Technological Efforts & Internationalization of IT firms in India

This paper examines the role of technological efforts, both internal (in-house R&D) and external (technology imports), in determining inter-firm variations in internationalization. The study, using the resource-based perspective, finds that there are differences in the determinants of exports and overseas investments. Also, the effects of the technological factors differ between a software and services firm and a hardware firm. The study finds support to the view that, presently, IT firms in India are gaining competitive advantage over their rivals by exploiting the technological gap along with factor cost differentials. The paper suggests that the firms need to create niche markets to have long-run competitive advantage in the international market.