China’s Catch-up and Innovation Model: A Case of the IT industry

Author(s):  
Xielin Liu
2017 ◽  
Vol 1 (4) ◽  
pp. 175
Author(s):  
Prosenjit Das

Aim: India has emerged as one of the most favoured destinations in the global Information Technology (IT) outsourcing market. On the other hand, the IT industry has been playing an instrumental role in transforming India’s image from a low income-backward nation to a knowledge-based economy.  Furthermore, the role of IT industry has been pivotal in putting India on a higher growth path. In addition, India’s IT industry has been showing robust performance in revenue earning, particularly in export revenue. However, the performance of this industry is likely affected by some recent global phenomena, such as 2008’s subprime crisis originated in the US, uncertainties in changes in H1-B visa rules, Britain’s exit from the EU, automation etc. There are other factors, like exchange rate volatility, emerging competition from other low-cost outsourcing destination countries, are also posing threat to India’s IT-outsourcing business. Against this backdrop, it is crucial to analyse the sustainability of performance of Indian IT industry. Thus, the present study aims at assessing the performance of Indian IT industry and evaluating the determinants of performance thereafter.Design / Research methods: To realize the objectives of the study, firm level data has been collected from the Centre for Monitoring Indian Economy (CMIE) Prowess database. For empirical analysis, we have applied a two-stage method. In the first-stage, we have used Data Envelopment Analysis (DEA) based Malmquist Productivity Index (MPI) to evaluate the Total Factor Productivity Growth (TFPG) of Indian IT industry during the period from 2004-05 to 2014-15. For this purpose, a balanced panel consists of 70 IT firms has been considered. Further, the TFPG has been decomposed into three components, viz. Catch-up, frontier-shift, and scale efficiency change (SEC). Consequently, in the second-stage, three random-effects panel regression models are considered to investigate the determinants of TFPG, catch-up, and frontier-shift separately. Conclusions / findings: During the study period, the average TFP and frontier-shift has been improved. On the other hand, catch up effect is found to have declined. The variables, such as export intensity, salaries and wages intensity have positive and statistically significant impact on the catch-up and frontier-shift. Export intensity has positive impact on TFPG. Age of the firms has positive impact on catch-up and TFPG. Salaries and wages intensity has positive impact on TFPG. On an average, the firms which spent on research and Development (R&D) have experienced improvement in TFPG and frontier-shift. The public limited firms performed better than their private counterparts in terms of catch-up, frontier-shift, and TFPG. The non-group firms have performed better than the group firms in case of catch-up. On the other hand, on an average, the firms exhibiting decreasing Returns to Scale (DRS) are found to have registered deterioration in catch-up and TFPG with respect to the benchmark firms which are exhibiting Constant Returns to Scale (CRS). The firms exhibiting Increasing Returns to Scale (IRS) have shown improvement in catch-up and TFPG over the benchmark CRS firms. The impact of the US subprime crisis has been negative on catch-up, frontier-shift, and TFPG. The firms, which have spent on royalty, have experienced improvement in catch-up and TFPG. Originality / value of the article: So far in our knowledge, not so many studies of this kind have been done in the arena of empirical research pertains to the IT industry, especially in a developing country like India. Moreover, we have not found any study that covers the span of the dataset considered in the present study. In addition to this, the present study has employed a random-effects panel model to accommodate a number of time-invariant dummy variables which would not be possible in case of a fixed-effects panel model incorporated by some previous studies of this genre.Implications of the research: The identification of the determinants of TFPG and its components would help the stakeholders and policy makers of the IT industry to formulate appropriate policies which could mitigate the risks faced by the industry on one hand, and stimulate the forces that would enhance the growth of this industry on the other. For instance, to mitigate future risks, Indian IT industry should reduce its dependence on the US and UK markets. Besides, it should explore new markets in the EU, and other emerging economies where opportunities are plenty. To maintain India’s robust global position in the long run, Government of India should play the key role in providing world class infrastructure and telecommunication facilities to its IT industry. In addition to this, Government needs to rationalise and simplify the existing Indian labour law to facilitate the business of IT industry. Various stakeholders along with the Government should put necessary efforts to develop the domestic IT market as there exists ample of opportunities in future. Keywords: information technology industry, data envelopment analysis, Malmquist productivity index, random-effects model, total factor productivity, catch-up, frontier-shift, India. JEL: C23, C61, L86, O47


2021 ◽  
Vol 11 (3) ◽  
pp. 100
Author(s):  
Claudio Petti ◽  
Minh Nguyen Dang Tuan ◽  
Tuan Nham Phong ◽  
Mai Pham Thi ◽  
Thao Ta Huong ◽  
...  

