Tiger, tiger, burning bright! Will India’s tiger economy stimulate its business marketing space?

Citation

Singh, R. and Seshadri, D.V.R. (2012), "Tiger, tiger, burning bright! Will India’s tiger economy stimulate its business marketing space?", Journal of Business & Industrial Marketing, Vol. 27 No. 3. https://doi.org/10.1108/jbim.2012.08027caa.001

Tiger, tiger, burning bright! Will India’s tiger economy stimulate its business marketing space?

Article Type: Guest editorial From: Journal of Business & Industrial Marketing, Volume 27, Issue 3

We are very pleased to introduce this Special Issue to all JBIM readers. The timing of the Special Issue could not be any better. The 2003 Goldman Sachs global economics paper “Dreaming with BRICs: path to 2050” (Goldman Sachs, 2003) suggests that India as one of the leading BRIC countries has the potential to out-perform Japan to become the third largest economy in the world by 2032. Even though the Indian economic tiger is predicted to roar loudly in the coming two decades, our current knowledge of the Indian business milieu – and business marketing in particular – is low, as reflected in the body of current knowledge in business-to-business marketing journals and books. We hope to address this and many associated issues in this Special Issue on Indian B2B marketing practices.

However, no understanding of business and business marketing can start before understanding the social and cultural fabric of the society involved. As previous research has also noted, India is a country that is not only very diverse (more than 3,000 different languages are spoken in India, where culture is said to change every mile), but also very different from other countries that have witnessed faster economic growths in the past. The Indian cultural milieu is characterised by socio-cultural values that influence the interests, priorities, and strategies used in business negotiations (Brett, 2000), and shapes an individual’s approach when engaging in business relationships (Shi, 2001). Indian society is characterised by cultural dimensions that include collectivism, being high-context (verbal cues are more implicit, and yet connote a deeper meaning), strong uncertainty avoidance, and a large power distance (Hofstede, 1981). Given this socio-cultural fabric, doing business in the Indian culture requires interpersonal communication that is characterised by focus on non-verbal cues, which are more implicit (Cohen, 1991), and involves displaying trust toward people in ways different from those in low-context cultures (Hsu, 1983). Individuals in the Indian culture are known to be more risk-averse (Lewicki and Bunker, 1996), which affects their economic rationality (Bazerman, 1994) in assessing costs and rewards associated with their behaviours (Doney et al., 1998).

However, what has been outlined in the previous section is what we already know about Indian society, and its culture, which collectively has a profound impact on the business marketing space as well. Nevertheless, the current body of knowledge of business marketing in the Indian context is like the tip of the iceberg, and many more explorers and navigators are required to fully understand the nuances of business marketing in the context of the complexity of this nation, and the vastness and diversity of its culture and people. No knowledge in management or in other streams can be devoid of this backdrop, since individuals run the businesses, and they in turn influence and are influenced by the values and beliefs of individuals operating in various managerial positions in organisations. The people themselves, who a decade ago were considered a liability on businesses’ balance sheets, are now being considered an asset that needs to be developed and nurtured to fuel faster growth in the economy. The development of human capital and the massive growth plans of India would involve enormous urbanisation. A Goldman Sachs (2007) paper on India predicts that 700 million people, or the equivalent of the population of Europe, will move to cities by 2050. This migration, and the associated structural shifts in the population, along with the reducing average age of the nation (estimated in the range 30-35 years today) would make the business marketing space even more exciting, especially so since increasing urbanisation will fuel faster growth of infrastructure sectors such as roads, rail, and air traffic, along with construction, telecoms, power, steel, and other industries based on derived demand.

Challenges before B2B marketers today

However, the biggest challenge in increasing the efficiencies of most B2B firms in this space would still be managing the political and regulatory environment in the country. As we write, India faces a challenge of unprecedented nature, viz. drastically reducing the levels of corruption in daily lives of individuals, large businesses, and millions of small business entities, including the millions of micro-enterprises. (The public debate on the Lokpal bill is currently ongoing, while the parliamentary session is ongoing too). To add to this business complexity are millions of people who constitute the bottom of the business pyramid, often referred to as street entrepreneurs. They include street hawkers, street vendors, nano-enterprises, etc. Managing these micro- and nano-businesses would become the biggest challenge tomorrow given the unorganised nature of these diverse and scattered set of a million aspiring enterprises that are separated from organised markets in terms of geographical proximity, financial access, technological divide, informational asymmetry, and temporal separations. To understand this phenomenon in more detail, in 2006 Microsoft Research India started a series of qualitative and quantitative research studies to explore the overall information and communication behaviours of micro-enterprises in India (defined by them as enterprises with five employees or fewer).

