ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Evaluating Institutional Disruption

Financial Sector Governance and Pharmaceutical Innovation in India

Evaluating Institutional Disruption

In India, from the late 1960s to the early 2000s, a consortium of three premier financial institutions gave projects long-term loans based on tangible assets. The consortium was abandoned in 2001. A transition away from the institutional logics of consortium financing is associated with a rise in the research and development activity of pharmaceutical firms. Changes in financial sector rules impacted Indian firms’ capability transformation. Management research needs to consider institutional logics changes in assessing the influence of financial factors on firms’ capabilities creation.

The international organisation Médecins sans Frontières (Doctors without Borders) has called India the pharmacy for the developing world (Chaudhuri 2012). India’s pharmaceutical industry is growing in double digits. It has a substantial foreign presence and 20% of the global generics market by volume. In terms of overall global volume, the Indian industry ranks third; it ranks 14th by value. The Indian bulk drugs industry has a share of 9% of the global market, and India’s pharmaceutical exports have grown annually at 20% in the first decade of the 21st century (Government of India 2012).

This paper reports a study examining the impact of changing institutional logics in the financial sector in motivating research and development (R&D) by India’s pharmaceutical firms. Specifically, the study evaluates how—over the 15-year period from 1991–92 to 2005–06—changes in the institutional logics of banks’ consortium financing practices has affected firms’ R&D activities.

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Updated On : 7th Dec, 2018

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