Third-World Copycats to Emerging Multinationals: Institutional Changes and Organizational Transformation in the Indian Pharmaceutical Industry

Authors:
Raveendra Chittoor;MB Sarkar;Sougata Ray;Preet S. Aulakh
Affiliations:
Indian Institute of Management Calcutta, Joka, Kolkata 700104, India;Department of General and Strategic Management, Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122/ Grenoble É/cole de Management, 38000 Grenoble, France;Indian Institute of Management Calcutta, Joka, Kolkata 700104, India;Schulich School of Business, York University, Toronto, Ontario M3J 1P3, Canada
Venue:
Organization Science
Year:
2009

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Abstract

This article investigates how Indian pharmaceutical firms, facing discontinuous institutional changes in their domestic environment due to economic liberalization and intellectual property reforms, have undertaken organizational transformation. Internationalization of resources and product markets constitutes an important component of organizational transformation for local firms in emerging economies. Using longitudinal data on 206 Indian pharmaceutical firms from 1995--2004, we find that firms' access to international technological and financial resources enables product market internationalization. Furthermore, we theorize and find support for our predictions that the association between international resources and markets is conditioned by time and business group affiliation, and product market internationalization affects financial performance. Several implications thus emerge for theory and practice associated with the sources of competitiveness in emerging economy firms and their transformation into globally competitive multinational firms.