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Tomas Gabriel Bas
Universidad Adolfo Ibañez, Chile
Jingyuan Zhao
Harbin Institute of Technology, China
Comparing High
Technology Firms
in Developed and
Developing Countries:
Cluster Growth Initiatives
Comparing high technology firms in developed and developing countries: cluster growth initiatives / Tomas Gabriel Bas and
Jingyuan Zhao, editor.
p. cm.
Includes bibliographical references and index.
Summary: “This book is the leading source of information for readers interested in this field of study as it promotes
scientific discussion on policies and practice of cluster growth, as well as covers the emerging research topics which are
going to define the future of the management of technology”--Provided by publisher.
ISBN 978-1-4666-1646-2 (hardcover) -- ISBN 978-1-4666-1647-9 (ebook) -- ISBN 978-1-4666-1648-6 (print & perpetual
access) 1. High technology industries. 2. Technological innovations--Economic aspects. 3. High technology industries--
Developing countries. 4. Technological innovations--Economic aspects--Developing countries. I. Bas, Tomas Gabriel,
1964- II. Zhao, Jingyuan, 1968-
HD62.37C66 2012
338.4’76--dc23
2011049599
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37
Copyright © 2012, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
Chapter 4
DOI: 10.4018/978-1-4666-1646-2.ch004
INTRODUCTION
The last quarter of the twentieth century witnessed
a remarkable convergence of policies for new
technologies. Almost every country, whether in
Western or Eastern Europe, whether in North or
South America, in Asia, Africa or Australasia, has
pursued policies for the development of Infor-
mation and Communication Technology (ICT).
Some of these were concerned mainly with the
private sector, some with the public sector, in most
countries with both, the precise mixture depending
on the political regime, the structure of industry,
Neeta Baporikar
Ministry of Higher Education, CAS - Salalah, Sultanate of Oman
Technology Policy Perspective:
Critical Review of Software
Technology Parks in India
ABSTRACT
Clusters are geographic concentrations of interconnected companies, specialized suppliers, service
providers, and associated institutions in a particular eld that are present in a nation or region. Cluster
growth initiatives are an important new direction in economic policy. Almost every country, in the
world, has pursued policies for the development of Information and Communication Technology (ICT).
Software Technology Parks of India (STPI) established in 1991, have certainly promoted cluster growth
of high-tech software companies, played seminal role and enabled India to become “IT Superpower.”
Today, these parks across over the country are synonymous with excellent Infrastructure and Statutory
support aimed at furthering growth of Information Technology. The chapter aims to do a critical review
of software parks, and the focus is to understand the importance of technology policy perspective - how
it can be developed, enhanced through right inputs, and adaptation. It raises a number of questions:
What is a right perspective and how should it be developed? What role can input and adaptation play?
How should resources and capabilities be congured to develop the right cluster growth? This is to
provide the reader with a suitable analysis platform for decision-making that enhances all phases of
making effective technology policy so as to ensure growth and success for clusters through optimization
of knowledge management process.
38
Technology Policy Perspective
ownership of the telecommunications infrastruc-
ture and so forth. These features were themselves
changing fairly rapidly in many countries, most
notably in Eastern Europe. But whatever the po-
litical and social regime, the preoccupation with
ICT was observable everywhere and identified in
numerous surveys by international organizations.
This common endeavour could no doubt be
attributed to the widespread conviction that ICT
was an extraordinarily pervasive technology which
could be fairly characterized as a “General Purpose
Technology,” i.e. one which could and would be
used in most sectors of the economy and many
different activities. In manufacturing industry al-
most every technique offered some possibilities for
process control through computerization, whilst
office functions offered even greater possibilities.
It would be true to say that just after the Second
World War; the ICT enthusiasts were relatively few
in number. In those days, it was nuclear technol-
ogy which attracted far more public attention and
far more government funds than ICT. It had been
by far the most spectacular and the most effective
and devastating technology of the war and it had
been the direct result of a massive government
programme for the development of technology –
the so-called “Manhattan” Project. Enthusiasm
for ICT was confined to those few people in the
academic world who had pioneered small-scale
computer projects, sometimes in collaboration
with the military, for aircraft design, artillery
computations, or decoding enemy communica-
tions. In those early days even firms, such as IBM
who already had some experience of government
projects were not at all optimistic about the future
applications of computers in industry.
These perceptions changed radically in the
1950s, 1960s and 1970s. Many new firms entered
the industry and a wide range of new applications
was rapidly developed, such as payroll and stock
control. Costs fell by an order of magnitude and the
speed of executing simple instructions increased
by several orders of magnitude. As the technol-
ogy was improved still further, and new software
programmes multiplied, large numbers of people
became familiar with them and social scientists,
such as David Bell and Manuel Castells began to
speak and write about the “Information Society”
or the “Knowledge Economy.” These terms passed
into general use reflecting the almost universal
social acceptance of the new technology. Every
human society of the past has of course been in
some sense an information society but the use
of electronic computers to record, store and dis-
seminate information revolutionized the concept.
Probably, therefore, the development and dif-
fusion of ICT has been the most widely supported
technology policy of all time. At various times, and
for short periods, the concentration of technologi-
cal efforts and the proportion of government funds
directed to another particular technology may have
been somewhat greater. This may have been the
case, for example, with aircraft technology and
with radar in a few countries early in the Second
World War. It was certainly the case with nuclear
technology at the end of the Second World War
and during the first decades of the ‘Cold War’.
But for sustained activity over a very long period
and with an enormous range of applications in the
civil economy, ICT is without parallel. Moreover,
it was and is also without parallel in the range of
countries which have followed deliberate poli-
cies to improve and diffuse the technology and
to extend the scope of applications.
