Knowledge-Based Entrepreneurship in India

There is intense interest in the formation and evolution of "emerging companies" in India.  Mani has referred to this type of entrepreneurial activity in India as “knowledge-based entrepreneurship”, which he defined as “entrepreneurship in the context of medium and high technology industries, both in the manufacturing and service sectors as well”.  With respect to India, the specific industries considered to meet the criteria for “knowledge-based” status include chemical and chemical products, metal products and machinery, electrical machinery, transport equipment, communication services, computer-related services and research and development services.

An analysis by Mani of the “hottest start ups” in India identified by the National Entrepreneurship Network as of 2008 revealed the following characteristics of technology-based entrepreneurship activities in the country:

  • 40% of the companies were technology-based (i.e., information technology, Internet, software, telecommunications and mobile);
  • Most of the companies—63%–were based in the larger cities (Bangalore (25%), Mumbai (19%) and Delhi (19%);78% of the companies had been in existence less than three years and the oldest companies had been formed in 2003;
  • Just under half of the founders were still in their 20s and more than half of the founders were “first generation” entrepreneurs launching their first business; however, only 8% of the founders were women;
  • 585 of the founders had either studied abroad or received their education in one of India’s “Tier I” institutions; and
  • The number of employees ranged from five to 15.

For purposes of determining eligibility as a “technology company”, the following criteria are used: (i) the company must own proprietary technology that contributes to a significant portion of the company’s operating revenues; (ii) the company must manufacture a technology-related product; and (iii) the company must devote a significant portion of its operating revenues to research and development.

There has also been a significant increase in the number of Indian companies included among the Deloitte Technology Fast 500 Asia Pacific, a collection of the fastest growing technology companies in the Asia Pacific Region.  Indian representation grew from just 12 firms in 2003 to 82 (engaged predominantly in information technology or software) in 2007, the second highest among all countries represented on the list that year.  By 2010, the number of Indian firms had dropped to 60, fourth among all countries represented behind China, Taiwan and Australia; however, India still outpaced traditional technology leaders such as Korea, Japan and Singapore.

6 thoughts on “Knowledge-Based Entrepreneurship in India

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