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India, the next China? Analysis of the unique firm resources claimed

by Indian apparel export firms Debanjan Das and Jung E. Ha-Brookshire

Department of Textile and Apparel Management, University of Missouri, Columbia, Missouri, USA

Abstract

Purpose – The purpose of this paper is to explore the unique resources that Indian apparel exporting firms claim to have and the key resources that help provide competitive advantage to these firms. Design/methodology/approach – A web-based content analysis of texts available on “About Us” or related sections of the Indian export firms was conducted. Text data were coded and interpreted. Findings – Physical resources seemed to be one of the most critical resources for their competitive advantages for the study samples. The ability to provide affordable and competitive prices for their products and experience in exporting were recognized as important firm resource described by the study samples. Research limitations/implications – The study results supported the resource-based theory of the firm by showing additional key firm resources, such as ability to maintain domestic operations and to provide competitive prices that Indian apparel exporters claimed to have. Generalizability of the results is cautioned due to the content and analysis mode of the study data. Practical implications – The results indicate that design capabilities, flexible production systems, and skilled labor are the key resources that provide Indian apparel industry the competitive advantage over its competitors. Therefore, Indian apparel exporters may want to continue to strengthen and emphasize these abilities to foreign buyers to complete in the global marketplace. Originality/value – Given the importance of Indian apparel industry in the global market place, this study builds a knowledge base of the key resources possessed by the Indian apparel export firms.

Keywords India, Competitive advantage, Firm resources, Apparel export

Paper type Research paper

Introduction China has been a dominant player in apparel export in the global market place since the abolition of the quota system in 2005 (Tewari, 2005). The ability to provide large quantity of quality products at cheapest prices has made China the most favorable sourcing destination. However, an increase in labor wages, rise in commodity prices, rising transportation and logistics costs, and appreciation of Yuan, Chinese currency, has negatively affected China’s position as the cheapest sourcing destination. Chang and Ha-Brookshire (2011) found that the Chinese apparel industry seems in the mature stage and apparel firms emphasizing in the development of their own brands and domestic retailing, rather than exporting. China exported US$153.8 billion worth of apparel in 2011 itself. In comparison, Hong Kong exported $24.5 billion, Bangladesh exported $19.9 billion, and India exported $14.4 billion worth of apparels (World Trade Organization (WTO), 2011).

As China is moving its focus from export to brand development and retailing, India has been considered as one of the next sourcing destinations that might replace China, due to its abundant skilled labor force, low labor wages, and flexible manufacturing infrastructure. However, experts say the growth of exports in India has failed to meet its expectation (Kathuria, 2008). For example, there was only 0.28 percent increase in

The current issue and full text archive of this journal is available at www.emeraldinsight.com/1361-2026.htm

Received 17 October 2012 Revised 17 October 2012 Accepted 27 November 2013

Journal of Fashion Marketing and Management Vol. 18 No. 4, 2014 pp. 378-393 r Emerald Group Publishing Limited 1361-2026 DOI 10.1108/JFMM-10-2012-0062

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Indian apparel exports from 2010 to 2011, while Bangladesh apparel exports increased by 0.38 percent during the same period (WTO, 2011). That is, Bangladesh is more effectively taking advantage of the decrease in Chinese production than India. Kathuria (2008) found that Indian labor wage was comparatively higher than Bangladesh and the productivity of Indian human resources was comparatively lower than Bangladesh. Thus, Kathuria tried to explain why India could not meet its expected export growth. Lu and Karpova (2011) found that fragmented manufacturing facilities, unreliable transportation and logistics services, low managerial flexibility and adaptibility, and low labor productivity were the main reasons behind India’s slow apparel export growth rate. Although their study showed interesting reasons for India’s slow growth, no research studied what Indian apparel export firms consider their key resources are, in order to increase their export shares in the global apparel marketplace. What do they have to compete against global competitors? What do they have in terms of unique firm resources to compete against China, or any other countries for that matter?

To answer these questions, the study investigated the unique key resources that Indian apparel export firms have to achieve and maintain competitive advantages in the global marketplace. The investigation was structured using the resource-based theory (RBT) of the firm as the theoretical framework. To achieve this research objective, the study first presents a literature review of Indian apparel industry, and then explores the key resources for competitive advantages from resource based theories perspective. Research methodology is presented, followed by results on Indian apparel export firms’ key resources. The study concludes with contributions, implications, limitations, and future research opportunities.

Literature review Indian apparel industry The Indian apparel industry has made special contributions to the Indian history as it played a vital role in the revolution for Indian Independence (1747-1947). In 1920, during the revolution period, in order to boycott foreign goods, the Indian National Congress decided to support both production and consumption of “khadi” (home-based cotton apparel, spun and made at home). Since then, khadi has been used as a political sign of the Indian National Congress. In fact, Gandhi used khadi to motivate Indian people to fight against the British control in a non-violent way ([The] Toronto Star, 2011). By the late 1970s, the Indian apparel industry has been at the core of the Indian economy in terms of its share in employment, economic development, and export earnings. Today, the apparel industry contributes approximately 14 percent to Indian industrial production, 4 percent to the gross domestic products, and 17 percent to the country’s export earnings (Ministry of Textiles, 2012a).