In this perspective it is perhaps not surprising
that both policy-makers and visionary scientists
are sometimes engaged in trying to identify the
next great “General Purpose Technology” which
should be promoted in good time in order to keep
pace with world development or even gain an
early lead in world competition.
Successive Industrial Revolutions
The hugely successful world-wide diffusion of
ICT has done much to restore the concept of “suc-
cessive industrial revolutions” first enunciated
by the Austrian economist and one-time Finance
39
Technology Policy Perspective
Minister, Joseph Schumpeter. Whilst Professor of
Economics at Harvard from the early 1930s until
his death in 1950, he became very well-known for
his insistence that it was innovation which was at
the heart of competition, economic development
and growth in capitalist societies. More than any
other economist he popularized the ideas of the
Russian economist, Nikolai Kondratieff, in the
economics profession. In particular, in his work on
Business Cycles, he designated the longer cycles of
40 to 60 years’ duration as “Kondratieff Cycles.”
Schumpeter explained these long-term trans-
formations in terms of periodic revolutionary
changes in technology. According to his inter-
pretation, innovations could not be regarded
as isolated, discrete, individual events, but as
“clusters” of events, which were both technically
and economically inter-related. Consequently, the
appearance of new technologies and their entry into
the social system was not a smooth, continuous
process, but one of alternating periods of explosive
change, followed by periods of relative stability.
Schumpeter himself was not especially interested
in developing technology policies in the sense of
active efforts to promote or prevent the creation
and diffusion of technologies, believing, as he
did, that only the efforts of outstanding innova-
tive entrepreneurs could drive such changes. His
major work on “Business Cycles” appeared only
in 1939 and was overtaken by the events of the
Second World War, which however showed con-
clusively that the appearance and application of
new technologies could indeed be accelerated for
the needs of the military forces. This was shown
not only for weapons systems but also for drugs,
such as penicillin. Earlier wars and the prepara-
tions for them had already demonstrated that such
innovations could be introduced and applied as a
result of determined policies, even with a fairly
low level of funding. The significance of the Sec-
ond World War technologies was the spectacular
scale of development, the close collaboration of
industry, universities and government and the links
between science and technology. Policies for the
development of science and technology which had
hitherto been spasmodic and relatively small-scale
now became recognized as a regular requirement
of government, at first in the military field but soon
for civil industry as well. The military example
proved contagious. The area in which this was
most quickly recognized and most energetically
pursued was of course nuclear technology – by
far the most spectacular and the most expensive
of all the technologies developed during the war
but by no means the only one.
Military objectives continued as the main
incentive for the vast expenditures of the super-
powers, as well as some smaller countries such as
France, the United Kingdom, and Yugoslavia. But
in all these countries too, civil nuclear technology
was also energetically pursued. Thus, although it
could not perhaps be described as a “general pur-
pose” technology, it was certainly a multi-purpose
technology, since cheap and abundant energy was
thought to offer the possibility of lower costs and
greater efficiency in almost any industry. Although
he did not speak of “general purpose” technologies,
Kondratieff himself did emphasize the importance
of waves of new investment in the infrastructure
in stimulating economic growth.
However, this early enthusiasm for civil
nuclear technology was followed by a long period
of disillusion and in the last few decades of the
twentieth century very few new nuclear power
stations were ordered or constructed. Thus, in
the same period that ICT was advancing by leaps
and bounds all over the world, nuclear power
stagnated. The explanation of this contrast is
fundamental to the purpose of identifying the
future prospects for other candidates as general
purpose technologies. ICT possessed the key
requirements for success and demonstrates them
all, but, nuclear technology did not prove to do
so over the long haul and in fact, lost some of its
comparative advantages during the last quarter
of the twentieth century. The key to this relative
failure was in the persistently high capital costs
of nuclear power stations which meant that other
40
Technology Policy Perspective
sources of energy remained highly competitive,
even when oil and coal became more expensive.
This was quite contrary to the early expectations
in the 1950s of universal availability of cheap
nuclear power.
The cost experience of ICT was completely
different. Costs fell by orders of magnitude in
numerous applications and a series of major
breakthroughs in technology promoted universal
expectations of continued cost reduction (semi-
conductors, integrated circuits, optical fibers, etc.
etc.) which proved well-founded and generated a
virtuous circle of cost reduction and expanding
sales. The nuclear industry itself is hoping for a
renewed spurt of growth following the depletion
of fossil fuels to a point where they become much
more expensive. There are still powerful lobbies
for nuclear energy in several industrialized coun-
tries. However, the prospects for more genuinely
renewable energy sources, such as wind power,
tidal power and solar power must now be taken
much more seriously, as well as the potential of
hydrogen for automobiles. The world-wide politi-
cal and social environmental movements are now
a major factor in the business environment as well
as in the political system itself. Consequently, the
long-term future of nuclear power must still be
considered as rather uncertain and certainly in no
way as bright as ICT.
The Growth of the World
Economy and the Development
of New Technologies
Drawing together the arguments of the researchers
and policy makers, it seems highly improbable
that biotechnology has the necessary combination
of characteristics to give the scale of impetus to
the world economy which is likely to be needed
to usher in a new period of really high growth. It
does not have the huge range of applications of
ICT or even of some earlier general purpose tech-
nologies such as electrification or steam powered
mechanization. Nor does it yet show the huge
cost reductions which have been such a remark-
able feature of the progress of ICT. Finally, like
nuclear power, it has been dogged by widespread
public opposition in many different countries
arising from anxieties about the long-term envi-
ronmental and social consequences of some major
applications. These anxieties are unlikely to be
diminished by the present international concerns
with terrorism and biological weapons, although
of course in some narrow specialized areas large
R&D and diffusion programmes will be pursued
to counteract these threats.
