The purpose of this paper is to discuss the resources, including technical skills and cost competency, that have contributed to the competitive position of the Indian software industry. Here, a detailed discussion of the Indian software industry and its resources is presented and the case analyzed, using a Resource-Based View (RBV) of the competitive advantages. In accordance with the RBV, the main source of the market performance of a range of firms lies on the specific nature of their resources and their accumulated competences. A firm with a competitive advantage excels in time, quality, or cost, or a combination of such, over its competitors. A combination of resources, including supportive government policies, skilled workforce, sound infrastructure, global linkages and first mover advantage, etc., helps to create a sustainable advantage for the Indian software industry. RBV helps to explain the contribution of various resources to the Indian software industry. The paper begins with a case study of the Indian software industry, followed by an analysis of the case using the RBV of strategy.
Over
the last few years, RBV has gained much influence in strategy.
This approach results from several research streams, notably
economic theory and strategic management. Its roots go back
to the 1950s, with the work of Penrose in 1959. Edith Penrose
(1959) provided initial insights into the resource perspective
of the firm and contributed with the formulation of important
concepts, such as: a firm can be seen as a collection of resources;
the path of growth of a certain firm can be optimized, requiring
the combination of internal as well as external resources
in a particular sequence; and the process of growth of a firm
is dependent on management, its acquired experience and its
learning capability (Rugman and Verbeke, 2002). Many researchers
have contributed to its development. The author believes that
RBV helps explain and deduce the contribution of various resources
to the Indian software industry. This analysis of competitive
advantage is based on the unique resources that a firm possesses.
To the extent that a competitor cannot create or substitute
for these resources, they provide a unique advantage to the
firm that owns them. Yet, resource advantage may not be sufficient—the
firm needs to possess distinctive capabilities to make better
use of its resources (Penrose, 1959). |
