Sources of innovation and technological capability development in the Indian automobile industry

Innovation in form of new products, processes or forms of productive organisation brings growth to firms and development to economies and therefore it is important to understand sources of innovation and technological capabilities. In this context this paper explores sources of innovation and technological capability in the Indian automobile industry. In last decade Indian auto industry emerged as one of the fastest growing industry with increasing levels of technological sophistication in auto industries amongst emerging countries. This paper tries to track capability development in Indian auto industry and seeks to understand factors; both internal and external of firms that shape innovative capabilities. It studies three Indian firms and analyses development of their innovative capabilities using Rattan's theory of induced innovation. This paper also point out important role played by factors such as nature of demand and firm ownership in innovative capability development. Paper reveals key attributes of firm ownership which include managerial vision and diversified nature of businesses. The diversified nature of businesses has helped Indian auto firms in innovative capabilities by facilitating inter-sector learning