Even if the further development of biotechnol-
ogy proves more favourable than this assessment
suggests, it is unlikely that it would prove strong
enough to overcome the weaknesses in the world
economy single-handed. It simply does not have
the scale of investment and sales which would be
needed to achieve this. Whereas it is sometimes
asserted that the “fundamentals are sound” in the
United States economy, this is far from true, as
is evident from numerous indications. The deep
decline in the stock market between 2000 and
2003 is only one of these. This decline cannot all
be attributed to anxiety and uncertainty about a
forthcoming war, although this has certainly been
a major cause for concern. The United States ad-
ministration has attempted to counter this decline
by a combination of monetary and fiscal policies
but, as Alan Greenspan himself made clear in his
testimony to the Senate Banking Committee on
February 11th, 2003, there are serious doubts about
the proposed increases in Federal expenditures,
which he himself shares.
It was not only in Congress that very serious
doubts have been expressed about the combina-
tion of heavy increases in expenditure and big
tax reductions for several years ahead. Aggregate
debt of households, corporations and government
in the United States already increased from $4
trillion in 1980 to $31 trillion towards the end of
2002. These levels of debt were only surpassed
as a percentage of GDP in the Great Depression
of the early 1930s. The decline in the dollar and
41
Technology Policy Perspective
the likelihood of further international currency
adjustments is an additional cause for concern.
Some of these worries found expression in the
statement of a large group of American economists,
including four Nobel Prize winners. The long-term
decline in the savings rate and the demographic
trends with the so-called “baby-boomers” reach-
ing retirement age will place further increased
strains on the public finances as well as on private
households. Finally, internal security expenditures
and the war on terrorism seem likely to prolong a
general climate of uncertainty and fear which is
unfavourable to new productive investment and
economic growth, both in the United States and
elsewhere.
In the second half of the twentieth century,
despite some serious fluctuations, the world
economy experienced its fastest economic growth
rate ever achieved over a long period. In analyzing
this relatively rather successful period economists
often used the expression “engines of growth”
to describe the source of the major stimuli to the
sustained growth of the world economy. It was
often pointed out that if the growth rate faltered
in one or other region of the world, this could
be compensated by higher growth elsewhere in
the global system. For example, when growth in
the United States or Western Europe slackened
in the 1960s or 1970s; this was to some degree
compensated by higher growth in Japan and other
Asian countries.
When growth in Japan slowed in the 1990s this
was compensated by a renewed surge of growth
in the United States and so forth. The fear was
always there that all the “engines” might slow
down together thus induce a deep world-wide
depression as in the 1930s. These fears were es-
pecially intense in periods when the world price
of oil rose rapidly and many countries simultane-
ously took measures to counteract inflationary
pressures. However, although the growth of the
world economy did indeed slow down in the
fourth quarter of the century in comparison with
the third, there was enough steam (or oil) in the
various engines of growth to avoid a deep world-
wide depression of this kind.
During the fourth quarter a subtle shift took
place in the use of the expression “engines of
growth”: whereas in the third quarter it simply
referred to fast or slow growing countries or
regions of the world, in the fourth quarter, it was
increasingly used with reference to technologies.
Among professional economists the work of Bres-
nahan and Trajtenberg (1995) was influential in
spreading the concept of engines of growth linked
to general purpose technologies. Among invest-
ment analysts the book by Alasdair Nairn (2002)
on “Engines that Move Markets” was typical of
this new genre, which sought to demonstrate,
after the manner of Schumpeter, that from the
time of canals and railways to the time of the
Personal Computer and the Internet, the growth
of world markets had been driven by successive
technological revolutions.
Alan Greenspan himself took up this theme
when he attributed the spurt of growth in the
United States in the 1990s to the so-called “New
Economy” based on ICT. One reason for some
of the increased pessimism about the prospects
for world economic growth in the twenty-first
century is that neither the “country” engines nor
the “technological” engines appear to be in good
enough shape to lead a major revival. Skepticism
about the “New Economy” boom was already
quite widespread before the bursting of the In-
ternet Bubble. However, although at first glance
the outlook appears bleak, a deeper analysis
shows that there are actually some more hopeful
possibilities both for the “country engines” and
the “technological engines” and even more for a
combination of the two.
In the first place, analysis of technological
revolutions and their diffusion shows that the
initial spectacular upsurge and the bursting of
the early bubbles is usually followed by a longer
period of absorption during which the enormous
42
Technology Policy Perspective
potential of the technology is fully exploited after
learning the hard lessons of some unprofitable
ventures and blind alleys. Schumpeter himself
already pointed to this type of sequence and a
number of economists have recently presented
convincing arguments that there is still a huge
as yet-unrealized potential in ICT, especially in
combination with other new technologies and
in the less developed regions in the world. One
example of this more optimistic analysis is the
work of Brian Arthur (2002) of the Santa Fe In-
stitute. He points out that the bursting of the early
railway bubbles in the 1840s was followed by a
long period of growth based on railways. Another
example is the work of Carlota Perez (2002) in
her book on “Technological Revolutions and
Financial Capital” which is particularly notable
for its analysis of the changing roles of financial
capital and production capital during successive
phases of a technological revolution. Her argument
leads to the conclusion that a prolonged period
of more prosperous growth is quite possible as
ICT is absorbed into the international economy
on a vast scale through a wave of new produc-
tion investment. Justification for her view is to be
found in the relative performance of the Chinese
economy in recent years and to some degree also
in that of the Indian economy.