Even though khadi played a very important and symbolic role during the Independence period, the core nature of production of khadi did not change from 1947 to the late 1970s. First, a focus on home-based apparel manufacturing did not fuel technological advancement within the industry. Therefore, apparel manufacturing still remained at home with few opportunities to grow. Second, the government also kept khadi manufacturing at individuals’ home, particularly in the rural areas, by calling it one of the village industries – “any industry located in a rural area which produces any goods or renders any service with or without the use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed one lakh rupees or such other sum as may, by notification in the Official Gazette, be specified from time to time by the Central Government” (The Khadi and Village Industries Commission

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Act (KVIC Act), 1956). Therefore, under this law, the Indian apparel manufacturing firms have been categorized as rural small- and medium-sized handcraft enterprises as they were mostly located in the rural areas and had a capital investment of less than Indian National Rupee (INR, the national currency of India) one lakh (approximately US $2,000 at the exchange rate of 2011) since 1956. In addition, the government viewed the handcraft industries as an important way to increase employment and incomes in rural areas, preventing villagers from moving to cities for jobs (Khaire, 2011). This resulted in keeping apparel manufacturing as a small-scale industry and khadi as handmade products.

Today, Indian apparel manufacturing seems to be under more threat than the past, due to South Asian Free Trade Agreement (SAFTA) of 2009. SAFTA is a free trade agreement between Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Afghanistan, and Sri Lanka, to facilitate free trade of goods without concerning legal restrictions (Alam et al., 2011). Although SAFTA may benefit India through electronics and machinery exports, the Indian apparel industry is now facing many challenges in exporting, due to cheaper labor in other SAFTA member countries, such as Bangladesh and Sri Lanka (Apparel Export Promotional Council, 2009).

Even with these challenges, the government and the industry still want to promote apparel manufacturing and exports. The history of the recent apparel export performance shows that the apparel export industry still plays a significant role in the country’s current and future economy. In the late 1980s, Indian apparel exports grew at an average compound rate of 22 percent (Chatterjee and Mohan, 1993) and, by 13 percent, in the 1990s (Tewari, 2006). In 2010, India exported US$11.25 billion worth of apparel, approximately over ten folds, compared to US$0.9 billion in 1985 (WTO, 2010). More specifically, in 2009 and 2010, India exported over US$5.3 billion worth of Indian apparel to European Union (EU), the biggest Indian apparel importer (WTO, 2011). During the same time period, the USA was the second biggest importer of Indian apparel, over US$2.85 billion (WTO, 2011), recording a growth of 7.29 percent from the previous fiscal year (Ministry of Textiles, 2012a). Overall, in 2010, India is ranked as the sixth largest apparel exporter, following China, Hong Kong, Vietnam, EU, and Bangladesh (WTO, 2011).

In this light, in 2009, the Apparel Export Promotion Council of India (AEPC) undertook a study to develop an action plan so that Indian exporters can achieve and maintain their competitiveness in the global marketplace (Apparel Export Promotional Council, 2009). The study predicted that, with the present growth rate, India would slip to the ninth position in the world’s apparel exports by 2015, behind Vietnam, Indonesia, and Mexico. The study predicted that an investment of INR 190 billion would be required to double apparel exports by 2015.

To achieve that goal, the AEPC study suggested three key changes in government investments and strategies. First, the changes in allocation of Technology Up-gradation Funds Scheme (TUFS) must be made to promote apparel exports. TUFS was launched by the Indian government in April 1999 to encourage investments for modernization and capacity building of all types of textile and apparel manufacturing firms (Apparel Export Promotional Council, 2009). The goal of TUFS is to offer financial aids for firms to upgrade existing technology or purchase new state-of-the-art technologies. The identified sectors for TUFS are spinning, cotton ginning/pressing, silk reeling/ twisting, wool scouring/combing, manufacturing of viscose filament yarn and viscose staple fiber, non-wovens and technical textile manufacturing, apparel manufacturing, made-up textile manufacturing, processing of jute fibers, yarns, fabrics, apparel, and made-ups (Ministry of Textiles, 2012b).

