our data are taken from oDesk, the world's largest online platform for outsourced contracts. Despite oDesk minimizing many of the frictions that diaspora connections have traditionally overcome, diaspora connections still matter on oDesk, with ethnic Indians substantially more likely to choose a worker in India. This higher placement is the result of a greater likelihood of choosing India for the initial contract and substantial path dependence in location choices. We further examine wage and performance outcomes of outsourcing as a function of ethnic connections. Our examination of potential rationales for the greater ethnic-based placement of contracts assesses taste-based preferences and information differences. This paper was accepted by Lee Fleming, entrepreneurship and innovation.

Market liberalization in emerging-market economies and the entry of multinational firms spur significant changes to the industry/institutional environment faced by domestic firms. Prior studies have described how such changes tend to be disruptive to the relatively backward domestic firms, and negatively affect their performance and survival prospects. In this paper, we study how domestic supplier firms may adapt and continue to perform, as market liberalization progresses, through catch-up strategies aimed at integrating with the industry's global value chain. Drawing on internalization theory and the literatures on upgrading and catch-up processes, learning and relational networks, we hypothesize that, for continued performance, domestic supplier firms need to adapt their strategies from catching up initially through technology licensing/collaborations and joint ventures with multinational enterprises (MNEs) to also developing strong customer relationships with downstream firms (especially MNEs). Further, we propose that successful catch-up through these two strategies lays the foundation for a strategy of knowledge creation during the integration of domestic industry with the global value chain. Our analysis of data from the auto components industry in India during the period 1992-2002, that is, the decade since liberalization began in 1991, offers support for our hypotheses.

The liability of origin makes participation in international technology licensing challenging for emerging market firms. We draw on signaling theory to propose that diaspora ownership – diaspora members’ equity investments in their homeland firms – constitutes a reliable third-party signal of emerging market firms’ trustworthiness, which facilitates the access of these firms to international technology licensing. We further hypothesize that the efficacy of diaspora ownership as a third-party signal varies with the firm’s subnational context. Specifically, the relevance of diaspora ownership signal increases with the degree of homogeneity of the within-industry R&2, additional signals are required to differentiate between local firms operating in the same industry. In contrast, the diaspora ownership signal has a smaller effect in dysfunctional institutional contexts due to their prohibitive transaction costs. We test our arguments on a matched sample of 597 Indian firms operating between 2006 and 2015, and find general support for the predicted relationships. Our study advances research on the liability of origin of emerging market firms, the work on subnational dimension of international business, and the literature on the benefits diasporans bring to their homelands and resident countries.

We contrast the knowledge spillovers perspective, which focuses on the externalities that arise from locating in a cluster, with the social ties perspective, which emphasizes resource flow through ethnic connections, arguing that these factors differentially influence the location decisions of foreign and domestic entrants in the services-offshoring industry in India. We develop a typology of the capabilities involved in the offshoring of services and, using 108 location decisions across 11 city clusters, find that ethnic networks exert greater influence than cluster capabilities on location decisions, although, as expected, the effect is stronger and more widespread in the case of Indian rather than foreign firms.

The extant literature on offshore outsourcing has focused on large traditional multinational enterprises from the OECD countries, and on their decisions to relocate production- and operations-related activities outside their home country in order to enhance their performance. By contrast, we examine the strategy of firms from emerging economies outsourcing knowledge-intensive activities abroad to improve their competitiveness. Using panel data of 1655 Indian firms over a 13-year period, we find that offshore outsourcing of knowledge-intensive resources makes firms more competitive in the international market, enhancing their exports and financial performance. Moreover, the positive impact of offshore outsourcing on firm profitability is greater as international sales increase. We offer new theoretical contributions and propose managerial implications for firms from emerging markets.

We study a field experiment at a large technology company. Employees were encouraged to submit ideas on process and product improvements. The company randomly assigned nineteen teams into treatment and control groups. Treatment team employees received rewards if their ideas were approved. Nothing changed for control team employees. Our main finding is that rewards substantially increased the quality of ideas. Rewards increased participation in the suggestion system but decreased ideas per participating employee, with no net effect on the quantity of ideas. Broader participation persisted after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out.

Background The Pradhan Mantri Jan Arogya Yojana (PMJAY), a publicly funded health insurance scheme for the poor in India, was launched in 2018. Early experiences of states with various purchasing arrangements can provide valuable insights for its future performance. We sought to understand the institutional agencies and performance of the trust and insurance models of purchasing with respect to; a) Provider contracting b) Claim management c) Implementation costs. Methods A mixed methods case study design was adopted. Two states, Uttar Pradesh (representing a trust model) and Jharkhand (representing the insurance model) were purposively selected. Data sources included document reviews, key informant interviews, quantitative scheme data from the provider empanelment and claims database, and primary data on costs. Descriptive statistics were reported for quantitative data, content analysis was used for thematic reporting of qualitative data. Results In both models, the state was the final authority on empanelment decisions, with no significant influence of the insurance company. Private hospitals constituted the majority of empanelled providers, with wide variations in district-wise distribution of bed capacities in both states. The urgency of completing empanelment in the early days of the scheme created the need for both states to re-review hospitals and de-empanel those not meeting requirements. Very few quality- accredited private hospitals were empaneled. The trust displayed more oversight of support agencies for claim management, longer processing times, a higher claim rejection rate and numbers of queries raised, as compared to the insurance model. Support agencies in both states faced challenges in assessing the clinical decisions of hospitals. Cost-effectiveness showed mixed results; the trust cost less than the insurance model per beneficiary enrolled, but more per claim generated. Conclusions Efforts are required to enable a better distribution and ensure quality of care in empanelled hospitals. The adoption of standard treatment guidelines is needed to support hospitals and implementing agencies in better claim management. The oversight of agencies through enforcement of contracts remains vital in both models. Assessing the comparative performance of trusts and insurance companies in more states at later stages of scheme implementation, would be further useful to determine their cost-effectiveness as purchasers.

Most privatization programs begin with a period of partial privatization in which only non-controlling shares of firms are sold on the stock market. Since management control is not transferred to private owners it is widely contended that partial privatization has little impact. This perspective ignores the role that the stock market can play in monitoring and rewarding managerial performance even when the government remains the controlling owner. Using data on Indian state-owned enterprises we find that partial privatization has a positive impact on profitability, productivity, and investment.