A strategic perspective on facilitation of network approaches: emerging network structure and adaptive systems in internationalisation of Indian firms
MetadataShow full metadata
Internationalisation by firms in India is in a nascent stage; however these firms are making rapid progress due to changes in government policies in this region. This has led to diverse opportunities for Indian firms in markets, as well as products, which previously were unexplored. The Indian firms have a high familiarity with network strategy in their domestic operations; however in the international context a network approach is challenging both in terms of geographic and “Psychic distance” (Freeman, Hutchings, Lazaris & Zyngier, 2010). Psychic distance is the extent of distance between the internationalising firm and the host country firm in terms of their familiarity with business operations and cultural factors (Brewer, 2007). The traditional approaches fail to explain internationalisation from the context of the co-development of the economy as well as from an emerging market perspective. Also, existing literature has not examined the distinct mechanisms that bridge the gap between Eastern and Western network partnerships from an Eastern perspective. In view of these gaps in existing research there is need for a model that links the areas of adaptation with the types of partners, either proximate or distant, or those who experience internationalisation challenges. The conceptual framework suggested in this study draws a comparison between the level of investment that internationalising Indian firms need for network adaptation with proximate versus distant partners to achieve linkage, leverage and learning gains in internationalisation through networks. This study explores Indian firms’ internationalisation specifically with distant network partners using a qualitative multiple case study analysis. Data was collected from six Indian companies which are internationalising with advanced network partners. The data, collected through a sequential e-mail interview process, explored the constructs in the conceptual framework. The constructs relate to adaptive mechanisms over information exchange, strategic monitoring, cultural and institutional factors with distant network partners. The constructs also included the level of investment in adaptation to build trust-based network relationships and benefits for internationalisation in terms of linkage, leverage and learning. The study results suggest that institutional rather than cultural factors are the major challenges in network relations for Indian firms with advanced market partners. The minimal impact of culture may be due to the familiarity and experience of the founders of the Indian firms in this study in dealing with advanced markets. However, although the study reveals that cultural differences impact on trust building within the network, the main reasons for the cultural differences relate to underlying institutional differences. Indian firms use contractual rather than the traditional Indian network approach of relational links to cope with the differences with advanced network partners. The study indicates that Indian firms need to create acceptance by the advanced market firms, due to pre-existing negative attitudes towards India and other factors such as newness of the Indian firm. The major reasons for the high level of investment in adaptation relate to the above institutional factors. The study highlighted that the innovative characteristics and international reputation of the founders of an Indian firm may give such a firm an ability to network effectively and become a valued contributor in networks with advanced market partners. These factors may alleviate the necessity for such a firm to make investments in adaptation. The study findings indicate that linkage, leveraging and learning are the benefits that accrue through strong network relations built through adaptation by the Indian firms in their internationalisation into advanced markets. The study has implications for emergent theory in the field of internationalisation from an Eastern perspective and also has strategic implications for practicing international business managers worldwide.