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Despite the original mission of TUFS, the AEPC study suggested TUFS has not been greatly helpful for Indian apparel manufacturing and exports. First, the share of the TUFS funds allocated for apparel manufacturing is only 4 percent. This is extremely low, compared to 30 percent for spinning, 25.5 percent for composite up-gradation (ginning, pressing, reeling, twisting, scouring and combing), and 14 percent for weaving sectors. Second, in the current policies, the funds are only reimbursed only after firms’ showing the proof of purchase of technology upgrades. This policy requires businesses come up with own finances to make large purchases and then request for reimbursements. This prevents full utilization of the TUFS funds. Total project costs sanctioned under TUFS until 2010 is approximately INR 2,077 billion, and the amount disbursed till 2010 is only INR 746 billion (36 percent), according to the annual report of TUFS published on June 30, 2010 (Ministry of Textiles, 2012b).

The second change that the AEPC study recommended was to increase foreign direct investment (FDI) in apparel manufacturing and export capacities. The study reported that, in 2009, FDI inflow to the Indian apparel manufacturing and export sectors was o1 percent of the total FDI that the country received. This was deemed troubling because FDI is often critical to help improve the fund-receiving country’s manufacturing upgrades and technological advancements. The study also implied the lack of FDI slowed the development of textile and apparel machinery manufacturing in India.

Finally, the third recommendation made by AEPC was to improve the country’s infrastructure, such as the power sector, port facilities, domestic transport facilities, water and labor in India. Without such improvement, the Textile Park Schemes that were set up to promote apparel exports will not attract investors and foreign organizations to build new manufacturing and exporting firms (Apparel Export Promotional Council, 2009).

From the academic’s perspective, Kathuria (2008) studied the macro-level competitive advantages of the Indian apparel export sector using Porter’s (1990) national’s competitive advantages framework. According to Kathuria, India’s labor cost is, in fact, higher than Bangladesh and China. The Indian apparel industry suffers from low labor productivity due to low technology and modernization levels. Therefore, overall, India lacks the competitive advantages in labor cost and labor productivity, compared to its competitors. Kathuria also pointed out that the costs of capital, particularly interest rates on long-term loans, in India, is higher at 13-16 percent, compared to 5.5 percent in China. Therefore, there is a shortage of fabrics in high quality at a reasonable price. The only positive aspect of the Indian apparel export sector is a good supporting industry such as yarn manufacturing with the second largest yarn spinning capacity in the world.

Similarly Lu and Karpova (2011) used the global value chain framework to study the comparative advantages that India has over Chinese apparel industry. They found low labor cost; production differentiation and specialization; flexible manufacturing based on small scale operations; and domestic brand development and retail distribution, as the key comparative advantages of the Indian apparel Industry, compared to China.

Although the results of Kathuria (2008) and Lu and Karpova (2011), and the AEPC study are extremely useful in evaluating the Indian apparel export industry from the macro- or government-level, these studies still do not provide what individual firms, particularly in apparel exporting, must do or have to achieve and maintain competitiveness against foreign competitors. The lack of our understanding on “what

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Indian apparel export firms do or have to achieve and maintain competitive advantages in the global marketplace” offers an incomplete picture of the effectiveness of the Indian government’s strategies to promote apparel exports, such as Textile Parks and TUFS. Also, this gap prevents us from understanding what resources individual Indian export firms have and how effectively they use such resources to achieve and maintain competitive advantages. Without such understanding, efforts to support the Indian apparel exports may be difficult to make and the results would not be fruitful.

RBT of the firm To help gain an understanding on what Indian apparel export firms do or have to achieve and maintain competitive advantages in the global marketplace, RBT of the firm (RBT) has been adopted for the study’s theoretical framework. Penrose (1959) initiated the development of the resource-based view of the firm, where he concluded that firms should be described as an administrative unit that links and coordinates activities of numerous groups and individuals, and as a bundle of productive resources. The Penrose’ view gained substantial tractions in the mid 1980s as Wernerfelt (1984) recognized that competition for resources among firms would have important implications for the ability of firms to gain advantages. Wernerfelt (1984) focussed on the possibility that the differences in firm performance could be developed, in terms of the resources that a firm controls. Two years later, Barney (1986) introduced the concept of strategic resource factors that firms could acquire or develop to implement the superior market strategies in the marketplace. In this light, Dierickx and Cool (1989) showed that the firm’s strategic resources assist in generating economic profits. All of these discussions on firms and their strategic resources lead to Barney’s (1991) RBT of the firm.

The RBT explains that firms gain and sustain competitive advantages by deploying valuable resources and capabilities that are rare, and not readily replicable (Barney, 1991). Firm resources are defined as the tangible and intangible assets that firms use to develop and implement their strategies. These firm resources must be valuable so that it can exploit opportunities and/or neutralize threats in a firm’s environment. Firm resources must also be rare among the firm’s current and potential competitors. Firm resources must be costly-to-copy so that the firm can maintain the competitive advantage.

The RBT researchers suggest that these firm resources are key factors for their competitive advantages. Competitive advantage is defined as a value creating strategy being implemented by a firm while other potential competitors do not or cannot (Barney, 1991). These competitive advantages provide the edge to the firm to its competitors in order to generate economic profits. The competitive advantage is considered sustainable when the competitors of the firm are unable to replicate the value creating strategy.

