Something struck me the other day suddenly
In this new flat world (there! Even I've started using Friedmanisms ;-)) interconnected with fiber optical cables does Porter's diamond still hold true?
Specially the bit about spatial proximity - it sounds so 20th century , doesn't it? And the role of government. The best example is India, where the IT services industry grew because the government was oblivious to it! And these are the folks who are going to challenge the big daddys of the IT consulting world now!
Yes Friedman has such a good explanation for the changes in the world. Everyone has started talking about the flat world. However Porter's diamond does make sense even in The Indian IT industry growth. A quick analysis:
ReplyDeleteFactor Conditions: India had a large number of well trained engineers, who did not have much demand for their skills. Too many of engineers were running after very few jobs.
Demand conditions The Indian IT market was very small but demanding, IBM etc. had moved out since they felt that their IP was not adequately protected. This was a window of opportunity for Indian firms. It also led to many with experience of having worked in high quality MNC's. If I remember correctly the original founders of HCL were from there.
Related and Supporting Industries: This definitely loses it's value in a digital world, where for bits and bytes, the cost of moving 1 meter is the same as moving them 10,000 miles. However we have to remember that Bangalore where it all started had a higher concentration of engineering talent than most other Indian cities, thanks to HAL, IIS and other such institutions.
Firm Strategy, Structure and Domestic Rivalry. As everyone knows there is cut-throat competition in the industry, both for clients and employees. As for structure, since these were new companies they did not inherit vast bureaucracies or hierarchical structures and could be quick, nimble and fleet footed to outfox the competition.
Now the big one
The Role of Government In the case of India, the government has had a very negative role in terms of economic growth. Thanks to British colonial rule, followed by Nehruvian Fabianism, an entrenched bureaucracy (a British legacy) and a fascination with socialist centralized planning, the Indian entrepreneurial spirit had been suppressed for almost three centuries. The private sector therefore reacted to the absence of government hurdles/ road blocks as if it was active encouragement or promotion. The governments role in promoting the IIT's, REC's has however got be acknowledged.
Very interesting exchange of insights, indeed. Now for Frances: Try pitching this question at answers.yahoo.com. Trust me you'll get a response in under one hour. No guarantee you'd instantly get the right answer though. You can of course take the Wikipedia route.
ReplyDeleteI do think Porters Diamond fits. I did a specific study on the competative advantage India has as a nation on the software industry...
ReplyDeleteReena,
ReplyDeleteCould you please share your analysis on the Indian IT industry.
Thnx
Ujwal
www.thebizofcoding.com
Can anyone could help me for my degree assignment ? I need to use porter and others marketing management which require me to analysis to company.pls pls...
ReplyDelete