Global value chains, market organization, and structural transformation of Bangalore’s software cluster

A key insight of the institutional approaches to industrial dynamics is that specific models of economic organization may combine the institutional arrangements of markets, hierarchies, and networks in different ways, resulting in inter-firm relations that are complementary to different types of “business systems” or “varieties of capitalism.” This chapter sets out to examine and discuss the particular local and global models of industrial organization that underpinned India’s software industry during the “takeoff phase” in the 1990s. As one of the most celebrated cases of rapid integration into the world economy this case holds important insights for the ongoing debate on local institutional dynamics in the age of deepening globalization. Is the increasing transnational coordination of economic activities overriding local organizational structures and institutional arrangement combinations? If so, what are the implications for the process of industrial upgrading in new growth regions?