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Public Policy and the Role of Multinationals and Local Enterprises in the Indian Drugs and Pharmaceuticals Industry

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  • Pradeep Kanta Ray

    (School of International Business, University of New South Wales, Sydney)

  • Shams Ur-Rahman

    (The Graduate School of Management, University of Western Australia, Nedlands)

Abstract

This paper examines the behavioural differences between multinational and local enterprises in their role as agents of development and transformation in the Indian pharmaceuticals industry. A case study of two large enterprises in the pharmaceuticals industry shows how a model of development spurred by national enterprises based on reverse engineering promotes industrial deepening in India. The comparison also illuminates the multinational enterprise (MNE) affiliate's position within the dynamics of its parental affiliation and its local institutional context, and how such a position may contrast and complement the position that local enterprises (LEs) occupy. The case study is followed by a matched pairs test of 169 enterprises in the Indian chemicals industry to distinguish how nationality might influence a firm's strategic role. Important differences between the ownership groups arise along four major strategic dimensions of technological activities, degree of vertical integration, trade orientation and product-environment compatibility. Local enterprises satisfy a majority of developmental goals while MNE affiliates comply with some transformational goals, and complement the efforts of LEs.

Suggested Citation

  • Pradeep Kanta Ray & Shams Ur-Rahman, 2000. "Public Policy and the Role of Multinationals and Local Enterprises in the Indian Drugs and Pharmaceuticals Industry," Global Business Review, International Management Institute, vol. 1(2), pages 207-228, August.
    • Handle: RePEc:sae:globus:v:1:y:2000:i:2:p:207-228
    DOI: 10.1177/097215090000100204
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