| Summary: | This paper analyzes the role of innovation in cross-border business-to-business (B2B) relationships within the born-global information technology (IT) industry to unmask the assertion that some nations, such as India, are simply ‘less innovative’ than others. We reveal a dark side in B2B relationships that masks, claims and prevents innovation. The dark side in innovation in the Indian IT industry is often manifested via three mechanisms of power; namely, a) masking the true ownership of innovation, b) preventing innovation by dominant organiza-tional structures in multinational enterprises (MNEs), and c) finally, the institutionalization of these practices in MNEs. We show when and how the dark side effects in (dis-) innovation are institutionalized in the business system itself through neo-colonial influences and trace power imbalances across multiple interfaces, such as headquarters – subsidiary or service provider – client. We discuss the theoretical contributions and managerial implications of our findings.
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