Organizational Capabilities and the Rise of the Software Industry in the Emerging Economies: Lessons from the History of some US Industries
Agglomeration economies involving knowledge spillovers are a common explanation for persistent regional leadership, such as that displayed by India in software services. This chapter offers a different perspective by drawing upon recent work by Klepper on the experience of four other industries in the US Geographical concentration and persistence of leading firms are closely related. Industries grow and concentrate in the regions where successful firms enter early. Not only do the early successful firms often end up dominating their industries, they are also more likely to spawn other successful firms that locate nearby. User organizations have been an important source of firm formation in the software industry in emerging economies. The 3Is in particular have drawn upon external competencies in the form of multinationals and expatriates, gaining access to vital organizational competencies that in the US industries were available only through successful firms in the industry or in closely related industries.
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