For the last decade companies in emerging markets (EMs) have started to develop products, which are can compete with those produced by firms in advanced countries (ACs). This ability to compete did not come and many overnight and the new companies emerging have followed a way of advancing that led them from producing for a developed company to designing their own product and then finally creating their own brand.
This essay will discuss the implications of the different stages in development of firms in emerging markets and will show on the example of Wipro, that while there is a standard way, but not the only way. The strategy used by Wipro involved skipping the first step of being an original equipment manufacturer (OEM) for others and starting their innovation from the get-go, being an original design manufacturer (ODM), progressing to being an own brand manufacturer (OBM) in the late 1990s early 2000s. After going through these phases, the company is now a recognised, global player and leads the industry in integrated business and business process solutions, as a strong consultancy and production partner.
Further the paper will discuss how the company was influenced by the macro and meso environment in India and Bangalore. On the macro level, it will provide evidence how Wipro has benefitted from the higher spending on education by the Indian government in the last 30 years, how AC companies’ outsourcing activities helped Wipro to catch up quickly and how the improvement of Intellectual Property Rights (IPRs) helps the innovation process of the firm further. Around the meso level influences on Wipro, the discussion will focus on the vacuum left by IBM leaving Bangalore and the clustering of tech companies and institutions that followed, as well as the entrepreneurship ecosystem, which is nurtured by the government’s policies and support.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- The Standard development of emerging market companies
- OEM Mode
- ODM Mode
- OBM Mode
- Different ways to innovate as an EM company
- Frugal Innovation
- Catch-up Innovation
- Wipro development and innovation
- Macro environmental factors supporting the development of Wipro
- Increased spending on education
- Outsourcing Activities
- Intellectual Property Rights (IPRs)
- Meso environmental factors affecting Wipro's development
- Tech Vacuum
- Clustering
- Entrepreneurship Ecosystem
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This essay explores the journey of knowledge-based international businesses in emerging economies, particularly focusing on the development of Wipro, an Indian multinational information technology company. The essay aims to understand the factors that led to the emergence of Wipro as a global player in the IT industry, while also examining the standard development trajectory of firms in emerging markets.- The stages of development in emerging market companies, from OEM to OBM mode.
- Different types of innovation strategies employed by emerging market companies, including frugal and catch-up innovation.
- The role of macro-environmental factors, such as government education policies, outsourcing activities, and Intellectual Property Rights (IPRs), in shaping the development of Wipro.
- The influence of meso-environmental factors, including the tech vacuum in Bangalore, clustering of IT companies, and the entrepreneurship ecosystem, on Wipro's growth.
- The specific case of Wipro, its unique development path, and its impact on the global IT landscape.
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: Introduces the concept of knowledge-based international businesses in emerging economies and provides a brief overview of Wipro's development path. Highlights the company's transition from an ODM to an OBM, and its current position as a global player in the IT industry.
- The Standard development of emerging market companies: Discusses the typical stages of development for firms in emerging markets, starting with OEM mode, where companies manufacture products for firms in advanced countries. The chapter outlines the learning processes involved in this stage, including production according to specifications, training by buyer firms, and on-site staff teaching by contractors. It then explores the ODM mode, where companies develop their own product designs and sell them under their own name. The importance of catch-up strategies and the role of R&D, university collaborations, and joint-ventures in achieving this stage are discussed.
- Different ways to innovate as an EM company: Introduces the concepts of frugal and catch-up innovation. Frugal innovation involves stripping down existing products to reduce costs and make them more affordable for low-income markets. Catch-up innovation focuses on adapting and commercializing existing products from other markets to fit the specific needs of the emerging market. The chapter explores the similarities and differences between these two approaches.
- Wipro development and innovation: Examines the unique development path of Wipro, highlighting its ability to skip the OEM stage and directly become an ODM. The chapter explores how Wipro's initial use of surface-mounted technology enabled it to quickly catch up to the international competition. It also discusses the company's later collaboration with global IT players, such as Acer, Cisco, and BT, and its transition from a "catch-up" innovator to a co-innovator alongside established multinational enterprises (MNEs).
- Macro environmental factors supporting the development of Wipro: Analyzes the macro-environmental factors that contributed to Wipro's growth. The chapter examines the impact of increased government spending on education, leading to a skilled workforce and the emergence of a tech sector in India. It also explores the role of outsourcing activities by western companies, which brought know-how to India and enabled local companies to learn and grow rapidly. Finally, the chapter discusses the importance of strong Intellectual Property Rights (IPRs) in protecting innovation and fostering a sustainable entrepreneurial environment.
- Meso environmental factors affecting Wipro's development: Discusses the meso-environmental factors that impacted Wipro's growth, specifically focusing on the role of Bangalore as a hub of technology in India. The chapter examines how IBM's departure from Bangalore created a tech vacuum, which Wipro was able to fill. It also highlights the clustering of IT companies in Bangalore, fostered by the government and facilitated by the demand for outsourcing services, leading to knowledge transfer and collaboration amongst companies.
Schlüsselwörter (Keywords)
Emerging economies, knowledge-based businesses, internationalization, Wipro, OEM, ODM, OBM, frugal innovation, catch-up innovation, macro-environment, meso-environment, outsourcing, education, Intellectual Property Rights (IPRs), Bangalore, clustering, entrepreneurship ecosystem, global IT industry.- Quote paper
- Marcel Strangmueller (Author), 2018, Developing Knowledge-based International Businesses in Emerging Economies, Munich, GRIN Verlag, https://www.grin.com/document/476809
