Technology Strategies of Large Enterprises in Indian Industry: Some Explorations

Abstract

Firms' technology choices determine to a significant extent their competitiveness and growth profile in the long run. Recent literature on technological change at the firm level draws from a wide variety of disciplines including business strategy, organisational theory, economics and business history. An inter-disciplinary approach for analysing technology strategies is desirable because there are many strategic choices which firms make that affect the payoff to investing in "technology". The objective of this paper is not to evolve a comprehensive analytical framework for studying firms' technology strategies. Such an exercise in any case is outside the purview of my capabilities. The purpose of recognising the need for an inter-disciplinary approach at the outset is to put this paper in a wider perspective and to assure the reader that I am only grappling with a very small subset of the firms' strategic options. It is widely recognised now that a firm's technology strategy is influenced by the 'technology regime in which it operates. The regime is broadly defined by a combination of variables capturing industrial structure. nature of technical knowledge (e.g., complexity and cumulativeness of the relevant technology) and the policy environment. Together, these variables determine the opportunity and appropriability conditions faced by a firm in a well-defined industry. Given these broad relationships, firms' technology strategies may differ across industry groups. To the extent the available data permit, this paper compares some dimensions of the technology choices made by firms belonging to two different industries: industrial (non-electrical) machinery and chemicals (excluding pharmaceuticals). Admittedly, heterogeneity within these industry groups is enormous and therefore the conclusions of the empirical exercise undertaken in this paper can only be regarded as tentative. India has developed a fairly decent technological capability in the industrial machinery industry; chemicals on the other hand is a relatively new and technologically dynamic industry. The questions relating to the intellectual property rights (IPRs) are also perhaps more pertinent for the latter. More on these differences later. The paper is divided into six sections. To put various relationships in perspective. Section 1 provides a broad framework of enquiry. Section 2 provides a policy background to the relationships explored in the paper by summarising various policy measures adopted by the Indian government which could have influenced firms' technology choices. On the basis of an earlier study (Basant, 1993)', the literature analysing technology choices in the Indian industrial sector is summarised in Section 3. The methodology, data and the specific relationships empirically explored in the paper are spelt out in Section 4. Section 5 discusses the empirical results and the final section explores areas for further research.