AIB 2012 Conference Proceedings - Academy of International ...

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India, China, and South Africa). Institutional regimes evolve rapidly to support such activities, and indigenous
firms are re-engineering their search routines to enhance their R&D and shift it to riskier domains. Multinational
R&D has broken off their well-tested routines of restricting R&D to home or home-like markets and investing
significantly in emerging markets. So much so, these markets are redefining MNE strategies and products. This
panel will address questions such as the motivation and rationale for such investment; its geographical and
sectoral spread; and its interaction with the local innovation system. All these questions will be answered in a
dynamic context and the changes over time will be identified and placed in a strong theoretical context. This
panel is expected to generate rich insights into the changing nature of multinational R&D in emerging markets
by taking a focused look at India, with important implications for theory and practice. (For more information,
please contact: Rishikesha T. Krishnan, Indian Institute of Management Bangalore, India: rishi@iimb.ac.in)
Session: 2.2.4 - Competitive
Track: 7 - Emerging Economies
The Nature of Innovation in Emerging Markets
Presented On: July 2, 2012 - 10:45-12:00
Chair: Masaaki Kotabe , Temple University
Transcending Paradoxes: Managing Innovation and Growth in the Indian Biotech Industry
Shaista E. Khilji, George Washington University
Tomasz Mroczkowski, American University
Rashmi Assudani, Xavier University
Biotech companies in USA are generally faced with the paradoxes of simultaneously managing growth and
innovation, as well as addressing explorative and exploitative aspects of innovation (Khilji, Mroczkowski &
Bernstein, 2006). This has led to a high failure rate among them. Scholars have urged tem to re-evaluate their
business model (Pisano, 2006). With the purpose of exploring how biotech companies in emerging economies
address these paradoxes, we focus upon the nascent biotech industry in India in order to investigate their
growth and innovation patterns, as well identify the challenges that they may be faced with. Data indicates that
Indian biotech companies are ambidextrous and have managed to transcend the aforementioned paradoxes by
developing and maintaining distinct organizational capabilities. They were found to pursue an integrated model
of efficiency and innovation and utilize both exploitative and explorative aspects of innovation to fuel growth
and innovation. We also find evidence of some of the characteristics of the "India Way", proposed by Cappelli,
Singh, Singh & Useem (2010a). We conclude that American biotech companies could glean some of the learning
from their Indian counterparts in order to build new competencies and sustain innovation in today's competitive
environment. (For more information, please contact: Shaista E. Khilji, George Washington University, USA:
shaistakhilji@gmail.com)
The Structure and Performance of Reverse-Innovating Subsidiaries in Emerging Markets
Michael Sartor, University of Western Ontario
This paper explores the structure and performance of foreign subsidiaries that employ a reverse innovation
strategy – the process of entering into emerging markets for the purpose of engaging in research and
development (R&D)-related activities. Given the well-documented risk of intellectual-property (IP) leakage in
these markets, we investigate how normative institutions in the host country market shape the structure and
performance of these unique investments. While institutional theory tends to predominate in research related to
host market institutions, we build on conceptual advances in transaction cost economics (TCE) and the
resource-based view (RBV) to develop a set of competing hypotheses with respect to the impact of two distinct
types of normative institutional distance (governmental and technological) upon the ownership mode choice and
AIB 2012 Conference Proceedings
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