These countries, the two largest of the less
developed economies, have both enjoyed high
growth rates of their ICT industries, together with
growth of their economies more generally, yet
there is still obviously far more scope for raising
living standards both there and throughout Asia
and even more in Latin America and Africa. To
adapt the new technologies to meet the needs of the
poorest people is surely one way to develop new
engines of growth in the world market. It was this
possibility which inspired the leading development
economist in the United States, Jeffrey Sachs, to
speak of “Weapons of Mass Salvation” (WMS)
and to argue that the US Administration should be
spending more on WMS than on WMD (Weapons
of Mass Destruction). He argued the case largely on
humanitarian grounds – combating AIDS, malaria,
TB and so forth – but a very strong case can also be
made on narrower economic grounds. The future
prosperity of the whole world economy (and the
defeat of terrorism) will probably depend in this
century on developing new engines of growth by
combinations of new and old technologies in the
poorer countries of the world.
With ICT firmly established as the dominant
world technology, the greatest possibilities for
further growth lie not in an attempt to replace it
with another general purpose technology but in
such new combinations of ICT with other tech-
nologies. One such combination – bio-informatics
– has already been discussed and there are others,
especially in the area of energy technology. The
need for a vast expansion of renewable energy
technologies and for a simultaneous programme
of energy conservation is universally acknowl-
edged. Progress has certainly been made with the
technologies of wind power, solar energy, tidal
energy and wave power. Yet in none of them has
there been the kind of cost breakthrough which
would justify a general concentration of develop-
ment resources on that one technology. It seems
more probable that what is needed is to advance
a large number of possible combinations of these
new technologies with ICT to take full advantage
of local resources and skills. This form of growth
has been characteristic of prolonged periods of
prosperity in the past, as with the combination of
electrical and mechanical technologies during the
period of electrification. This type of development
of technology can be encouraged and promoted
by well-conceived national and international
programmes but they will only be fruitful in an
economic climate which favours high growth in
the developing countries to compensate for the
rather weaker prospects in the United States and
other leading OECD countries, such as Japan
and Germany. The developing country engines of
growth could compensate for these weaknesses.
43
Technology Policy Perspective
Technology Frames
and Interpretation
Knowledge is proportionate to being. ...You know
in virtue of what you are. - Aldous Huxley (Time
Must Have a Stop, Ch. 26)
Veterans of fieldwork in companies throughout the
world will recognize the argument that companies
see the world differently to one another and, in
fact, senior managers perceive their ‘reading of
the game’ as a competitive domain. We should
expect the role of these interpretative frameworks,
or frames, to influence (and be influenced by) how
the firm evolves (intentionally and unintention-
ally) and how it seeks to act. Far from being an
interesting aside in the topic of firm evolution, the
frame provides the link between its inheritance
(established and path dependent cognitive maps,
capabilities, routines and preferences), its sense
making efforts (Teece, 1998, 2000; Weick, 2001)
(justification, development and documentation
[Weick op.cit. pp 20-23] of the most fit-for-purpose
strategies) and its future (the boundaries for the
firm of choice and action in light of inheritance
and capabilities to translate strategy into action,
and in light of the firm’s environment).
The concept of framing and interpretation
has been appreciably - though not exclusively
- advanced in psychology, political economy
and information sciences, which treat the matter
of problem specification and process mapping
squarely as a function of human behaviour and
experience. Clinical psychologist Edward Tolman
(1948) first discussed cognitive maps as a ‘field
map’ developed in the course of learning and
experience with the environment. Axelrod (1976)
applied the concept more specifically to political
decision-making. He argued that decision-making
was largely dependent on the existing set of beliefs
and previous knowledge of the individual, because
these maps determined how the problems, deci-
sions and options were perceived. In the case of
Tolman’s findings, we can describe this process
as ‘adaptation mapping’, whereby signals in
the environment prompt the agent to adapt their
interpretative frameworks of their condition of
being (in other words, their ‘reading of the game’).
Axelrod emphasizes another vector of influ-
ence related to path-dependency, that which we
can term ‘formational mapping’. Organizational
theorists, notably Weick, Fiol and Huff (1992),
Lyles and Schwenk (1992) and Starbuck and
Mezias (2003), have extended this discussion of
cognitive maps and the process of sense making
to the firm and highlighted their role in organi-
zational success or failure. Edith Penrose in her
seminal discussion of ‘the theory of the growth
of the firm’ (1959), has spoken of firm specific
‘images’ that relate closely to notions of interpre-
tative frameworks.
The role of interpretation is more often recog-
nized at more isolated levels of analysis and choice.
In a recent paper on investment decision-making
in the oil and gas sector, the authors state that,
Variation in approaches to appraising the value of
exploration and production opportunities is based
in part on the scope for different interpretations
of the different types of variables. And this scope
allows for interpretations to be influenced by
shared assumptions, interpretative frameworks
and operating procedures, which emerge within
organizations, and exist prior to the onset of any
particular episodes of appraisal and decision-
making. (Finch, Macmillan and Simpson, 2002)
Decision theory provides another approach
to an agent’s perception of the choice landscape
and strategy. Two key works in this literature,
Schelling’s (1960) book, The Strategy of Conflict,
and Tversky and Kahneman’s (1981) seminal
article, “The framing of decisions and the psy-
chology of choice,” consider how decisions are
made under conditions of bounded rationality
and different frames of thought. In Schelling’s
work, co-ordination between two separated agents
was achieved through the selection of ‘salient’
combinations. For example, the respondent when
asked to choose a alphabet to match that chosen
44
Technology Policy Perspective
by the other agent, chose “a” or “z.” Salience
denotes a matter of marked value of importance
to the individual and which ‘stands out’. This
meaning is not intrinsic to the matter, but rather
is attributed by the individual. Points of salience
are labels that are recognized by agents because
they are analogous or associated with ideas from
common experience, culture or mindset. (Mehta,
Starmer and Sugden, 1984) In effects, points of
salience are points of significance in the evolved
cognitive maps reflecting experiences and belief
systems comprising an individual or organization.
