A Study Comparing R&D Clusters in India

Sammanfattning: Observed trends in R&D expenditures reveal that the quantity and geographical distribution of such investments has changed over the years. Multinational Enterprises (MNEs) are increasingly spending money on R&D investments, as they must continuously upgrade their processes, products and services for establishing long-term success in today’s increasingly competitive landscape. In the mist of this, MNEs from developed countries are increasingly making R&D investments in emerging markets. India and China has in this regard be termed “hotspots” and do today house several R&D clusters. Given the important role of R&D and the changing patterns of such investments,  the following thesis aims to address four related research gaps: (1) the limited understanding of how MNEs make location choices, (2) the limited recognition of the inherent differences between research and development oriented activities and how such differences impact location choices, (3) the relatively limited attention scholars have given India, although this country is attracting significant amounts of R&D investments, and (4) the limited understanding of how emerging markets differ on a sub-national level. Based on these issues, the following research question has been formulated: What are the differences and similarities between R&D city clusters in India, that are significant from a western R&D investment perspective?   The purpose of this research question is three-fold. It firstly serves to encourage the integration of International Business (IB) and Economic Geography (EG) literature for better understanding location choices for economic activities. Secondly, it serves to encourage researchers to acknowledge and take into account the inherent difference between research and development activities. And thirdly, it serves to highlight that regional variation exist in emerging markets on a sub-national level. A sub purpose of this is to encourage more research on India.   For addressing the research question in matter, this thesis has studied Bangalore and Gurgaon which are two growing clusters in India. They have been studied through a qualitative research methodology where interviews have been combined with secondary sources for understanding their differences and similarities, and subsequently their strengths and weaknesses from a research and development perspective respectively. By looking at factor-, demand-, industry-, firm rivalry- , network- and policy conditions, it has been found that several areas of similarities and differences exist between the two clusters. In regards to similarities, both have similar levels of costs in terms of human capital; both cities receive support from the national government and both cities largely serve customers across the world, including India, and do thus both provide environments where there is to some degree a pressure from sophisticated demand conditions to be more innovative. In regards to differences, Bangalore has relatively more talented human capital available; Bangalore is dominated by the IT industry whereas Gurgaon is not clearly dominated by a single industry; Bangalore has more proactive support from its local policy makers; Bangalore has more local network linkages whilst Gurgaon has more global network linkages; and lastly, Gurgaon has more local rivalry. Based on these similarities and differences, it has been argued that Gurgaon is a relatively better location for both research and development oriented R&D investments from a telecom industry perspective.   Essentially strong enough evidence for the identified similarities and differences has not always been found due to limited data. They are nevertheless indications of regional variations that could serve as a basis for future research to have a closer look at. As indications of similarities and differences that affect the location choice of research and development activities differently has been found - using an approach integrating insights from IB and EG - this paper has served its purpose in terms of encouraging further research related to identified research gaps.