Question

Is a Culture of Entrepreneurial Problem Solving Key for India? India is a complex and chaotic place with hundreds of millions of poor citizens and a ramshackle infrastructure—particularly when compared to the gleaming new ports, highways, and airports that China has built in recent decades. Moreover, India has long been plagued by a notoriously inefficient, albeit democratic, government. But these challenges and barriers have arguably produced something remarkable in India—a problem-solving mentality that helps many Indians to quickly, cheaply, and cleverly invent new products and new ways of doing things. Indeed, this mentality has caused multinationals the world over to flock to India, not just for backroom outsourcing but to tap some of the most innovative minds in the world. As a result, optimists are saying that India today is booming in many respects, with a variety of world-class firms such as Tata Motors and mobile phone provider Bharti Airtel. Not surprisingly, they predict that India’s gross domestic product growth will pass China’s in a few years. And by 2015, some estimate that another 460 million Indians will join the ranks of the middle class, bringing spending power with them. Small wonder that some predict that India, not China, will be the fastest growing big country in the world for the next quarter century. Interestingly, while China’s approach to growth has been, for the most part, government driven, India’s successes are more connected to the collective efforts of its nearly 50 million entrepreneurs. The unleashing of India’s underlying entrepreneurial culture has been driven by several factors, including reforms that started 20 years ago (e.g., lower tariffs, friendlier rules for investment, and less business red tape). Another factor is the domestic market. While many Indian companies do a brisk export business in services, the local market is large and demanding, with customers wanting cheap products that work well from the start. And India’s frugal innovators provide them what they want. In fact, some of what they have come up with is nothing short of mind-boggling. For instance, Tata Chemicals has developed a water filter that costs less than $1, needs no power, and provides 30 days of pure drinking water for a five-person family. And Indian scientists have developed a new laptop they hope to bring to market—one that costs just $35! All of this is consistent with recent research about cultural values that seems to encourage entrepreneurship. Entrepreneurs function in a social context, and consequently societal culture can play a role in inhibiting or enhancing the entrepreneurial problem solving seen in India today. Specifically, cultural values that encourage helpfulness, cooperation, relationship building, and bootstrapping—particularly as mechanisms for overcoming obstacles in society—seem to help spur entrepreneurial innovation. And India generally scores high on these attributes—on what GLOBE refers to as humane orientation. Likewise, India scores highly on in-group collectivism, where strong family connections and ties dominate and define India’s most prominent and entrepreneurial companies. Moreover, when entrepreneurship is touted as being socially desirable in a country, it can, over time, strengthen and support cultural values that encourage entrepreneurial activity. But, as stated earlier, India is a complex place with plenty of built-in contradictions. Because of bureaucratic barriers and increasing domestic competition, some of India’s best companies, such as Godrej Consumer Products, are looking abroad to places such as Africa to grow their revenues—where their efficient and inexpensive business models are well suited to create products tailored to local demands. Indeed, many companies feel that India remains a very challenging place to do business. Many Indian roads are abysmal, and some are slowed by checkpoints where officials demand bribes from truck drivers. Likewise, companies often must maintain their own backup power and sanitation systems given the lack of stable utilities. Moreover, while India has plenty of innovative entrepreneurs, it is woefully short on engineers and other trained professionals, has too few outstanding universities, and a weak primary education system. The government is also somewhat unpredictable, and laws are routinely challenged in court, making it difficult for businesses to know what will happen next. One Western businessman noted that China was much easier to operate in compared to “the freewheeling chaos of India.” The big question, of course, is whether India’s cultural support for its unique, problem-solving frugal innovators can continue to lift the country up faster and farther than its challenges and weaknesses hold it back. Will the optimists or the pessimists be right in the end about India? What do you think?51 Assignment Questions . Perform an in-depth assessment of Indian culture. What specific elements of that culture support entrepreneurship? Are there elements that hinder it? Can you provide examples of how these cultural elements are manifested in successful Indian firms as well as firms that have struggled recently? As an international manager for a foreign multinational, how would you try to make sense of and adapt to the Indian business and cultural environment if you were doing business there? How might you be able to take advantage of India’s expertise in frugal innovation? (Be sure that you apply the stages in international corporate development.) How would you use Hofstede’s conceptual framework approach and the Globe’s Framework? Overall, do you side with the optimists who believe that India’s culture will help it leapfrog China in the next few decades or the pessimists who see India as facing daunting problems that will hold its growth back for years to come? Either way, fully explain your position.