Key firm resources for competitive advantages from RBT Then, what are the key resources firms must have for their competitive advantages? Barney (1991) identified the three key firm resources for competitive advantages:

(1) physical capital resources;

(2) human capital resources; and

(3) organizational capital resources.

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Physical capital resources refer to the physical assets of the firm, such as geographic location, accessibility to raw material, machineries and equipment. Human capital resources refer to the manpower present in the firm, such as the workers and managers. Organizational capital resources refer to the structure of the firm, such as the controlling and coordinating organizational systems. Following Barney, many researchers investigated key firm resources for successful manufacturing in many different industries (e.g. Collins and Clark, 2003; Ravichandran and Lertwongsatien, 2005; Runyan et al., 2007; Watchravesringkan et al., 2010).

In the export setting, researchers suggested that exporting firms require different firm resources for their competitive advantages, compared to general firms. Cavusgil and Zou (1994) emphasized that exporting is a firm’s strategic response to perform against intense domestic and international competition. Therefore, the strategic dimension of exporting firms is critical to assess their performance. Piercy et al. (1998) studied small- and medium-sized British manufacturing and exporting firms in all type of product categories and found the abilities to offer competitive pricing, to produce superior product quality, and to provide responsive services as key resources for their competitive advantages.

Most recently, after reviewing all key firm resources discussed in the export performance literature, Enz (2008) proposed the five key firm resource categories, using US food exporting firms as study subjects:

(1) financial resources, including all of the monetary resources from which a firm can draw;

(2) physical resources, such as land, buildings, equipment, locations, and access to raw materials;

(3) human resources, which pertains to the skills, background, and training of managers and employees, as well as the way they are organized;

(4) organizational knowledge and learning, such as management flexibility, consumer satisfaction, delivery, and quality; and

(5) general organizational resources, including the firm’s reputation, brand names, patents, contracts, and relationships with external stakeholders.

In the apparel export setting, it is difficult to isolate firm resource study findings specifically related to apparel as much of previous studies investigated both textile and apparel export firms. However, these findings still provide good insights into apparel export firms’ competitive advantages. For example, McCann (2011) found the key firm resources of the Chinese textile and apparel export firms were found to be accessibility to diverse and high-quality raw materials, efficient and effective transportation and logistics services, vertically integrated production facilities, and low manufacturing cost. In addition to these firm resources, Shamsuddoha et al. (2009) observed that governments’ export promotion programs help export performance of the textile and apparel industries in Bangladesh. Similarly, expert performance of textile and apparel firms in Croatia was benefited from its government’s trade agreements, industrial policy, and efforts for economic stability (Bezić et al., 2011).

Based on the assumption that textile and apparel export firms may require different key firm resources than general export firms, Chang and Ha-Brookshire (2011) surveyed Chinese textile and apparel firms’ company profiles, using Enz’s framework. Overall, the authors found 18 key resources possessed by successful Chinese textile

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and apparel export firms. The firm resources were good relationships, high quality, equipment, skilled human resources, customer satisfaction, fashion trend knowledge, company size, reputation, brand, location, product breadth, land or building, managerial knowledge, awards, industry certificates, financial resources, employee training programs, and quick delivery. Particularly, organizational knowledge and learning resources, such as high quality, customer satisfaction, fashion trend knowledge, product breadth, managerial knowledge, and quick delivery, were most frequently mentioned key resources that Chinese textile and apparel export firms.

Research gap and question Although the RBT and subsequent research on firm resources have helped improve our understanding on how general and export firms establish, maintain, and sustain their competitive advantages, we still have little knowledge on the key resources that would help Indian apparel export firms’ competitive advantages. To help fill this gap, the study was designed to gain a deeper understanding on “what Indian apparel export firms do and have to achieve and maintain competitive advantages in the global marketplace” in order to guide current and future Indian apparel export performance and to offer a better picture of the effectiveness of the Indian government’s strategies in the global marketplace.

Methodology In order to achieve the research goal, the study took a content analysis approach. A content analysis of web-based communication data was used to obtain core themes of firms’ self-descriptions about what they do and have to achieve and maintain competitive advantage. Due to the lack of established research and findings on individual firms in the Indian apparel industry, the study was designed to be exploratory. Content analysis is one of the useful exploratory research designs as it allows replicable and valid inferences from data to the subject’s context, rather than to the researcher’s context (Krippendorff, 1980, p. 25). Firms’ web sites were chosen for three reasons. First, firms’ web sites are useful as they form a communication medium that is easily accessible to all audiences, constantly available, and affordable; thus, web sites have been regarded as important tools for firms’ routine or constant image management (Berthon et al., 2001). Second, web sites have been widely used for organizational image management research as they provide a relevant context for the study of image presentation (Argenti and Forman, 2002; Berthon et al., 2001; Lamertz et al., 2005). Third, web sites contain explicit communications and the deliberate identity of a firm; thus, the information on the web site represents the final outcome of a company’s identity communication and image management strategies.

