Strategic Responses of Multinationals to Competition from Developing‐Country Cottage Firms Available to Purchase

This article reports on the unusual phenomenon of aggressive competition from cottage firms encountered by multinationals and large local firms in the developing‐country environment. It analyses the conditions that enabled cottage firms to compete aggressively in five industries in India, and how large firms dealt with such competition. It discusses how such competition is likely to vary with industry characteristics. It also discusses the implications of such competition for the strategies of multinationals.