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Deinstitutionalization in the context of software exports policymaking in Costa Rica

Deinstitutionalization in the context of software exports policymaking in Costa Rica. Brian Nicholson Centre for Development Informatics. Agenda. Background Theory Methodology Case study. Role of national policy. Tax exemptions Software technology parks

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Deinstitutionalization in the context of software exports policymaking in Costa Rica

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  1. Deinstitutionalization in the context of software exports policymaking in Costa Rica Brian Nicholson Centre for Development Informatics

  2. Agenda • Background • Theory • Methodology • Case study

  3. Role of national policy • Tax exemptions • Software technology parks • Incentives for foreign direct investment • Venture capital support for start ups

  4. Outsourcing and Development • India, Ireland, Israel success as software exporting nations • India IT/ITES industry contributes 4.8% GDP, employs over 1million, 28% growth (2005-6) • Many aspirant small countries e.g. Iran, Jordan, Vietnam, Costa Rica.

  5. Software Export Industry Development Model

  6. 4.5 million population

  7. Costa Rica’s Software Industry 2005 Approx 150 firms, 91% SME, only 5% have more than 100 employees Revenues $173m 60% to Central America and Mexico 4800 people employed ICT Services Industry: Global Sourcing Post Crisis

  8. Methodology • Action research in collaboration with Cegesti (San Jose), • IADB sponsored • To develop a strategic plan for the stimulation of the software industry in line with strategic priorities

  9. Process • SWOT • Benchmarking • Stakeholder identification • Task force groups

  10. Members of Organisation Field • Caprosoft • CINDE • Investors / banks • Universities • IADB • ICE • Ministry of science and technology

  11. Concerted Action Web for Outsourcing Industry Infrastructure providers Government regulation and laws Finance Foreign companies Software sector Education Trade associations Domestic demand

  12. Results & Puzzle • Some organisations adopted radical change others did not despite experiencing similar environment Why?

  13. Institutions as a conceptual frame • Institution: “the rules of the game in a society….the humanly derived constraints that shape interaction” North • Nature of influences: formal rules and informal constraints on the actors • Contradictions: When institutions are in conflict, for example between the new directions and existing traditions, organizations and individuals may mobilise to defend the symbols and practices of an institution

  14. A deinstitutionalisation framework (Oliver 1992)

  15. Dissensus and deinstitutionalisation at Caprosoft • Consensus: • Dominant “Wine drinking club” subculture. Influence of longer term members to new sectors joining. • Lack of energy / impetus for change – maintenance of status quo. • “Plateau of comfortable existence”. “Costa Ricans will not offend each other”

  16. Here people will be happy to earn a good salary, have a nice car, a nice house, have their children in a good school and owning 100% of their companies. And that’s it. So there is a limited level of preference of risk taking or ambition

  17. Costa Rica is so small. It's so small that nobody can take the luxury of confronting anybody, because in no time you will meet again, in other circumstances, most likely the situation will be the other way around. So when you come to live here, you want no enemies. Confrontation is just not worth it, you know, to be living like that. So people prefer to manage relationships

  18. “In their relations with others, Ticos[i] want above all to ‘Quedar bien’ – to get along and make a good impression in an encounter, to appear amiable. It is easier to promise to do something ‘ahoria’ (in a little while) or ‘manana’ and thus avoid possible friction at the moment than it is to tell someone that it cannot be done soon or perhaps ever”. Biesanz [i]Ticos: Colloquial term for Costa Ricans

  19. “Decision making al la tica means constant bargaining in an effort to avoid conflict, even though the problem may not really be resolved. Decisions are postponed indefinitely and once made which may never be implemented. A common term of phrase in Costa Rica for this is palanganeo evoking an image of riding the waves unsteadily in a palangana or basin tilting from side to side, getting nowhere” Biesanz.

  20. Dissensus and Deinstitutionalisation • Emergence of counter subculture • 3 new board members, newer, smaller firms supported by a senior figure • Visited India’s Nasscom • Dissensus localised within Caprosoft but mobilised in organisational field questioning legitimacy of institutions

  21. Consensus and persistence at Cinde • CINDE Mandate of bringing in FDI intersectoral. Responsible to private shareholders, none to the industry or CAPROSOFT • Lack of participation or coordination with the software industry in appropriateness of FDI • FDI killing the industry through the competitive forces it is generating

  22. The companies that come in here and set up shop and hire people, that doesn't mean that any local companies are part of it. That’s my point. Yesterday we had news that Fujitsu is setting up a high tech call centre with 500 people, $5 million. And we hear some of that every month

  23. “Rather than join with others to demand better bus services, Costa Ricans would be more likely to buy a car or motorcycle. Rather than cooperate with neighbours to prevent burglaries, there is a more generalised tendency to hire private security and buy guns” Biesanz

  24. Sykes, IBM or Hewlett-Packard or Intel, they have a different type of operation by definition, but they are demanding the same human resources. Cinde official

  25. The only way for these local companies to compete is to be able to make similar offers like these. And the only way to do that is by if they do work for clients that also pay them well. And that won't happen with local companies working with local customers.

  26. Consensus and persistence • Consensus on legitimacy of Cinde institutions • Defensive institutional work – token participation • Cinde a private company, shareholders • Nestedness in Washington consensus free trade policy

  27. Software Export Industry Development Model

  28. Conclusions • Limitations of the unitary assumptions of the software export success model in implementation • Counter subcultures, wider cultural traits • Disruptive and defensive institutional work • Insider and outsider driven dissensus • Institutional nestedness

  29. Further information Centre for development informatics http://www.sed.manchester.ac.uk/research/cdi/ Home page http://www.php.portals.mbs.ac.uk/Default.aspx?TabId=1045 Brian.nicholson@manchester.ac.uk

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