Answer 1

Do an in-depth assessment of Indian culture. What specific elements of that culture support entrepreneurship? Are there elements that hinder it? Can you provide examples of how these cultural elements are manifested in successful Indian firms as well as firms that have struggled recently?

The authors have aptly described India as a complex and chaotic place. It is the 7^th largest country in the world¹, second most populated country, one of the highest population densities in the top 10 largest countries, 6^th largest economy by GDP³and has 23 constitutionalized languages⁴. You can easily find poorest of the poor and richest of the rich living within a mile’s radius. You can find one team of craftsmen using centuries old tools next to another team using Cloud and Mountain Lion both working on same construction project. You can find people wearing traditional cultural dresses as well as latest fashion tuxedo’s both shopping in the same store. Lastly, you will find homes with medium to high use of English, as well as homes with only one local language in the same city. This complexity has a fundamental impact on how foreign companies do business in India.

From Hofstede’s cultural perspective, Indian culture is primarily:

MildCollectivist: People typically think in terms of a groups like religion, caste, village, but they also have the capability of being responsible of themselves and their nuclear families.

MildMasculine: Indians are relationship oriented. There are relatively less broken homes (although this has been changing, typical blame going to cable TV, gaming and Internet), kids care for aging parents (this has also been changing and old age homes are emerging). Diet is mainly vegetarian with occasional preparation of chicken/egg dishes. You can say this also has roots in relationships - in this case with animals. Corruption is high,from a child's birth to getting admitted to school, getting admission in colleges, jobs, everywhere you can find corruption. You can argue that this also has roots in relationships because even though corruption is mainly for money, it is also for “saving face”. You don't want society to think you don't care for friends. For instance, if (because of overpopulation), there is a line of 100 people to see a doctor at a government hospital, some will try to jump the line claiming they know the doctor personally. Similar principle applies to a government officer giving a construction contract to a businessman friend.

High power distance: Large unequally distributed power is acceptable to the society. Many sections of society feel destined or deserving for their role in life.There is a caste system in India⁵,although seen more in rural India, towns and cities are not casteism-proof. High caste families can discriminate against a low caste without much legal action. Just like affirmative action in the US, there is a quota system that helps low caste people (traditionally poor/uneducated) to secure college seats and jobs. Politics and crime are often hand in glove.

Mild uncertainty avoidance: Banks have only recently started giving out business or housing loans little bit more liberally. It is acceptable to do everyday things your own way rather than doing them by the book or set procedures.

Mild collectivism is good for entrepreneurship because financial and other support from friends and families is easily available. Family businesses are very common in the country.

High power distance culture is a hinderance to entrepreneurship. Employees tend to accept opaque management and there is a virtual absence of labor laws. Further, uncertainty avoidance means money does not move as freely as compared to economic powerhouses like US and UK where society is more risk-taking than India.

Reliance Industries Limited is an iconic Indian conglomerate holding company with interests in energy, petrochemicals, textiles, natural resources, retail, and telecommunications. Its 2018 revenue was USD 60 billion. The company was founded by Dhirubhai Ambani in 1977, who passed on the ownership to his two sons in 1986, despite being a publicly traded company. The brothers ultimately ended up splitting the company in two parts based on personal family feud. With high power distance culture in Indian society, these kinds of changes are acceptable with little to no overview of board of directors as seen in Western firms.

The rise and fall of Kellogg’s brand, known for breakfast cereals, is a case of failing to adapt to local dynamics. With the slow but constant industrialization of Indian economy, working females has become a norm. Females being the primary cooks at home may supplement breakfast with cereals. But at the same time Indian society is quickly realizing the bad effects of processed food, and social media propaganda against these foods does not help any.