The cancer of corruption has affected all businesses irrespective of their scale, including mega, large, medium, small, micro, and nano. Hitherto, it was assumed that corruption in India, as witnessed during the first four decades since its independence, was due to low levels of liberalisation and high levels of regulation, an era popularly referred to as the “licence Raj”. However, post-1991, two decades of liberalisation have only changed the face of corruption. The scale of corruption has also increased massively. The “licence Raj” has been replaced by the “contract Raj”. In the decades before liberalisation, corruption was fuelled by who should get licences for setting up a company, for increasing manufacturing capacity, or for import quotas. Today, corruption revolves around who should get the contract, and how the contract terms should be designed to favour a particular business entity over others in the fray. Examples abound of massive corruption-laden contracts, such as the 2G spectrum allocation and Commonwealth games contracts being awarded to favoured companies. If the “contract Raj” prevails, suppliers in business markets would be more inclined to engage with governmental and other customer organisations in designing contracts and building relationships with people deciding the contracts rather than working on designing the right market offerings to best fulfil customer needs, while building relationships with customer and supplier organisations. Indian businesses must therefore work to move away from such “jan-pehchan” based relationships (i.e. those that breed favouritism and nepotism) to a more professional way of working between organisations.

The four decades of the regulated business environment in India compared to the two decades of a less regulated business environment (post-1991) have shown that corruption is not necessarily positively correlated with regulation (i.e. more regulation breeding more corruption). Instead, we are witnessing a paradoxical situation where regulation and corruption may in fact be negatively correlated (i.e. less regulation and more corruption going hand in hand). What it probably shows is that since businesses would continue to remain opportunistic, fewer regulations means more opportunities, and therefore the propensity for corruption can increase further, unless there are robust systems to check corruption. Given this context, and against the backdrop of the recent financial meltdown, we probably may see an era of more regulation is some areas as a necessary evil for promoting greater growth in business in particular, and the economy in general.

There are other challenges, such as evolving from the current predominant mode of process and product innovation practised in India, popularly referred to as “jugaad” (meaning to get things magically to somehow work or fall in place using frugal resources), to a more systemic approach to innovation, not only in large firms, but also the millions of micro- and nano-enterprises that dot the business landscape in India today. Only then can Indian businesses become truly capable of thriving in the intensely competitive globalised world.

Another very important phenomenon being witnessed is the growth of huge opportunity at the “bottom of the pyramid” (BOP), which has been highlighted by scholars such as C.K. Prahalad, Aneel Karnani, and many others. The Indian BOP is characterised not just by poverty of economic resources alone, but also by the richness of social resources (i.e. strong social ties within the BOP communities), and the abundant levels of grassroots innovations that can spur growth in Indian BOP markets. Given the rapid innovation in these markets, some of these innovations also have the potential to be adapted to other BOP geographies. Moreover, since the Indian BOP faces constrained choices of employment, skills generation, and education, we are witnessing new and myriad forms of local entrepreneurship, including nano-entrepreneurship. B2B marketing scholars focusing on India therefore have to cover new ground to address these challenges. For example, there are many challenges faced by nano-entrepreneurs at the BOP in India, when negotiating with their suppliers of capital goods as well as raw materials, and while marketing their products. Most of the B2B marketing literature is silent on the problems faced by such nano-entrepreneurs.

India today is also witnessing major changes in the microfinance industry. This, along with nano-entrepreneurship, grassroots innovation, and traditional grassroots knowledge, can spur new business opportunities and innovative business models. A major government initiative that is in the making is the project “Aadhar” or the UID, which intends to provide a unique identity number to all residents in India over the next few years. This technological revolution will enable hundreds of millions of Indians to have bank accounts and avail themselves of government schemes, etc., opening up the floodgates for thousands of new business opportunities that businesses of all sizes in both consumer and business markets can capitalise upon, directly or indirectly.

This Special Issue and the future research agenda

Given the backdrop of India’s B2B marketing landscape, this Special Issue intends to enhance the knowledge base of B2B marketing in the Indian context. More importantly, it seeks to motivate future researchers to study this context in a new light, given the unique challenges of the Indian context and the consequent plethora of new research questions that arise. We would now like to suggest some of the important and interesting research questions that need further research and that could lead to new knowledge and the development of new and interesting theories, which may be applied to other emerging markets such as BRICs, SAARC, etc. Some of these new theories and insights may also be applicable in developed country markets.

The resulting interesting research questions that arise include:

• •

  What are the new business market management challenges arising from the increase in regulation as the fallout of increased failure of the state in controlling corrupt and unethical practices?

• •

  Can legal business contracts (including their design, terms, and award) safeguard against the unethical practices and opportunism that can affect businesses, especially when government is the customer?

• •

  What should be the most appropriate form of legal contracts for safeguarding suppliers of government customers, given the slow and often ineffective systems that characterise many government institutions (such as legal systems, regulatory agencies, enforcement bodies, etc.) present in emerging markets like India?

