Global Enterprise and Innovation - Literature review Example

Global Enterprise and Innovation The purpose of this report is to comprehensively and critically examine the development and progressof the concept of national innovation systems (NIS) over the span of recent decades by assessing the implications of the notion with regard to India. By adopting a specific approach towards the analysis the report explores the business environment of India and examines the functioning of the government, finance, technological, educational and industry components of NIS in accordance with the practices of the selected country. In conclusion, the outcome of the report summarizes whether investment prospects in India can prove to be effective in enhancing the nation’s innovation potential. Accordingly the report also identifies various strategies and tactics that firms can execute in order to capitalize on the advantages of NIS. According to Sharif (2006), the origination of a concept of national innovation systems (NIS) can be traced back to the latter half of the 1980s when the development of European industrial policies and frameworks was being extensively debated by concerned politicians and analysts who sought to fulfill the objective of advancing the progress of nations across Europe. With the passage of time however, the application of this concept has transcended the geographical boundaries of Europe as the world’s largest economy including the United States, Japan, South Africa, China, Brazil and India are now employing the principles of NIS to nurture their policies and steer them towards success (Lundvall, 2007). Even though, the fundamentals that guide the establishment of NIS are based upon the interaction of private and public entities and the elements of the larger external environment in which a firm operates, Nelson and Rosenberg (1993) assert that despite of the evident similarities in economic features the historical and cultural background of nations play a significant role in shaping national institutions, regulations, rules and policies. Given this observation it is important to outline the primary features of a nation’s business environment when examining the implications of national innovation systems. As the second-most populous nation in the world, the impact of a diverse Indian society reflects upon the business environment of the nation. As it is not possible to isolate the operations of a firm from external and internal environment factors, it is significant for policy makers to carefully assess the dynamics of the business environment so as to assist the establishment of pertinent and effective guiding principles. According to Jain, Trehan and Trehan (2010) the key features of the current Indian business environment are 1) liberalization 2) privatization 3) globalization 4) rise in competitive forces 5) increase in foreign investment 6) fast growth in tertiary sector 7) increase in the people’s standard of living 8) increase in foreign trade and 9) a diminishment in foreign debt. An improved economic policy for India was introduced in 1991 under the name of New Economic Policy by the country’s policy makers to address the limitations and weaknesses of previous economic measures. The framework largely targeted advancement in the areas of privatization, globalization and liberalization which meant that the private sector was recognized as an integral part of economic activity and a range of significant role that was previously, almost exclusively held by the public sector was awarded to the private sector (Jain, Trehan and Trehan, 2010). The exchange of roles meant that the strict bureaucratic regulations that were imposed on the private sector were either relaxed or completely eliminated and the weaknesses within the public sector including, inefficiency, red-tapism and lack of merit were addressed. Jain, Trehan and Trehan (2010) claim that these changes to economic policy came in the wake of the 1991 economic crisis in which the nation was steeped in, at this point the government began to realize that its economic policies were proving to be unsuccessful and a reformation was required to fulfill the aims of tackling with the economic crisis effectively and subsequently promoting economic growth within the nation. The examination of the government component of NIS comprises of critically assessing policies, measures, frameworks, directives and decisions that have been taken by government agencies to foster innovation in the country. According to a report published by the Organization for Economic Co-operation and Development (2012), India has consistently demonstrated an advanced performance in the research and development (R&D) sector in recent years thereby, emerging as one of world’s largest R&D player in recent years. Despite of this distinction the report suggests that the nation still lags behind in terms of science, technology and innovation (STI) when compared against the progress of China and several OECD member nations. Owing to this observation, the Government of India has demonstrated a commitment to improving its position in the global arena by launching a range of policies to address and improve the situation in the long run. As noted by Organization for Economic Co-operation and Development (2012), in 2008 the government passed the National Innovation Act and labeled the period of 2010-2020 as the ‘Decade of Innovation’. Moreover, government measures for stimulating innovation in the country have also been conducted through the execution of economic policies. In this regard GERD, as a percentage of GDP has been raised by the government since 2000 beginning from 2% in the same year. Another commendable effort of the government in this case is the establishment of The National Innovation Council (NiNC) which took place in 2010, the ideal behind the launch of this institution is to allow the provision of a roadmap for advancing innovative and research-based endeavors by creating innovation councils on both the level of the state as well as industry sectors. It is promising for the future of India’s innovative and technological progress that the government of the nation has recognized that the progress of a national system of innovation cannot occur unless this system invites collaboration from all factions of society and various institutions. Therefore, the government has simultaneously launched the India Inclusive Innovation Fund for providing financial resources to those who belong to lower-income strata of society but wish to play their part in the process of scientific progress and India’s 11th Plan has been established to equip the nation with educational, training and academic opportunities for aiding innovation. This plan has been launched along the lines of the Higher Education and Research Bill of 2011 that seeks to enhance the provision of higher education and vocational training opportunities to Indian citizens (Organization for Economic Co-operation and Development 2012). Furthermore, Lundvall, Intarakumnerd and Vang-Luridsen (2006) suggest that India’s federal structure that grants regional authorities the liberty to govern the progress of industrial innovation has led to the creation of regionally stable innovation across the country. In