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 organizational 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.