Building on the concepts of sense making
and salience, the concept of ‘frame’ in this paper
provides the organizational construct through
which the firm assesses its current position through
sense making and explores its choice landscape
(the environment, the competitors, the opportu-
nities and the like) using points of salience held
by senior management, in particular. The frames
can be described as the perspective from, or a lens
through which, the firm considers its commercial
past, present and future. The frame comprises the
firm’s appraisal of the competitive value of its
resources and capabilities and its ability to ob-
tain and/or contain these. As such, it is critically
linked to the process of strategy development and
implementation.
March and Simon (1958) described this role
of the mental “model” of the agent; .”..choice is
always exercised with respect to a limited, ap-
proximate simplified ‘model’ of the real situation..
. We call the chooser’s model his ‘definition of
the situation’.” (1958, p. 12) Several authors have
considered the strategic value of interpretative
capabilities at the firm level (Lippman and Rumelt,
1982; Barney, 1991; Barr et al, 1992) and have
emphasized the biases that are introduced through
experience as decision makers misremember and
search for analogues.
However, there has been less focus on the pro-
cess by which interpretative frameworks are medi-
ated at the organizational level (how does strategy
emerge from the frames of many senior managers
and technical staff?). Moreover, relatively less
attention has been paid to the impacts of these
frameworks on the innovation and technology
strategies of firms, where novelty and uncertainty
greatly frustrate easy analogue mapping; recent
exceptions to this discuss technology disruptions
in photographic equipment (Tripsas and Gavetti,
2000) and pharmaceuticals (Kaplan, Murray and
Henderson, 2003). In these cases, the authors
are referring, explicitly or not, to the technology
frames of the firms in question.
The concept of ‘technology frame’ as devel-
oped in this paper thus has overlaps with similar
sounding notions scattered around some of the
relevant literatures. Because most of the work
to date has however been couched very much in
qualitative terms, the precise meanings of those
scattered notions are generally difficult to apply
in practice. Still less do we have much quantita-
tive information about their impacts. The present
chapter takes one of the first steps in this direction,
while recognizing its contiguity with other work.
Technology Frames in ICT
The concept of technology frame was first pre-
sented by Orlikowski and Gash (1994) who argue
that the individual’s interpretation of technology
was fundamental to understanding their interac-
tion with it. They define the technology frame as
”..that subset of members’ organizational frames
that concern the assumptions, expectation, and
knowledge that they use to understand technol-
ogy in organizations.” In their discussion of the
technology frame for information systems, the
authors focus ”..on those aspects of shared cogni-
tive structures that concern technology.” In other
words, Orlikowski and Gash are also exploring the
salience of technology frames and the means by
which these salient’s co-ordinate (or frustrate) the
interaction with the technology. Through detailed
field study work with a professional services
45
Technology Policy Perspective
firm, they reveal the influence that technology
frames have on the individual’s interaction with
technology and, moreover, that congruence (and
incongruence) of frames across groups affects
the organizational use and change of technology.
This work by Orlikowski and Gash (and indeed
subsequent work by Orlikowski (2000) and oth-
ers) addresses key issues related to organizational
change and adaptation to technology and provides
deep insights to the workings of frames within
the firm. My purpose in this paper is to consider
a different level of technology frame effects at
the firm level: that of technology strategy choice.
Because strategy determines resource choices
and co-ordination for the firm, the management
leadership of the firm must have a principal role
to play in creating and implementing strategy,
thereby committing the firm to the planned in-
vestment and collaboration (and this is quite in
keeping with views from both Penrose (1959) and
Chandler(1977)).
My question is whether it is possible to identify
from management words and choices the underly-
ing technology frame that is holding sway in the
firm at that time, and to consider this with respect
to operational outcomes. Clusters are geographic
concentrations of interconnected companies,
specialized suppliers, service providers, and as-
sociated institutions in a particular field that are
present in a nation or region. The development and
upgrading of clusters is an important agenda for
governments, companies, and other institutions.
Cluster growth initiatives are an important new
direction in economic policy, building on earlier
efforts in macroeconomic stabilization, privatiza-
tion, and market opening, and reducing the costs
of doing business.
India’s software technology parks established
in the last two decades have certainly promoted
cluster growth of high-tech software companies.
In the process, India has earned itself a reputation
of an IT superpower.
CRITICAL REVIEW OF SOFTWARE
TECHNOLOGY PARKS IN INDIA
Software Technology Parks of India has played a
seminal role in accomplishing this status. Today,
these parks across over the country are synony-
mous with excellent Infrastructure and Statutory
support aimed at furthering growth of Information
Technology in the country. As of now, a total of 51
STPI Centres/Sub-centres are operational across
the country. Out of these 51 centers, 44 centers
are in Tier II and Tier III cities.
Software Technology Parks of India (STPI)
is a society set up by the Ministry of Informa-
tion Technology, Government of India in 1991,
with the objective of encouraging, promoting
and boosting the Software Exports from India.
STPI maintains internal engineering resources
to provide consulting, training and implementa-
tion services. Services cover Network Design,
System Integration, Installation, Operations and
maintenance of application networks and facilities
in varied areas. Process development is based on
the Quality Management System. STPI centres
also adhere to ISO 9001 certification.
This chapter is a critical review of software
parks of India. It has comparative analysis of
clusters between different parks since it promotes
scientific discussion on policies and practice of
cluster growth. Furthermore, this chapter will
demonstrate the effectiveness and efficiency
of technology policy based on observations of
differential growth rate in exports and overall
business indicators of employment, turnover and
spillover development. The factors that have key
impact on the growth of clusters and the perfor-
mance of high technology firms, as well as the
best practices in different software parks are also
discussed correctly and comprehensively as this
discussion would be theoretically and practically
important in understanding the technology policy
perspective for both developed and developing
countries. India has earned itself a reputation of
46
Technology Policy Perspective
an IT superpower. Software Technology Parks of
India has played a seminal role in accomplishing
this status. Today, STPIs across over the country
are synonymous with excellent Infrastructure and
Statutory support aimed at furthering growth of
Information Technology in the country.