The article analyses the dynamics of technological catch-up through entrepreneurship in latecomer firms to emerging markets. With this aim, the article introduces Vietnam’s experience and illustrates the result of three case studies of Vietnamese technology firms at different stages of their evolution. Insights from the cases reveal all follow an incremental innovation model based on business model ‘soft’ innovations, mainly in customer-facing activities and partnering, as well as limited products and technology adaptation to local market needs. Consistently with latecomer firms’ theory, the market drives these firm’s innovation efforts, which are concentrated on developing new services and comprehensive solutions rather than new technologies. Comparisons of the findings with recent and similar experiences of Chinese firms highlight that different stages of catch-up lead to different innovation practices in nature and degree, and the need to strengthen institutions to face competition, rather than use the former to shelter from the latter. The Vietnamese firms’ innovation practices and catch-up patterns found are then discussed under the perspective of reaping the benefits of international knowledge and technology flows and the specific challenges faced by Vietnam. The paper concludes with several reflections, lessons learned and perspectives for other newly industrializing emerging countries.


Work ◽  
2020 ◽  
Vol 66 (4) ◽  
pp. 885-900
Author(s):  
Sumit Goyal ◽  
Ash Narayan Sah ◽  
Rakesh Kumar Sharma ◽  
Jolly Puri

BACKGROUND: The Information Technology (IT) industry of India has proved its capabilities in delivering both on- and off-shore services to clients globally over the years. However, the technological advances and innovations taking place at the global level not only present a whole new range of growth prospects, but also challenges for this highly competitive industry. Moreover, the IT sector of India also witnessed the economic recession in 2008, which had an adverse impact on the prospects of this industry. In this scenario, it is imperative for Indian IT companies not only to maintain their focus on increasing their technical efficiencies, but also to deal with the increased competition emanating from the Asia Pacific region. OBJECTIVE: This study aimed to estimate the relative efficiency of the top 18 selected Indian IT software service companies in order to determine benchmarks, output slacks and target settings. METHODS: Data envelopment analysis has been used for achieving the stated objective. RESULTS: The paper found mixed trends in efficiency. The top five IT companies exhibited higher efficiency as compared to the rest of the selected IT companies. Tata Consultancy Services, HCL Technologies Ltd. and Tech Mahindra Ltd. are more efficient while Infosys Ltd. and Mphasis have lower efficiency. CONCLUSION: The inefficient companies have to increase their workers’ productivity to become more efficient, and have to catch-up and follow the best practices of the benchmark company HCL.


2021 ◽  
Vol 93 ◽  
pp. 05006
Author(s):  
Alexander Demidenko ◽  
Alexander Demidenko ◽  
Igor Demidenko

The global information technology market is growing every year. Russia has great resource potential and a developed material and technical base to become one of the leaders in this area. Now Russia occupies a very modest place in the global IT industry. The situation is gradually changing. The Russian digital industry is growing much faster than the economy as a whole. However, in order to catch up with the leading countries, the IT sector must develop even faster. In recent years, the state has begun to play a decisive role in the economy therefore, the state has been tasked with bringing the Russian digital economy into the ranks of world leaders. This requires significant transformations and changes in the state model for creating a digital economy.


2004 ◽  
Vol 63 (1) ◽  
pp. 17-29 ◽  
Author(s):  
Friedrich Wilkening ◽  
Claudia Martin

Children 6 and 10 years of age and adults were asked how fast a toy car had to be to catch up with another car, the latter moving with a constant speed throughout. The speed change was required either after half of the time (linear condition) or half of the distance (nonlinear condition), and responses were given either on a rating scale (judgment condition) or by actually producing the motion (action condition). In the linear condition, the data patterns for both judgments and actions were in accordance with the normative rule at all ages. This was not true for the nonlinear condition, where children’s and adults’ judgment and also children’s action patterns were linear, and only adults’ action patterns were in line with the nonlinearity principle. Discussing the reasons for the misconceptions and for the action-judgment dissociations, a claim is made for a new view on the development of children’s concepts of time and speed.


Author(s):  
Elizabeth Terry-Humen ◽  
◽  
Jennifer Manlove ◽  
Kristin A. Moore ◽  
Keyword(s):  

Sign in / Sign up

Export Citation Format

Share Document