Abstract
A recent paper has suggested that the entry of transnational corporations (TNCs) favorably affected the productivity of Indian software, by inducing greater human capital formation in the industry, which in turn raised the productivity of existing investments. This note suggests an alternative causation that may lie behind the favorable effect of TNCs on the evolution of Indian industry. Factor market competition by local and foreign firms bid up the price of scarce human capital. Leading domestic producers in the industry responded to this scarcity by developing the offshore model and the complementary organizational capabilities suited to it and to introduce process methodologies and organizational practices that economized on human capital. These growing firm capabilities we argue lie behind the growing productivity of the Indian software sector.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
