Institutional Voids and Indian Automotive Industry: Challenges and Reflection

Abstract

Postliberalization period has seen significant growth in the Indian automotive industry, hosting majority of the big automobile giants of the world. In spite of significant growth in the last two decades, automotive industry has not managed to achieve its true potential due to the presence of ‘institutional voids’ in the area of product market, capital market, labour market, and macro context, as classified by Khanna and Palepu (Winning in emergent markets: A road map for strategy and execution. Harvard Business Press, Boston, MA, 2010). India is considered as a mid-range emerging economy (Hoskisson et al. J Manag Stud 50(7):1295–1321, 2013), thereby is considered to lack across the four areas of institutional voids, that presents challenges to multi-national corporations (MNCs) and large domestic firms when establishing or managing their supply chain in the emerging economies context. This chapter presents some of the voids faced by Indian automotive sector and countermeasures developed by industry and industry associations to address those voids.