This case study research on the Indian automobile company Mahindra & Mahindra adds to the debate on latecomer companies from emerging markets. It investigates the model of „crisis construction‟, which has been introduced by Linsu Kim, as an effective means for catching up. An extensive research in journal and newspaper articles, annual reports and further company publications forms the basis of this study. In addition, three expert interviews were conducted to give a comprehensive and in-depth view of the four development phases between 1990 and 2010. These four phases describe the corporate development over time in aspects of technological catch up, internationalization and organizational learning. One result of this study is that Kim‟s proposed model can be applied to other companies in other business environments successfully. In addition, this paper suggests approaches of how to better classify events as „constructed crises‟, how to better identify means of overcoming these crises and how to better evaluate the outcome of these crises. As a final part, this case study research gives explanations as to why „crisis construction‟ is not applicable for pioneering and proposes an alteration of Linsu Kim‟s linear learning model.
Table of Content
1. Introduction
2. Literature Review
3. Case Introduction
3.1 Industry Overview
3.2 Company Portrait and History
4. Crisis Construction and Capability Building Process
4.1 First Crisis: Economic Liberalization and Competitive Shock
4.2 Second Crisis: Reinventing the Automotive Business
4.3 Third Crisis: Going Global
4.4 Fourth Crisis: Becoming a Technological Leader?
5. Analysis, Discussion and Propositions
5.1 Analyzing the Setup, Execution and Outcome of Constructed Crises
5.2 Discussing Crisis Construction as a Tool for Pioneering
5.3 Concluding Remarks and Suggestions for Further Research
Research Objectives and Topics
This case study aims to contribute to the understanding of how latecomer multinational companies from emerging markets, specifically the Indian automobile conglomerate Mahindra & Mahindra, achieve technological catch-up and organizational learning through the proactive construction of internal crises.
- Application and extension of Linsu Kim’s "crisis construction" model to new emerging market contexts.
- Examination of capability building processes over four developmental phases between 1990 and 2010.
- Evaluation of "linkage, leverage, and learning" strategies in the context of joint ventures and supplier relationships.
- Investigation into the transition from latecomer "imitation" to technological "innovation" and its applicability as a pioneering strategy.
Excerpt from the Book
4.1 First Crisis: Economic Liberalization and Competitive Shock
Often only a crisis leads to severe change in an organization and it is certainly true that a big crisis led to a big change for the company Mahindra at the beginning of the 1990s. For the first time in its history, Mahindra was “shook up” (Mahindra, n.d.) and faced an environment that was far more difficult to cope with than the protective regime of the past decades. Like many Asian countries, also India began its economic liberalization with the beginning of 1990 and opened up rapidly to world markets and foreign companies – which led to two major movements that formed the new competitive environment of the Indian market: liberalization and globalization.
In a gradual but straight forward approach, the government abolished the ‘License Raj’, thereby allowing capacity and industry expansions as the market required them. Further, it became easier for Indian firms to gain access to foreign technologies and foreign capital markets (Kedia et al., 2006, p. 568). All these factors plus the opportunity to serve foreign markets favored Mahindra’s business. As the former and current Group CFO Bharat Doshi puts it in an interview, Mahindra now had “freedom to invest as it wanted, embrace new technology, set up collaborations and partnerships, start making new types of products and respond to the market.” (Mahanama, 2008)
Before the liberalization, every car maker was bound to the government production quota and did not have to respond to a demanding market. All of the sudden, a market based competitive landscape was established and the Indian car makers were free to expand and defend their market share – a phenomenon they had not experienced before. Those were opportunities and threats Mahindra was inexperienced in dealing with and later on, the competitive arena got even stiffer by allowing new entrants from advanced Western markets. Globalization, that meant, above all, increased foreign competition (Kedia et al., 2006, p. 568).
Chapter Summaries
1. Introduction: Presents the research goal of studying latecomer firm strategies in emerging markets and outlines the qualitative case study approach focused on Mahindra & Mahindra.
2. Literature Review: Synthesizes theoretical frameworks regarding latecomer catch-up, business groups, organizational learning, and Linsu Kim’s model of crisis construction.
3. Case Introduction: Provides an overview of the Indian automotive industry and a historical portrait of the Mahindra Group's development since its foundation.
4. Crisis Construction and Capability Building Process: Analyzes the four developmental stages of the company, detailing how each phase served as a "constructed crisis" to drive organizational change.
5. Analysis, Discussion and Propositions: Evaluates the efficacy of the crisis construction model, discusses its limitations in pioneering contexts, and concludes with findings on capability building and future research directions.
Keywords
Mahindra & Mahindra, Crisis Construction, Latecomer Firms, Technological Catch-up, Emerging Markets, Organizational Learning, Capability Building, Automotive Industry, Strategic Management, Linkage Leverage Learning, Joint Ventures, Innovation, Frugal Engineering, Business Restructuring, India.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis focuses on how the Indian automobile company Mahindra & Mahindra utilized the "crisis construction" model, initially proposed by Linsu Kim, as a strategic tool to accelerate its organizational learning and technological catch-up process.
What are the primary themes discussed in the work?
The work explores latecomer multinational strategies, the role of constructed crises in organizational development, the importance of linkage and leverage with global partners, and the evolution of a firm from imitation to innovation.
What is the primary research objective?
The goal is to build theory rather than test it, specifically examining whether the "crisis construction" model can be successfully applied to emerging market firms beyond the original context of Korean companies.
What methodology was employed?
The paper follows qualitative case study research principles, utilizing a broad base of secondary sources and conducting three expert interviews to gain in-depth insights into the company's development between 1990 and 2010.
What is covered in the main section of the paper?
The main section is divided into four distinct time periods, each representing a "crisis" phase, where the author analyzes internal and external triggers, challenges, organizational learning methods, and the resulting development outcomes.
Which keywords define the research?
The research is characterized by terms such as latecomer firms, technological catch-up, crisis construction, organizational learning, and emerging market multinationals.
Why did Mahindra choose to collaborate with foreign partners?
Collaboration was chosen as a means to gain access to advanced production systems, design knowledge, and quality standards that were previously inaccessible, allowing the firm to leapfrog traditional development stages.
How does the author define a "constructed crisis"?
A constructed crisis is defined as a situation that threatens the company's system or subsystems, is addressed under significant time pressure, and involves unpredictable outcomes, serving as a catalyst for revolutionary rather than evolutionary change.
Is the crisis construction model applicable to pioneering firms?
The author concludes that the model is less effective for pioneering, primarily due to the absence of a defined performance gap, a lack of clear industry benchmarks, and the fact that market outcomes are dictated more by the environment than by internal strategy.
- Quote paper
- Hanka Smiejczak (Author), 2011, Mahindra & Mahindra's capability building process, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/188498