Sample selection method/justification Sample firms in this study were selected from the directory of apparel exporters published by the Apparel Export Promotion Council, Ministry of Textiles, India in 2011. Most apparel export firms register with AEPC for export performance certifications, potential markets information on international fairs and assistance in participating at these fairs, and technical guidance, and therefore the membership directory is deemed to be the most updated and current (Apparel Export Promotion Council, 2012). At the point of data collection, November 2011 to March 2012, the directory showed detailed information of 7,329 apparel firms, including contact information, e-mail addresses, and major business activities.

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Out of the 7,329 firms, 6,113 firms had their e-mail addresses. After confirming the existence of active e-mail addresses, researchers checked whether these firms have web sites available. As a result, 2,410 firms have been identified as the study’s sample frame. Out of these 2,410 firms, 500 firms were randomly selected, using a random-number-generating scheme available through www.random.org (Haahr, 2012). The sample size of 500 was sufficient to reach data saturation.

Table I illustrates the descriptions of the study samples. The review of companies’ history sections showed that 66.4 percent (332 out of 500) of firms had their own web sites, while the remaining 33.6 percent (168 out of 500) of firms used third party web site hosts. In addition, approximately one-third (or 31.2 percent) of the study sample was located in Tirupur, while one fifth of them (or 21.2 percent) were in the Greater Noida region. In all, 34 percent of the sample firms indicated that they had over 11-20 years of experience in apparel exporting, while 91 (or 18.2 percent) firms had fewer than ten years of export experience. The study samples listed many different product categories, even up to 15, that they produce. The review of the first three

Characteristics Frequency (%) Sample firms

Location Tirupur 156 (31.2) Eastman Exports Apparels Industries Greater Noida 106 (21.2) Sanskriti Apparels Pvt. Ltd Bangalore 96 (19.2) Arvind Mills ltd Mumbai 59 (11.8) Radiant Apparels (P) Ltd Chennai 51 (10.2) Stanfab Apparels Private Limited Kolkata 35 (7) The Raj Lakshmi Cotton Mills (P) Ltd Total 500 Experience in exporting 451 years 12 (2.4) Orange Apparels 41-50 years 16 (3.2) Madura Garments 31-40 years 46 (9.2) Amrit Exports Pvt. Ltd. 21-30 years 133 (26.6) Silver Spark Apparel Ltd 11-20 years 170 (34) Creative Garments (P) Ltd o10 years 91 (18.2) Concept Clothing Unknown 32 (6.4) Sakthi Impex Product category Women’s wear 427 (34) Trendz Creations Men’s wear 387 (30.8) Nat Exports Kid’s wear 323 (25.7) Mayur Mfg Co. Industrial garments 40 (3.2) Gokaldas Intimatewear (P) Ltd Lingerie 39 (3.17) Kariwala Workwear Ltd Sports wear 39 (3.17) Triburg Sportswear Total 1,255 Exporting destinations Europe 264 (45.5) Integra Apparel Ltd USA 148 (25.4) Lifestyle Garments Middle East Asia 68 (11.7) Vishal Garments Canada 41 (7) Lakshmigraha Apparels Pvt. Ltd Australia 29 (4.9) Essay Exports Latin America 16 (2.7) Shell Apparels Pvt. Ltd Japan 11 (1.9) Asma Exports South Korea 7 (1.2) Scotts Garments Ltd Total 585

Table I. Sample description

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product categories listed by each firm suggested that over 427 out of 1,255 (or 34 percent) of the samples were engaged in women’s wear and 387 out of 1,255 (or 30.8 percent) in men’s wear. Finally, the study sample showed that 45 percent (264 out of 585) of the samples were exporting apparels to EU, while only 25 percent (148 out of 585) of the samples were exporting apparels to USA.

Data collection and analysis The text data available on company profile, including “Company profile,” “About Us,” “Company Overview,” “Who We Are,” “Know Us,” were collected. Each company’s profile was treated as a unit of analysis in this study. Only a limited number of companies included images or photos in the profile section. For the data consistency, images or photos related to company profiles were not included for data analysis.

The coding system was developed to determine the competitive firm resources of the study samples. Each set of texts representing a unique concept related to competitive resources was coded as a separate theme, following Chang and Ha-Brookshire (2011). For example, the text data of “skilled operator expertised in manufacturing high fashion garments” were coded into a unique theme of “skilled human resources.” The researchers met twice a week for a period of four weeks in early 2012, to code and categorize unique firm resources. When disagreements occur, the two researchers shared their different views, discussed in depth, and agreed upon one cohesive theme. For example, when researchers faced the text “manufacturing products using organic raw materials,” one of the researchers thought that this should be categorized as a physical resource because it would require a separate production line to handle organic raw materials. However, the other researcher suggested that producing products with organic raw materials does not require a new set of production equipment. Rather, it requires knowledge, expertise, and managerial resources to maintain the integrity of organic raw materials throughout the supply chain. After the lengthy discussion, both researchers agreed to categorize this theme into the general organizational knowledge resources. As a result, the agreement (or reliability) in coding between the researchers reached to 100 percent.