As an international manager for a foreign multinational, how would you try to make sense of and adapt to the Indian business and cultural environment if you were doing business there?

As a manager adapting to the Indian business and cultural environment one would need to understand the culture that’s being managed. It would be advantageous to have a mentor in India that would help the manager/management team to understand and alleviate any misconceptions or stereotypes associated with the area. Coming from a Western business mindset and culturalization, it can be difficult to understand the cultural norms and what makes a business thrive and what makes business fail. For example, India’s culture is known for their quick problem-solving skills. This would be an asset to your team especially when there are time-sensitive projects that need to be produced. Another example would be their drive for entrepreneurship,most times Indian entrepreneurship is driven by status or class and can either build up or tear down the business. They have the drive to create businesses but may not have all the necessary skills needed to maintain the business, this is due to lack of universities that have prominence in their country. Given the opportunity of expanding their education with the implementation of educational programs from Western universities could probably increase morale and give people opportunities that were previously unavailable. Frustrations that a manager might encounter would be the government’s interference in the business. In Western culture there are scheduled holidays for employees but behind the scenes, there are some employees that work these days to keep the business going and maintaining profitability- essential vs non-essential personnel. In India, the government can impose a mandatory closure or “bandh” that shuts down all segments of the business, and in turn causes a loss of profit for the day or days closure. These types of shutdowns would need to be figured into the business plan, so it will not be a surprise when it comes to a profit loss. Management would also have to deal with the “locals” not willing to try a different way of business. Most times local employees only see one way of conducting business and would have difficulty adjusting to or expanding their way of business.

How might you be able to take advantage of India’s expertise in frugal innovation?

The managers need to understand the most popular items in the region, the cost of productions, and what makes it sell. The focus then would be shifted to the process (I.e. is there waste in the process? time, materials, etc.) and maximizing the potential of making more profit for the business locally. Once this is worked through, you can work with the team to transition the product out for export for a profitable return. The key to frugalness would be catering to your audience and finding out what they want. With this one key factor in mind, it maintains the focus on what needs to be created and not excess or over-creating.

Overall, do you side with the optimists who believe that India’s culture will help it leapfrog China in the next few decades or the pessimists who see India as facing daunting problems that will hold its growth back for years to come? Either way, fully explain your position.

India’s mild collectivists' culture helps people think in a group setting. This means that the entrepreneurs think of their families and villages when they set about an inventing some gadget that is needed. That is why the problem-solving mentality of many entrepreneurs could possibly help them create cheap and clever inventions that can help others in the community and also build better infrastructure like highways that could in return boost the entire village and country. This could also be said for the culture’s mild masculinity perspective. Saving face is very important and that could be used to the country’s advantage.

From the pessimists’ point of view the problems facing India will hold back growth for years to come. India’s high-power distance could cause problems for entrepreneurs. Many Indian people believe they deserve what they have in life and there is nothing they can do about it. They take the orders from the higher up management or from corrupt officials feeling that there is nothing they can do about it. The Indian culture also has mild uncertainty avoidance meaning that some banks will not loan money to entrepreneurs causing them to be unable to fulfill a need within the community, this is causing some local entrepreneurs and businesses from other countries to leave India and sell their inventions and other services to other countries. Even though the Indian companies will not forget their families they might not necessarily have the ability to take care of the rest of the community and failing infrastructure. Another issue is the weak primary education system and a lack of trained professionals along with ways to train more professionals. This will continue to cause the country to be unable to function and rise above its current situation.

Quite frankly, it’s hard to imagine that India would leapfrog China in regard to the condition of the country’s infrastructure and overall income per family. We’ve seen other countries be in the same position as India with an opportunity to achieve great things but in the end, fall short of the ultimate goal. For example, Mexico is a country that has plenty of natural resources available to them but corruption, poor infrastructure, and poor education just like India has taken its toll on society and has hindered the country and its ability to become a first world nation. Resources alone do not guarantee that a country will grow into a powerhouse it takes more than that, it takes leaders capable of changing a mindset and help push forward for the better of a nation.

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