The influence of management's attitude towards internationalization of Indian software firms

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Kumar Rai, Abhijit
Issue Date
MA of Business Administration (international)
Dublin Business School
The project starts with the basic objective of exploring the influence of management's attitude on the internationalization process of service firms. Service firms are becoming more international (Javalgi et al.,2003). Technological improvements have also encouraged the trend towards internationalization. An extensive revision of the relevant literature is comprehensively reviewed, discussing about the process of internationalization and its consequence on the concerned industry. This provides the basis of the primary research and the subsequent research methodology which is employed to test the stated hypothesis, discussed within the context of existing literature. The results are interpreted based on research findings and it was observed that management's attitude towards internationalization is contingent on firm size, competitive advantage of the firm and years of top management team's international experience. The attitudes are less dependent on market characteristics of the host country and relevant psychic dispersion of top managers. Larger businesses (with more human capital) are more likely to operate internationally. The research among 17 mid-cap software firms finds that larger businesses are more likely to operate internationally. This may be because these firms have more resources to commit for international expansion and are healthier enough to cope with the risks linked with it. Moreover, these firms tend to operate in mature domestic markets and so may be searching for growth internationally. The research elucidated that a firm's perceived competitive advantages directly influence management's attitudes toward international expansion. The findings conform with the argument in the context of manufacturing industry that, when a company is aware of the unique assets it possesses, it’s more likely to search for wider exploitation of its competitive advantages. Years of top managements international experience brings expertise in order to address critical issues faced by these firms. It was found that this factor positively relates with managements attitudes towards operating in global arena. However, the research findings do not find support in the service sector for market characteristics of host country. This can find support from the outcome of Uruguay Round of the World Trade Organisation in 1986 which has reduced previous national restrictions placed on the marketing of international services (Fielke, 1995; Almi, 1994; cited by Javalgi et al.,2003). The agreement was expected to boost international trade and the growth of global economy and has sustained it seeing the boost in USA service sector to 77 percent( US Department of Commerce, 1999). The research findings also refute the claim that psychic dispersion is an important attitudinal indicator of internationalization. This may be because the Indian software industry is at its nascent stage in global arena and they have still not attained the transnational status with geocentric outlook. The findings strongly support the central proposition of the study that the attitudes of the service firm's management also affect how international the firm will be. The service industry is one of low capital-investment requirements. In this context, managerial attitudes plays a crucial role and tend to have the strongest influence on expansion decisions. Researchers' advice is that these mid-cap companies should not wait for saturation of the domestic market or growth in the size of the firm before seeking the rewards of foreign markets. By carefully evaluating the present situation, if the returns from international market exceed those available in domestic marketplace, management should begin its international expansion. One vicarious learning is that no matter what the internal environment of the organization should be congenial , futuristic and ready for managing any change seeing the volatility of the industry. Considering this, they should therefore seize the opportunities presented by the current global economy.