Software Technology Parks of India (STPI)
is a society set up by the Ministry of Informa-
tion Technology, Government of India in 1991,
with the objective of encouraging, promoting
and boosting the Software Exports from India.
STPI maintains internal engineering resources
to provide consulting, training and implementa-
tion services. Services cover Network Design,
System Integration, Installation, Operations and
maintenance of application networks and facilities
in varied areas. Process development is based on
the Quality Management System. STPI centres
also adhere to ISO 9001 certification.
STPI OVERVIEW
The Background
Software Technology Parks of India was estab-
lished and registered as an Autonomous Society
under the Societies Registration Act 1860, under
the Department of Information Technology, Minis-
try of Communications and Information Technol-
ogy, Government of India on 5th June 1991 with
an objective to implement STP Scheme, set-up
and manage infrastructure facilities and provide
other services like technology assessment and
professional training.
Objectives of STPI
The Objectives of the Software Technology Parks
of India
• To promote the development and export of
software and software services including
Information Technology (IT) enabled ser-
vices/ Bio- IT.
• To provide statutory and other promotional
services to the exporters by implement-
ing Software Technology Parks (STP)/
Electronics and Hardware Technology
Parks (EHTP) Schemes and other such
schemes this may be formulated and en-
trusted by the Government from time to
time.
• To provide data communication services
including value added services to IT / IT
enabled Services (ITES) related industries.
• To promote micro, small and medium en-
trepreneurs by creating conducive environ-
ment for entrepreneurship in the eld of
IT/ITES.
Functions of STPI
The STPI performs all functions necessary to
fulfill its objectives and include the following:-
1. To establish Software Technology Parks /
centers at various locations in the country;
◦ To perform all functions in the capac-
ity of the successor to the erstwhile
Software Technology Park Complex
which were taken over by the STPI
◦ To establish and manage the in-
frastructural resources such as in-
tegrated infrastructure including
International communication / Data
center / Incubating facilities etc. for
100% export oriented units and to
render similar services to the users
other than exporters.
◦ To undertake other export promo-
tional activities such as technology
assessments, market analysis, mar-
ket segmentation as also to organize
workshops/exhibitions/seminars/con-
ferences etc.
47
Technology Policy Perspective
◦ To facilitate specialized training in
the niche areas to meet the above
objectives.
◦ To work closely with respective State
Government and act as an interface
between Industry and Government.
◦ To promote secondary and tertiary
locations by establishing STPI pres-
ence to promote STP/EHTP Scheme,
and promotional schemes announced
by Government.
◦ To promote entrepreneurship through
incubation programmes / seed funds /
IP development and other awareness
programmes.
◦ To assist State Governments in for-
mulating IT policies and liaison for
promoting the IT industries in respec-
tive states to achieve an exponential
growth of exports.
◦ To promote quality and security stan-
dards in the IT industries.
◦ To work jointly with venture capital-
ists for providing nancial assistance
to the IT industries.
◦ To provide Project Management and
Consultancy services both at national
and international level in the areas of
expertise of STPI.
2. To perform financial management functions
which comprise inter alia the following
activities;
◦ To obtain or accept grants, subscrip-
tion, donations, gifts, bequests from
Government, Corporations, Trusts,
Organizations or any person for ful-
lling the objectives of the STPI.
(Note: Whenever any gifts, bequests
from foreign Governments/ organi-
zations are accepted / obtained they
shall be routed through Government
and be regulated by such directions as
may be issued by Government.)
◦ To maintain a fund to which shall be
credited:
◦ All money provided by the Central
Government, State Governments,
Corporations, Universities etc.,
◦ All fees and other charges received
by the STPI,
◦ All money received by the STPI by
way of grants, gifts, donations, bene-
factions, bequests or transfers
◦ All money received by the STPI in
any other manner or from any other
source
◦ To deposit all money credited to
the Fund in Scheduled Banks /
Nationalized Banks or to invest in
such a manner for the benet of the
STPI as may be prescribed. At least
60% of the funds shall be placed with
the Public Sector Banks or in such a
manner as may be prescribed by the
Government from time to time
◦ To draw, make, accept, endorse and
discount cheques, notes or other ne-
gotiable instruments and for this
purpose, to sign, execute and deliver
such assurance and deeds as may
be necessary for the purposes of the
STPI
◦ To pay out of the funds maintained by
STPI or part thereof, the expenses in-
curred by the STPI from time to time
including all expenses incidental to
the formation and reorganization of
the STPI and management and ad-
ministration of any of the foregoing
activities including all rents, rates,
taxes, outgoings and the salaries of
the employees
48
Technology Policy Perspective
◦ To acquire, hold and dispose of the
property in any manner whatsoever
for the purposes of the STPI, with the
prior approval of Governing Council
as per the procedure laid down by
Government
3. To do all such acts and things as may be
required in order to fulfill the objectives of
the STPI.
World class One Stop Solutions Service Portfo-
lio specially designed to meet your organizations
needs. In tune with our mandate to cater to 100%
export oriented units, STPI broadly provides ser-
vices specially tailored for Software exporters in
the region. Over a Decade’s experience of provid-
ing world class services ensures total satisfaction.
COMPARATIVE ANALYSIS
OF SOFTWARE PARKS
1. Promotion of Development of
Software and Software Services
STPI has been serving the cause of the software
exports sector right from its inception in 1991.