terms of the financial element of NIS, the funding and provision of monetary resources for private innovation has been aided by governmental efforts through various projects such as the India Inclusive Innovation Fund which has been launched in collaboration with the Ministry of Finance (Organization for Economic Co-operation and Development 2012). Accordingly, financial assistance for promoting innovation amongst entrepreneurs, individuals and private entities is also provided by the means of cluster networking or by focusing on specific groups through innovation grants such as the National Award for Performance. While, it is definite that research grants and financial support for private entities to conduct innovative research has been made available by government agencies through the identified framework of cluster targeting, the scope of this measure is limited and fails to represent the abundance of private firms and companies currently operating in India that seek financial assistance to progress to the next stages of innovation. Lundvall, Intarakumnerd and Vang-Luridsen (2006) note that due to a prescribe rationale of development, India has chosen to remain self-reliant for the maintenance and advancement of its technological capacities however, in the process the country has not been able to lift its educational system to the desired because of financial constraints and a lack of support from concerned agencies. While, the creation of national innovation systems is reliant upon the assimilation of a number of constituents that aid the establishment of a comprehensive and effective network to guide further progress it is identifiable that the role of institutions and the educational sector is the most important element of the NIS largely because of the human resource requirements of the system that cannot be met unless the stated constituent is enhanced. In his assessment of the role of Indian universities in the creation of the country’s NIS, Krishna (2012) raises a critical point of observation regarding the lack of funding that is dedicated as a percentage of GDP for R&D and STI in the country. Accordingly, Krishna (2012) remarks that whilst, Indian universities have been able to raise their standards in recent decades educational discrepancy continues to reside in the nation as the part of Indian universities within the NSI is still limited in comparison with the performance of European educational institutions in addition with India’s Asian contemporaries. For example, statistics indicate that Japanese universities were responsible for 15% of GERD in 2004-2005, while, 10% of China’s educational institutions represented 10% of GERD in 2005-2006 yet Indian universities were only able to account for less than 7% of the same in the period of 2007-2008 (Krishna, 2012). Apart from these observations it is also important to address the state of educational accessibility and outreach amongst Indian citizens because research indicates that it is lacking. Krishna (2012) notes that a major issue in this regard is associated with the higher educational enrollment ration in the country that stands at a mere 11% additionally, another problem is a lack of research-based focus in universities with only 20-25% of the nation’s institutions identifying themselves as having a research-based approach and focus to the provision of education (Krishna, 2012). From the industrial context, India’s NIS has been supported by the nation’s thriving and prosperous Information and Communication Technologies (ICT) industry that combines the expertise of the nation’s brightest minds and acts as a major outsourcing region for renowned companies that conduct their operations from North America and Europe. Kumar and Joseph (2006) postulate that in comparison with other ASEAN countries, India’s innovative potential in the sector has remained unparalleled for the industry’s progress in the previous decade has been marked by growth rate of 45%, which is greater than any other industrial sectors in the nation. Moreover, the electronics industry in India has also remained a primary focus for the implementation of government’s innovative policies since the beginning of 1960s for it was seen as being a pillar of national industrial development. Kumar and Joseph (2006) note that governmental efforts for promoting IT and related industries has always been prioritized in India by advancing the potential for progress through policy initiatives which have coincided with the transformation of the nation’s NIS and IT sector. Therefore, by charting the progress of the country’s IT and electronics policy it can be identified that India possesses tremendous innovative potential in the field that must be taken advantage of by prospective investors. The conclusions that can be drawn from the preceding analysis suggest that as one of the most promising economies in the current scenario, India has the potential to greatly benefit from investment in ventures and other business initiatives in order to stimulate further innovation. Despite of certain reservations regarding the country’s political scenario, economic conditions in the nation are largely stable and even political considerations cannot be deemed as severe or unfavorable for the demonstration of investor interest. Accordingly, India also boosts the presence of one of the world’s most competitive, skilled and knowledgeable human resources that exhibit a competitive level of training and educational achievement which is at par with their European and North American counterparts. Considering the fact that India’s governments have worked on the development of a NIS since the past fifty years, it must be acknowledged that the nation has tremendous potential in comparison with ASEAN countries and neighboring states. Therefore, it is recommended that private firms should benefit from government support and financial assistance to stimulate innovation by participating in funding projects, preparing proposals and forwarding them for screening and finalization for government grants that are awarded through Innovation Funds and other monetary programs by the means of cluster targeting and regional selections. References Jain, T. R., Trehan, M. and Trehan, R. (2010). Business Environment. FK Publications. Krishna, V. (2012). Universities in India’s national system of innovation: An overview. Asian Journal of Innovation and Policy, 1(1), 1-30. Kumar, N., & Joseph, K. J. (2006). 10. National innovation systems and Indias IT capability: are there any lessons for ASEAN newcomers?. Asias innovation systems in transition, 227. Lundvall, B. Å. (2007). National innovation systems—analytical concept and development tool. Industry and innovation, 14(1), 95-119. Lundvall, B.-A., Intarakumnerd, P., & Vang-Lauridsen, J. (2006). Asias innovation systems in transition. Cheltenham, UK: Edward Elgar. Nelson, R. R. and Rosenberg, N. (1993). National innovation systems: A comparative analysis. New York: Oxford University Press. Organisation for Economic Co-operation and Development. (2012). India: Sustaining High and Inclusive Growth. Paris: Oecd Publishing. Sharif, N. (2006). Emergence and development of the National Innovation Systems concept. Research policy, 35(5), 745-766. Read More