After theme development, each unique theme was classified into the five overall firm resource categories proposed by Enz (2008) and Chang and Ha-Brookshire (2011). For example, all monetary related resources were classified under the financial resource category. Infrastructure, location, production capacity, and easy access of raw materials were classified under the physical resource category. Skilful and experienced human resources, and employee training programs were combined under the human resource category. Experience, knowledge of high quality manufacturing, consumer satisfaction, ability to produce diverse products, capability of quick delivery, and managerial knowledge were classified under the organizational knowledge and learning resource category. General organizational resources included reputation, brand, quality certificates, awards, good relationships, and government recognition.

Results Notable interpretation of sample descriptions The review of the company’s history sections revealed that the concentration of the Indian apparel export firms were found to be in the Southern region of the country, with Tirupur (156 out of 500) being the most occurring place for the study sample, followed by Greater Noida (106 out of 500) and Bangalore (96 out of 500). Given that Tirupur and Bangalore have an easy access to ports and availability of international

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airports, this result was not surprising. The average experience age of exporting among the study samples was found to be 20 years approximately. The majority of the firms (170 out of 500) had 11-20 years of experience in exporting. It was also found that firms (91 out of 500) had fewer than ten years of experience in exporting. The results on export experience suggested that the development of the Indian export firms has been boosted by the abolition of apparel quotas in international market and, therefore, new firms have been coming up to take advantage of new market situations. It was also interesting to see that the majority of the study samples (264 or 45.5 percent) were exporting apparels to Europe, while only 148 (or 25.4 percent) of the samples were engaged in exporting apparels to the USA. Shorter transportation time to Europe, thereby reducing the lead time for exports to EU favors the result (Chatterjee and Mohan, 1993). Also the EU’s order being small in quantities compared to USA’s order and with more design details favors Indian apparel export firms to do business with EU as the Indian apparel manufacturing infrastructure does not support bulk production of apparels (Tewari, 2006). China being geographically closer to USA compared to EU gives Indian apparel export firms a comparative advantage over China on apparel exports to EU.

Competitive resources described by Indian apparel export The result of content analysis resulted in 22 key firm resource categories.

They were:

(1) quality (338 out of 500 or 66.7 percent);

(2) experience (338 out of 500 or 66.7 percent);

(3) land or building infrastructure (240 out of 500 or 48 percent);

(4) location (236 out of 500 or 47.2 percent);

(5) equipment (216 out of 500 or 43.2 percent);

(6) size (188 out of 500 or 37.6 percent);

(7) good relationship (184 out of 500 or 36.8 percent);

(8) skillful workforce (172 out of 500 or 34.4 percent);

(9) quickly or timely delivery (170 out of 500 or 34 percent);

(10) management (164 out of 500 or 32.8 percent);

(11) product breadth (154 out of 500 or 30.8 percent);

(12) affordable or competitive price (150 out of 500 or 30 percent);

(13) customer satisfaction (144 out of 500 or 28.8 percent);

(14) domestic operations (144 out of 500 or 28.8 percent);

(15) reputation or recognition (136 out of 500 or 27.2 percent);

(16) design (130 out of 500 or 26 percent);

(17) certificate (102 out of 500 or 20.4 percent);

(18) skillful designer (94 out of 500 or 18.8 percent);

(19) financial resources (90 out of 500 or 18 percent);

(20) domestic manufacturing or brands (61 out of 500 or 12.2 percent);

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(21) fashion trend knowledge (88 out of 500 or 17.6 percent); and

(22) awards (48 out of 500 or 9.6 percent).

Each sample claimed that they have more than one key firm resources. A total of 3,218 key resources were coded throughout the study sample, resulting in 6.5 resources described by each firm.

These 22 key resources were then classified into Enz’s (2008) and Chang and Ha-Brookshire (2012) five firm categories. First quality, customer satisfaction, fashion trend, managerial knowledge, product range, and quick delivery were classified into organizational knowledge and learning resources. A total of 1,338 occurrences were found in this resource category, resulting in on the average 2.67 resources per firm. Second, equipment, company size, location and infrastructure were categorized into physical resources with a total of 1,014 occurrences. Third, good relationships, reputation or recognition, awards, certifications and experience in exporting were classified into general organizational resources with a total of 804 occurrences. Skillful or experienced employees, experienced designers and employee training programs were classified into human resources and these resources made up to 306 occurrences. Finally, all types of monetary support and annual turnovers were classified into financial resources with a total of 90 occurrences (see Table II).

