Globalization and the Innovative Activities of Firms (Essay Sample)

Implications of Globalization on the Innovative Activities of Firms in India
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Abstract
Globalization has created a good business environment in India that is promoting innovativeness in companies. Features of the economy that are driving such innovative activities include technology, infrastructure, industrialization and modernization. However, the country faces challenges due to high inequality both in development and income; corruption and unemployment. The industries that are leading innovation in the country include ICT and infrastructure. In addition to ICT and construction industries, agriculture provides a viable opportunity for companies to invest in India.
Implications of Globalization on the Innovative Activities of Firms in India
Introduction
Globalization has forced many emerging markets to innovate new ways to remain competitive and attract investments in those countries. India represents a major emerging market struggling with major economic challenges that have resulted to the use of innovative technologies and strategies to capture the world’s attention. Globalization has, therefore, forced companies to take up innovative activities in order to remain relevant both locally and internationally. This paper seeks to investigate the implications of globalization on innovative activities of firms by analyzing business environment features in India.
Features of Business Environment in India that Affect Innovative Activities
According to Jain, M. Trehan, and R. Trehan (2011), Indian economy can be classified using the following characteristics; underdeveloped, mixed and planned developing economy. For the purposes of this paper, the business environment in India will be classified as planned developing economy. India’s planned developing business environment is characterized by development of information communication and technology (ICT) sector, institutional and structural changes, modernization, and development of infrastructure and industries. After the country had been hit by the economic crisis, the government embarked on innovative activities that would attract investments in the country and improve the business environment in the country. Globalization has led to the country’s current development path. Features such as technology, infrastructure, industrialization, and modernization are key elements that are driving innovativeness in the country.
Features that Promote Innovation
The information technology industry in India has grown tremendously. With the world becoming more integrated, the country is at the forefront in the export of its IT-services. Jain, M. Trehan, and R. Trehan (2011) indicated that the country accounted for 65 percent of IT-service global market. This development resulted from the efforts put in strengthening formal research and development sectors of the economy (Utz and Dahlman, 2007). Consequently, technology has emerged as one of the major features of the India business environment that is driving innovation.
Since 2011 the government of India embarked on a momentous infrastructure development project, estimated to cost over one trillion US dollars (Park, Walsh, and Yu, 2011, p.4). This five-year plan was hatched to improve the quality of infrastructure in the country. The government is spending its resources in the development of power generation plants, dams, roads, bridges, and urban centers (National Portal of India, 2014; Ministry of Power, 2014). The ICT infrastructure has improved in the past few years making the country one of the most preferred outsourcing destinations in the world.
The industrialization of India is a slow continuing process that has taken years. According to Chibber (2011, p.173), ‘red tapism’ and the protectionist policies resulted to the slow industrialization of the Indian economy. However, the new measures put in place by the current government seek to ensure ease of doing business in the country.
The complex concept of modernization forms the last feature of the business environment in India that affects innovation. Questions have been raised whether modernization entails westernization. In a bid to rid itself of westernization, India is developing into a modernized country laced with cultural and traditions that set it apart from other nations. This mix of modernization and culture puts the country at the forefront of innovation.
Features that Hinder Innovation
The bulk of the India’s population operates in the informal sector. Over the last decade, the country has grown tremendously in the knowledge-driven industries such as ICT but has lagged behind in agricultural productivity. Utz and Dahlman (2007, p.105) cite inequalities in development and income among the citizenry as one of the major challenges of innovation in the country.
India is struggling with a huge unemployment problem that has persisted since its independence (Lal, n.d). Further, unemployment has resulted to insecurity in the country that hinders investment. This presents a huge challenge for firms that would wish to invest in the country. Lack of investment in the country may result to fewer companies investing in innovative activities in India.
Hambrock and Hauptmann (2014) indicate that corruption is one of the biggest hindrances to investment in India. While this vice is prevalent in many emerging markets, it presents a huge challenge to development and establishment of innovative activities by firms in India (Bussell, 2012). Loopholes in government procedures allow corrupt individuals to stall establishment of companies in the country, which in turn, hinder the country’s development.
Industries That are Leading in Innovation
India’s business environment favors the development of industries such as ICT and the private sector. The information technology sector has given jobs to millions of Indians who can easily access jobs online from other countries such as US, UK, and Canada. There are a large number of young people who are involved in ICT-service sector hence creating jobs for university students. Further, the increased access to the internet has contributed to the development of innovative ideas in the country.
Infrastructure is another aspect of the Indian economy that is leading in innovation. The country is investing in innovative ways to generate power, build dams, roads, bridges, and houses that will accommodate the large population. Further, with the need to conserve and retain the country’s culture, new building models and designs are required, which present avenues for innovative activities by firms in the country.
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