Performance of STPI Registered Units
STP Units
During the year 2008-09, 572 new units were
registered under STP Scheme. As on 31st March
2009, 8455 units were operative out of which
7214 units were actually exporting. The remain-
ing units are at various stages of gestation as the
scheme allows three years for companies to start
commercial production.
The growth in the number of operating and
exporting units during the last 8 years is given
in Table 1.
Exports Made by STP Units
There has been an impressive growth of software
exports made by STP registered units in the year
under review, considering the global recession.
The exports grew from Rs 180155.31crore in
2007-08 to Rs 207357.92 crores in 2008-09,
with a YOY growth of 15.01%. The growth of
Software Export registered by STP Units from
the beginning of this decade is given in Table 2.
State wise Software Exports made by registered
units through STPI for last three years is as given
in Table 3.
Exports Made by EHTP Units
The exports made by EHTP units grew from Rs
4377 Crores in 2007-08 to Rs 6208 Crores in
2008-09, with a YOY growth of 41.8%. Export
growth registered by EHTP units in last 8 years
is given in Table 4.
2. Provision of Statutory Services to
Exporters across the Country
In an effort to achieve its prime objective of pro-
motion of development and export of software
and software services as well as to provide statu-
tory and incubation services to reaching almost
complete utilization, a industry, major thrust was
given to establishment proposal for launching
Phase II of the of new centres and revamping of
existing centres.
3. Provision of Data
Communication Services
One of the STPI’s remarkable contributions to the
software-exporting sector is provision of High-
Speed Data Communication (HSDC) services.
SoftNET, the state-of-the-art HSDC network,
designed and developed by STPI is available to
software exporters at competitive prices.
49
Technology Policy Perspective
4. Provision of Project Management
and Consultancy Services
5. Promotion of Small and Medium
Entrepreneurs by Creating
Conducive Environment in the
Field of Information Technology
CONCLUSION
The Government of India had announced a Special
Economic Zones (SEZ) scheme in April, 2000 with
a view to providing an internationally competitive
environment for exports. The objectives of SEZs
include making available goods and services free
of taxes and duties supported by integrated infra-
structure for export production, expeditious and
single window approval mechanism and a pack-
age of incentives to attract foreign and domestic
investments for promoting export-led growth.
In order to give a long term and stable policy
framework with minimum regulatory regime and
to provide expeditious and single window clear-
ance mechanism, the Special Economic Zones
Act, 2005 has been brought into effect along with
the Special Economic Zones Rules, 2006 from 10
February 2006.
The main objectives of the SEZ Act are:
1. Generation of additional economic activity
2. Promotion of exports of goods and services
3. Promotion of investment from domestic and
foreign sources
4. Creation of employment opportunities
5. Development of infrastructure facilities
The economic recession in the US and the
Europe, the leading export destinations of the
Indian software and service industry, has adversely
impacted the financial performance of the Indian
IT companies. This has resulted either in clients
delaying major IT Projects or downsizing their
IT budgets. The depreciating rupee against the
US Dollar was one of the factors which helped
Indian IT Companies to withstand the turbulent
times. Strong fundamentals of a large talent pool,
Table 1. Operating and exporting units (2001-2009)
Year Operating Units Exporting Units
2001 - 2002 4279 3429
2002 - 2003 4644 3544
2003 - 2004 5987 3910
2004 - 2005 5806 4379
2005 - 2006 6383 5116
2006 - 2007 7543 6321
2007 - 2008 8188 6842
2008 - 2009 8455 7214
Table 2. Growth of software exports (2001-2009)
Year Rs. in Crores
2000 - 2001 20061
2001 - 2002 29623
2002 - 2003 37176
2003 - 2004 51458
2004 - 2005 74019
2005 - 2006 100965
2006 - 2007 144214
2007 - 2008 180155
2008 - 2009 207358
50
Technology Policy Perspective
sustained cost competitiveness and enabling busi-
ness environment have helped India remain as the
preferred sourcing destination.
The IT industry geared up for acquisitions in
the quarter ending December 2008 and some of
the IT companies concluded large buy-outs dur-
ing the last quarter. This helped them to win large
contracts especially in such turbulent times when
clients were postponing decision on major IT ini-
tiatives of tendering contracts to IT vendors. The
deals finalized by the companies are expected to
provide them assured returns and financial growth
in the coming quarters.
Banking, Financial Services and Insurance
(BFSI), High Technology and Telecom continued
to account for more than 60% of the Indian IT-BPO
exports. Healthcare industry is likely to witness
increased IT investments due to increased focus
on public health, making healthcare and insurance
affordable to all. Other industries which are likely
to grow include retail, utilities etc. In 2008-09,
Software and ITES exports from India grew with
a growth rate of more than 15% touching US$
46.3 billion. Within this segment, IT services
exports touched US$ 26.5 billion, while engineer-
ing services and product exports revenue grew to
US$ 7.1 billion during FY 08-09. IT industry’s
contribution to the GDP rose from 5.5 per cent in
2007-08 to 5.8 per cent in 2008-09.