These results showed several interesting facts that are different or similar to Chinese apparel export firms. First, the study samples gave the most emphasis on the experience of exporting apparel (338 out of 500 or 67.6 percent). Export experience was often listed together with the ability to provide and maintain high quality (338 out of 500 or 67.6 percent) throughout the product manufacturing. However, it was interesting to note that only 14.8 percent (74 out of 500) of the Indian apparel exports firms had more than 30 years of experience in exporting. Perhaps, the emphasis on experience and quality comes from the lack of experience and high-quality products relative to other competing countries, such as China, in the global marketplace. For example, in the Chang and Ha-Brookshire’s (2011) study on Chinese textile and apparel manufacturers, the authors found that Chinese firms made more emphasis on good relationship with foreign buyers than they did on quality or export experience. In their study, Chinese firms did not seem to have a need to communicate their export experience and quality, while Indian firms seem to need to do so.

Second, physical resources seemed to be one of the most critical resources to be competitive for the study samples. The results showed that the study samples emphasized the fact that they have proper infrastructure for apparel manufacturing and exporting (infrastructure, 240 or 48 percent), that they are located in special economic zones that are suitable for easy export access (geographical location, 236 or 47.2 percent), that they are built with modern equipment and machinery (equipment or machinery, 216 or 43.2 percent), and that are sufficiently large enough to achieve scales of economies in apparel exports (size, 188 or 37.6 percent). On average, two physical resources were mentioned per study sample. On the contrary, Chinese textile and apparel firms had less emphasis on their physical resources, compared to organization resources (Chang and Ha-Brookshire, 2011). This can be explained by the fact that the Chinese apparel industry is more advanced than the Indian’s. Until 2001, the Indian government considered the apparel industry as a small-scale industry and thus it favored small batch productions. A lack of substantial FDI in Indian apparel industry can also be related to this.

These challenges, relative lack of experience, quality, and physical resources, seem to push Indian apparel exporters to emphasize unique capabilities that their

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competitors may not possess. Some of those unique capabilities seem to be knowledge of latest fashion trends, and having design teams with reputable and experienced designers. The design capabilities described by the study sample were actually those of product development from the foreign buyer’s perspective, and the emphasis on design capabilities could be because these firms are producing apparel products in

Firm resource categories Key resources Description

Frequency (%)

Organizational knowledge and learning resources (1,338 occurrences)

Quality Ability to provide high quality products 338 (67.6)

Timely delivery Ability to deliver goods fast and on time 170 (34) Management Knowledge of having good management

system for efficient production and adaptability

164 (32.8)

Product breadth Ability to export a wide range of products 154 (30.8) Competitive price Ability to produce goods at a competitive

or affordable price 150 (30)

Customer satisfaction Ability to offer services for highest Buyer Satisfaction

144 (28.8)

Design Involved in designing or licensing or product development on behalf of the customer

130 (26)

Fashion trend Knowledge of the latest fashion products or involved in fashion forecasting

88 (17.6)

Physical resources (1,014 occurrences)

Infrastructure Having land, building, factory, dormitory or having vertically integrated manufacturing units

240 (48)

Location Located in geographically convenient places for easy to access to transport systems

236 (47.2)

Equipment Having advanced equipment or latest machinery for production

216 (43.2)

Size Having a large workforce or ability to produce huge amount of products

188 (37.6)

Domestic operations Having own brands or retail stores, or involved in domestic manufacturing

144 (28.8)

General organizational resources (804 occurrences)

Experience Exporting and manufacturing garments from a long period (more than 5 years)

338 (67.6)

Good relationships Ability to maintain good and long relationships through Trust and goodwill

184 (36.8)

Reputation or recognition

Well known and recognized by Government and Apparel Association

136 (27.2)

Certificates Receiving certifications from governments and private certifying agencies

102 (20.4)

Awards Receiving government, textile and apparel associations or public media awards

44 (8.8)

Human resources (306 occurrences)

Skillful or experienced employees

Having skillful or experienced operators or employees or staff

172 (34.4)

Designers Having experienced or reputed designers or design teams

94 (20.6)

Employee training programs

Providing training facilities to employees 40 (7.8)

Financial resources (90 occurrences)

Finance Having strong monetary support or having a positive turnover

90 (15.6)

Table II. Firm resources as

described by Indian apparel export firms

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small-batch with unique yet multiple designs rather than focussing on bulk quantity with little product development components (Lu and Karpova, 2011). The study samples seem to try to reach foreign buyers who may need unique, fast-changing, apparel products rather than standard, mass-produced, basic apparel products.