• •

  What types of contracts can micro- and nano-enterprises enter into with their suppliers to safeguard themselves given their low levels of knowledge, education, and at times, literacy?

• •

  Can supplier-purchaser relationships evolve differently in micro and small enterprises than large enterprises?

• •

  What would be the nature and scope of relationship marketing as practised between suppliers and buyers in a collectivist society like India?

• •

  What models of local and frugal innovations (in product, pricing, supply chain, etc.) by micro and small enterprises can be tapped by large enterprises in the B2B space?

• •

  Has the Indian business market management space evolved new business marketing models that MNC firms can learn from?

• •

  How does a business market supplier market value in an extremely price-conscious Indian business marketplace?

• •

  What role do relationships play in business markets in India?

• •

  Given that a significant proportion of business market transactions in India are based on tendering, how can a supplier highlight value?

• •

  How can a supplier firm overcome nepotism, which is not uncommon in awarding contracts?

• •

  What is the role of new technologies such as the internet, reverse auctions, e-procurement, etc., in business markets in India, and how does the adoption of these practices compare with best-in-class practices elsewhere in the world?

• •

  What are supplier firms’ internal inhibitors and enablers of being market-oriented?

We think there are many more research questions that need to be found and researched on to build substantially new theories in the Indian business-market management context.

Looking into the collection of papers in this Special Issue, we find an interesting approach to theory building, testing, and validation. On the one hand, Dabas et al. (2012), using organisation theory, explore the retailing sector in India and finds that government regulations influence the supply chain structure in India. The authors also find that relational bonds offset the uncertainty borne out of weak institutions, while information transparency and long-term orientation fosters trust between channel partners. This trust, in turn, leads to collaborative partnerships. The study also finds that price regulations encourage cost transparency between channel members, which in turn contributes to relational trust. Government regulations (such as with the sales tax structure) influence the traditional retail supply chain channel length. The authors found a strong antecedent effect of regulations on trust and in the evolution of the supply chain and its length. Their study contributes to the literature to show how trust is built in channels based on contextual antecedents such as the regulatory environment in the Indian market that force partners to work together.

Kumra et al. (2012) investigate the “open books” (OB) policy in supplier-buyer relationships, which refers to those firms in the supply chain that reveal cost and related information. Drawing on three case studies, this article identifies and discusses factors that influence open-book (OB) practices in Indian buyer-supplier relationships. These factors relate to exchange, product, buyer, supplier, and supply market characteristics. The findings also show than an OB policy has broad applicability in India; it can serve operational purposes such as price reduction and costs cutting through joint product development, but also more strategic purposes such as supplier selection and market entry decisions. The cases point to how in some instances the OB policy can be better leveraged. The paper also provides some recommendations regarding OB applications.

Alam (2012) compares the new service development (NSD) practices of multinational business-to-business service firms operating in India with that of the indigenous and local Indian service firms. Firms belonging to these two varied groups emphasise different sets of development stages in service innovation, which validates the author’s initial contention that NSD varies from company to company and there cannot be a “one size fits all” approach to NSD practice in India. The findings of the study also suggest that a less risky option of developing moderately innovative services is the most popular strategic choice in India. Thus for the Indian business-to-business market, service managers should make a paradigm shift from developing highly innovative services to moderately innovative services.

On the selling front, Agnihotri et al. (2012) extend the sales literature through their investigation of an Indian sales force, by focusing on the integration of two emotionally based traits – i.e. guilt proneness and empathy proneness – among salespersons. The study’s findings suggest that a salesperson’s empathy proneness is linked positively to helping behaviours targeted toward colleagues, whereas guilt proneness is negatively related to helping behaviours. Notably, the study highlights that a salesperson’s empathy proneness does not have a direct effect on customer-based behaviours in the Indian sales force. The study has meaningful implications for managing the Indian sales force. For example, when devising control mechanisms for the sales force, the critical question would be how to focus on the value of community relationships that is so prevalent in India, and the sense of duty, thereby leveraging the salesperson’s guilt proneness. It suggests that the output control mechanisms such as rewards on quota achievements should plausibly include evaluation on customer-relationship outcomes, such as satisfaction or loyalty, rather than profitability or sales volume alone.

In one of the probably pioneering studies on the use of competitive intelligence by B2B firms in India, Shukla et al. (2012) investigate empirically the relationship between the level of competitive intelligence (CI) activities and firm performance in an emerging market context. Indeed, those firms that exhibit high levels of CI activity in India also achieve high levels of performance. Moreover, the study seeks to answer the question “What are the most frequent and effective CI activities being performed by firms in business markets?”. This study explores in detail the answer to this question, which should assist local and foreign managers in having a more informed understanding of CI activities in the Indian business marketplace.

