Foreign ownership and firm scope in India

We examine how foreign ownership influences the extent to which firms engage in outsourcing. We observe a significant and positive relationship between the extent of foreign ownership and the level of internal sourcing for the firms. Second, when foreign owners have at least 51% ownership versus where foreign ownership is less than 51% we observe dramatic differences in outsourcing levels. Also we find that for firms with controlling foreign ownership undertaking in-house activities, the motivation to keep their property rights as inviolate as possible when their capability contributions within the Indian economy are large and significant is intense. For firms considering locating in India a strategy of internalization of activities in India is central towards retaining their competitive advantage.