Fourth, the ability to provide affordable and competitive prices for their products was recognized as an important firm resource by Indian apparel exporters. Interestingly, the study samples use the term “affordable” or “competitive” when it comes to pricing. These terms seem to be strategically selected as they try to compete against low price that China counterparts offers. The emphasis on affordable or competitive prices showed that India might not be the cheapest sourcing destination but Indian apparel exporters can still provide products at competitive prices. In addition, affordable or competitive price (144 or 28.8 percent) was often listed together with timely delivery (170 or 34 percent) and customer satisfaction (150 or 30 percent). Providing products at the right time and right price seemed to be a method for customer satisfaction, which in return was deemed to bring more business to the export firms.

Finally, human and financial resources were found to be the last two competitive advantages that the study samples claimed to have. This finding was similar to what Chinese textile and apparel firms claimed to have (Chang and Ha-Brookshire, 2011). The employee training had 40 (7.8 percent) occurrences. The financial resources were listed as the least important resource. The lack of FDI, and small manufacturing units can be a reason for financial resources to be the least occurring resource.

Conclusion The Indian apparel industry has played a vital role in India’s economy. The Indian apparel industry exported US$14.4 billion worth of apparel in 2011 itself. However, experts claimed that the Indian apparel industry has failed to meet its predicted growth in the past few years since quota elimination among WTO members. In order to forecast what Indian apparel firms’ future would be like in the post-quota era and how the industry would progress, this study investigated the unique firm resources that Indian apparel firms claim to have for their competitive advantages.

The results of content analysis of the “About Us” section of the web sites of the 500 sample firms selected from the exporter directory published by the AEPC in 2011, revealed several interesting findings about Indian apparel firms. First, the results suggested that Indian apparel firms shared similar key firm resources that Chinese textile and apparel firms claimed to have, such as experience in apparel exporting and the ability to provide quality products. Second, over 40 percent of Indian apparel firms claimed to have physical resources, such as necessary infrastructure for mass-scale production. It seemed that these firms were trying to convince foreign buyers that they are capable of undertaking the responsibility of mass production. Third, the ability to manufacture designer- and high-fashion garments seemed to be a unique resource possessed by Indian apparel firms. Finally, Indian apparel firms claimed that they are able to provide products at competitive prices, with customer satisfaction and on time delivery.

The study results have several important contributions and implications. First, the results reinforce the RBT of the firm, suggesting that each firm has unique key resources to gain and sustain competitive advantages. Particularly, the study suggested price and design under organizational knowledge and learning resources,

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JFMM 18,4

domestic operations under physical resources, experience in exporting under general organizational resources, and designers and designing teams under human resources are unique to Indian apparel export firms. The study findings also revealed the firm capabilities that today’s Indian apparel manufacturing and exporting firms are focussing on or claim to have as critical resources for their competitive advantages.

Second, the study findings suggest Indian apparel export firms may need to re-evaluate their key resources and unique contributions to the global apparel industry, and clearly communicate their roles in global apparel production with their foreign buyers. Mixed signals, such as claiming long experience while they do not seem to really have it, or claiming to have mass-scale production while small-batch production is their main operational technique, could confuse foreign buyers. “Trying to claim the one for every one” may not be the best strategy for Indian firms when so many other developing countries are trying to grab market shares in the global apparel industry through mass-scale production capacity.

Third, the study findings also suggests that Indian apparel export firms may want to invest more on general organization resources, such as awards from government or public media, certifications from government or public media, as they are critical for the development of credibility of firms and, thereby, will be able to generate and gain trust in foreign buyers. These awards and certifications will help the firms in maintaining international standards and ethical business practices and earn the goodwill of foreign buyers. This will also help the government in monitoring the labor and business practices in the apparel export and manufacturing sector.

Fourth, the study finding suggested that the key resources that Indian apparel export firms claim to have to sustain competitive advantage are designing capabilities, small and flexible batch production systems, and skilled labor. Therefore, Indian apparel export and manufacturing firms trying to replicate resources for mass production may want to re-evaluate their key resources and concentrate more on developing designing capabilities, maintaining flexible batch production systems, and employing skilled labors as these resources may make India a unique sourcing destination. As mass-production systems and flexible, yet, agile production systems are two very different business strategies therefore careful evaluation must be made before investing too much capital in mass-production systems. Educators in India may want to give more emphasis on flexible and agile production systems in their curricula. It is important for future workforce to understand the uniqueness of Indian apparel industry and thus concentrate on developing design skills and skillsets to manage and work in a flexible and agile manufacturing setup.

This study has certain limitations. Broad application of this study should be done with a care due to the content and mode of collection of the study data. Further research is recommended to include a variety of data, such as actual interviews, surveys, or field trips. This will help increase our understanding of what Indian apparel exports firms really have rather than claims for their competitive advantages. This will help provide a more comprehensive view to understand the key resources possessed by the Indian apparel export firms. Second, the significant portion of the study data was collected from the southern region of India. Finally, in order to help generalize the results, further study involving a larger number of samples across different geographical areas is needed.

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