Adoption of Open Business Models in the West and Innovation in India's Software Industry

Lema, Rasmus (2010): Adoption of Open Business Models in the West and Innovation in India's Software Industry. Published in: IDS Research Reports , Vol. 2010, No. 62

Abstract

Over the last three decades, outsourcing has had a big influence on the international division of labour. It is clear that it has been a major reason for the enormous build-up of production capabilities in the developing world, in particular in the export platforms of Asia. However, the influence of outsourcing on innovation capabilities is less clear. Recent literature shows that innovation capabilities have emerged in the software cluster of Bangalore in India. This report asks whether and how the adoption of open business models in OECD countries had an influence on the rise of innovative software services in Bangalore. This requires detailed research on both the demand side and the supply side of outsourced software services. On the demand side, this report compares three software buyer segments, exploring the relationship between business models and outsourcing patterns. The study shows that the adoption of open business models in OECD countries has a major influence on the ‘space’ for innovation that accrues to suppliers in the software industry in India. On the supply side, the study investigates the factors that determine whether the new spaces are filled and how advanced innovation capabilities are built. The key feature of this study is that it examines the interaction between demand- and supply-side dynamics. Most studies tend to focus on only one side, but the key is to see them in conjunction. The study shows that their co-evolution over time changes not only the scale of outsourcing but also the ‘quality’ of the contents and the division of labour.

• Item Type: MPRA Paper
• Language: English
• Keywords: outsourcing; open business models; global value chains; ODIP; innovation; integrated innovation; problem framing; software; Bangalore; India
• Subjects: L - Industrial Organization > L8 - Industry Studies: Services > L86 - Information and Internet Services ; Computer Software; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D

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