Product and Labor Market Globalization & Convergence of Corporate Governance: Evidence from Infosys and the Indian Software Industry

Krishna Palepu
Harvard University – Harvard Business School; Harvard University – David Rockefeller Center for Latin American Research; Harvard Business Review; NBER; International Academy of Management

Tarun Khanna
Harvard University – Strategy Unit

September 2001

Harvard NOM Working Paper No. 02-30; Strategy Unit Working Paper No. 02-040; Harvard Business School Working Paper No. 02-040

Abstract:

In contrast to the focus of much of the literature on the role of capital markets in hastening convergence in corporate governance practices worldwide, we document the role played by the globalization of product and talent markets in affecting corporate governance of firms in the Indian software industry. We discuss several possible reasons why a particular firm, Infosys, has emerged as the exemplar of good corporate governance in India, traditionally a backwater of corporate governance practices. We further analyze the manner in which Infosys has attempted to shape corporate governance practices in India more generally. Finally, we discuss why these efforts in particular, and globalization more generally, has not had much of an effect on corporate governance convergence in the aggregate in India, thus far.

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