The Indian ITES-BPO sector has built a strong
reputation for its high standards of service quality
and information security, which has been acknowl-
edged globally and has helped to enhance buyer
confidence. Indian ITES-BPO exports grew from
Table 3. State wise software exports (2006-2009)
Serial No. State 2006 - 2007 2007 - 2008 2008 - 2009
1 Andhra Pradesh 18582.00 26122.00 31039.00
2 Chandigarh 345.00 455.11 539.00
3 Chattisgarh 2.00 0.22 1.83
4 Delhi 4146.00 5264.00 1762.00
5 Gujarat 564.00 681.00 1268.13
6 Haryana 9287.00 10960.00 12410.00
7 Himachal Pradesh 1.00 1.10 0.75
8 Jammu Kashmir 2.00 1.28 1.74
9 Karnataka 48700.00 55000.00 70375.00
10 Kerala 750.00 1201.00 1803.00
11 Madhya Pradesh 220.00 185.22 198.00
12 Maharashtra 27625.00 35374.00 42360.00
13 Orissa 732.00 844.00 1162.00
14 Pondicherry 44.00 64.00 78.65
15 Punjab 195.00 227.56 230.00
16 Rajasthan 312.00 275.30 358.00
17 Tamil Nadu 20745.00 28295.00 28355.58
18 Uttar Pradesh 8453.00 10695.21 10264.36
19 Uttarkhand 9.00 9.31 21.00
20 West Bengal 3500.00 4500.00 5129.00
TOTAL 144214.00 180155.31 207357.92
51
Technology Policy Perspective
USD 10.9 billion in 2007-08 to an estimated USD
12.8 billion in 2008-09. Countries like Vietnam,
Philippines, Malaysia, China and Central and
Eastern European countries offer IT-BPO services
at competitive rates, and it is probable that India
may lose its low cost advantage. Such countries
are progressively promoting IT-BPO business by
offering various incentives and tax benefits. So,
developing the Knowledge Process Outsourcing
(KPO) becomes imperative. It will not only ensure
that we move up the value chain but also increase
marginal revenue vis-à-vis the BPO.
The transition from the BPO to the KPO of-
fering a high quality of human capital and ICT
enablement can be relatively smooth, since our
Information Technology-Information Technology
Enabled Services (IT-ITES) companies are already
very well established. IT Software and Services
employment reached nearly 2.23 million mark
in 2008-09, as against 2.01 million in 2007-08, a
growth of 10.9 percent Y0Y(Year-on-year). The
indirect employment attributed to the sector is
nearly 8 million in year 2008-09. Notwithstand-
ing the risks arising out of the unprecedented
economic downturn, the outlook for Indian IT-
BPO remains positive. The industry is expected
to achieve its aspired export target of US $ 60
billion by 2010-11. Key factors underlying the
optimism include more diversified geographic
market exposure, continued expansion of the
service offerings portfolio and steady growth in
scale by Indian IT industry.
The effective mobilization of technology for
competitive advantage depends on the orchestra-
tion, integration and application of increasingly
specialized knowledge from both inside and out-
side the firm. In spite of rapid improvements in
underlying scientific understanding, corporate
innovative activities remain uncertain in their
outcome, given increasing complexity in physical
artefacts and their knowledge bases, and our lack
of understanding of the socio-economic conditions
for their acceptance. Advances in the Information
and Communication Technologies (ICTs) will re-
inforce the dual trend of greater understanding and
greater complexity. Learning through experience
and experimentation remain essential features of
corporate innovative activities.
Rapid performance improvements in ICTs will
generate potentially revolutionary and disruptive
changes in a number of corporate functions, in-
cluding transactions, distribution, technological
development and strategy. Yet the revolution will
be incremental in nature, since experimentation
based on past experience (including past failures)
will remain the norm.
Subjects requiring further research include
the changing nature of professional networks,
co-evolution of technology (including the ICTs)
and organizational practices, and the manage-
ment of change in increasingly complex systems,
collaborative and innovative approaches in STPI
units, benchmarking and developing standards for
measuring optimization.
REFERENCES
Annual Reports of Software Technology Parks
India. (2007, 2008, 2009, & 2010).
Table 4. Export growth (2001-2009)
Year Rs. in Crores
2001 - 2002 1502
2002 - 2003 2206
2003 - 2004 2121
2004 - 2005 2174
2005 - 2006 2950
2006 - 2007 3446
2007 - 2008 4377
2008 - 2009 6208
52
Technology Policy Perspective
Bresnahan, T. H., & Trajtenberg, M. (1995).
General purpose technologies: Engines of growth.
Journal of Econometrics, 65.
Castells, M. (1996, 1997, 1998). The informa-
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Hawkins, R. (Ed.). (2003). Technology standard-
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Nairn, A. (2002). Engines that move market. New
York, NY: Wiley Publishers.
OECD. (1988). New technologies in the 1990s: A
socio-economic strategy. Paris, France: OECD.
Perez, C. (2002). Technological revolutions and
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(1987). The importance of technology policy. In
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policy and technological performance. Cam-
bridge, UK: Cambridge University Press.
KEY TERMS AND DEFINITIONS
Technology: A method for convening re-
sources into goods and services.
Technology Driver: A product with a relatively
simple design which a manufacturer may produce
in high volume in order to hone its skills and then
transfer this experience to more complicated but
higher-value-added devices. See learning curve.
Arguments for import protection or export promo-
tion sometimes are based on assertions that the
product in question is (or may become) a technol-
ogy driver, and so warrants special treatment as
part of national technology policy.
Technology Policy: Government measures
or programs to promote innovation and adop-
tion of new technologies in key industries. Such
tools include government sponsorship of research
consortia, support for research and development
(R&D), trade measures, and special antitrust
exemptions for joint R&D efforts among firms.
See also industrial policy.
Technology Transfer: The diffusion of prac-
tical knowledge from one enterprise, institution
or country to another. Technology may be trans-
ferred by giving it away (e.g., through technical
journals or conferences); by theft (e.g., industrial
espionage); or by commercial transactions (e.g.,
patents for industrial processes) as well as through
cross-national exchanges among components of
multinational enterprises. The transfer of tech-
nology may be accompanied by transfer of legal
rights to use of the technology, such as sale of
licensing of associated intellectual property rights.
Both UNCTAD and OECD have been active in
discussing regulation of international technology
transfers.