There are two invited guest articles in this issue. The first article is by Sharad Sarin, who is a pioneer of business marketing teaching and research in India. Sarin (2012) thoughtfully reflects on his 40 years’ experience as a teacher, consultant and researcher in business marketing in India, and suggests nine lenses for reflection. The article examines the evolution of business markets and marketing in India and traces the symbiotic relationship between academia and practice. His reflection reveals that business marketing practices have benefited and improved a great deal in India due to interventions from academia. The most disturbing aspect of business marketing practices in India seems to be related to the all-pervasive corruption. There seems to be no solution for it. An important audience for this paper is young faculty members involved in teaching of, and research into, business marketing. Sarin (2012) suggests that a major challenge for academia involved in business marketing is to fuel what he perceives as a declining interest in the discipline. This needs the creation of newer dimensions and directions for business marketing research. Sarin (2012) also highlights that the time has come for the reverse flow of knowledge from East to West. He provides very valid arguments on why knowledge developed in B2B marketing based on Western data and contexts may have limited usefulness in managing the unique set of challenges in the Indian context. Consequently, he suggests that simply copying models for business market management developed in the context of advanced Western countries may not be appropriate in the complex Indian milieu. He makes an impassioned case for developing an Indian context-centric body of knowledge in business markets that should inform both academia and practitioners in India and other similar countries.

In the second invited article, three business marketing scholars – Murali K. Mantrala, Shrihari Sridhar and Xiaodan (Dani) Dong – highlight the urgent need to develop India-centric theories for sales managers operating in business markets in India. However, the study laments that most research-based guidance on best practices and salesperson success factors in the business market settings emanates from data used in developed countries. In their commentary, the authors report the results of an exploratory study of recent business market sales job advertisements in India, where they content-analyse job ad postings to identify the job goals, skills, and additional roles sought by Indian business market salespersons. Subsequently, they use latent class clustering to segment companies along these requirements. They find that the business market sales organisations in their sample appear to be recruiting according to the same core strategies, principles and criteria as those in the developed world, especially with regard to customer management. This develops confidence that to some extent, business market sales management theories, models, and knowledge accumulated in developed markets are applicable to the Indian context, and can provide a starting point for future India-centric sales management research. At the same time, they suggest the need to refine these theories and augment them with more Indian context-specific research.

We hope that academicians and managers concerned with business markets in India will find this Special Issue useful and find several valuable ideas to take away. We are of the opinion that the Special Issue lays the foundation for progress in theory development and testing in the Indian context. While a few articles in the Special Issue extend previous theories and find partial validation of them, the fact that such theories are partially validated implies two possible courses of action for future researchers. First, we may choose to look at the partial application of existing theories as an indication of the existence of possible moderators that reduce the full application of those theories. Alternately, and more importantly, it also indicates that the Indian business marketing arena is a new context from the perspectives of both researchers and informed practitioners , where the interplay of various cultural, social, political, regulatory and other variables makes it ripe for researchers to develop new theories using various research methods.

There are at least a few elements in each of the theories tested in different articles in this Special Issue that make them useful in terms of applicability and generalisability. Going forward, a grounded theory approach to the development of new theories would be useful for at least two purposes. One, it will enrich the existing literature in business marketing, and can therefore be potentially useful for application in contexts other than emerging markets, including the developed markets. Second, the utility of any theory depends significantly on the context in which it is developed. If a theory was developed in a particular era, in a particular context, then it is best applied and useful in the same era and the same context, since any claim on the universal applicability of a theory or a general theory of marketing is at best a claim.

We believe that the applicability of theories developed in a different era for a different context is greatly compromised if applied blindly to situations in a different era and a different context. Such myopic and blind application, resulting from attempting to force-fit antiquated theories to changed contexts, can compromise our motivation and ability to develop new theories that are better suited to fit a changing era and context. As an example, transaction cost analysis (TCA) theory was developed in an era and context where transaction costs were a high percentage of the transaction value and in a context where efficiency was the primary business objective. TCA may lose some of its significance and applicability when applied in India, because in the Indian context, often transaction costs are only a small percentage of the transaction value, and efficiency is not always the most important or only business decision criteria.

All the arguments we have presented in this Editorial amply justify the need for this Special Issue. Although this Special Issue has generated new theories, and extended some previous ones, we hope that this Special Issue will further motivate future business marketing researchers dealing with the Indian context to chart out and embark on the exciting journey that awaits them in decades to come.

We wish to thank all the reviewers who made this Special Issue possible, and are grateful for the kindest support of the Editor and his teams for making it happen. We wish readers enjoyable reading with this Special Issue, and invite their possible comments, suggestions, and critiques.

Ramendra Singh and D.V.R. SeshadriGuest Editors