Corporates should have a specific strategy to build core competencies that will introduce innovative concepts like venture capital and avoid importing management ideas lock, stock and barrel from the United States.

These were among tips that Harvard Business School professor of business administration Prof Krishna G Palepu gave the top brass of Indian corporates while delivering the keynote address at a CII (Souther Region) seminar on the subject `Context: Liberalised India building core competencies to gain competitive advantage' in Chennai on Thursday.

Prof Palepu asked corporates to identify instiututions which were relevant to their business and build them internally. Terming such institutions as soft comeptencies, he said they were as valuable in an economy likeIndia as were hard competencies in the US.

A good venture capital base would provide access to domestic and international risk capital. Many foreign institutions wanted to invest in India but did not know how to go about it.

There was need to build reputation in soft competency areas like venture capital, negotiation of contracts, internalising quality standards, and management practices. "If there is reputation then foreign investors can be accessed," Prof Palepu said.

According to him, the Asian financial crisis was one example of how lack of institutions affected functioning of financial markets. On the scale of institutional development he said, ``Korea is still a primitive country,'' adding that the Korean currency crisis was directly attributable to the position of institutions in the market and not because of the problems of the market.

Comparing 18 different large corporations in Chile and India, Prof Palepu said the analysis of market conditions showed how "remarkably uniform" they were. Thecompanies had rationalised but not reduced business focus. They had increased levels of diversification rather than reduce them and had a lot of strategic redirection in marketing but less in improvement and efficiency.

According to him, it was not enough to liberalise primary markets alone but the process must also cover intermediate markets. IMF's prescription to discard Korean chaebols was "disastrous" because "you are not creating the institutions needed" and only destroying institutions which chaebols had already created.

In a panel discussion, MV Subbiah, vice chairman and managing director of EID Parry, said intermediate institution creation was critical.