Drivers and barriers of Reverse Innovation

Abstract

The paradigm of innovation approaches has changed over the years. This thesis has been designed to understand one such unconventional innovation approaches called as Reverse Innovation. Reverse Innovation is an innovation approach where the innovation is first launched in an emerging country and then transferred to the developed countries.

The geographical focus of this research is India and the research aims to document innovations of Indian EMNEs that are an example of Reverse Innovation. India’s recent developments show that the country is in forefront in terms of disruptive and breakthrough innovations that are further launched in developed countries. As India is moving towards being self-reliant and self-sufficient with a motive to boost its economy, Reverse Innovation can be one of the essential innovation approaches to achieve the same.

The focus of this thesis is from the perspectives of EMNEs (Emerging-market Multinational Enterprises) and the main aim is to find the list of drivers and barriers of RI (Reverse Innovation). For EMNEs in emerging economies to undergo RI and transcend their innovations to developed countries, they struggle in many ways. For example, in terms of funding, technology, operation costs and so on. However, RI approach also brings EMNES, new employment opportunities, inspires firms to produce cutting-edge technologies, FDI spillovers and more. Hence, the motivation is to understand what are the influencing factors of RI, i.e., drivers and barriers for EMNEs undergoing the RI approach. Documenting this will help the business leaders to grasp the concepts of RI and work with a finer comprehension as they advance to different stages in the RI lifecycle. This may in turn galvanise investors’ interest to fund and support the innovation, thereby strengthening the stakeholder relationships.

To attain this objective the research has two major parts of data collection. One from literature review and the other from case studies. Before proceeding with data collection, the first step lies in identifying the different stages of RI lifecycle. Then the first set of lists of drivers and barriers are derived from the existing literature studies which are placed in different stages of RI. Later another set of lists of drivers and barriers are derived from three cases studies which are selected in accordance to the designated stages of RI. The case studies comprise of innovations by three Indian EMNEs. They are Tata Group’s Tata Nano, Godrej Group’s Godrej ChotuKool and the Suzlon Group itself. The cases pertain to both B2B and B2C innovations which cater to different sectors of the society. The case study lists of drivers and barriers are obtained by recording interviews, converting audios to text and in turn the transcribed texts are run on Atlas.ti to form codes. The deliverable of the research is to assemble and analyse both set of lists from literature and case studies.

After the data collection, the analysis has been sectioned into four parts. The first analysis is a cross-case analysis which helps to understand the relative occurrences of factors amongst the case studies. It is an aggregate level analysis to understand the holistic occurrence of factors in all the three case studies. It is seen that Tata Nano has more common drivers to Godrej ChotuKool than with Suzlon. Similarly, Godrej ChotuKool has more common drivers to Suzlon. It could mean that as the innovation proceeds or has the potential to further to next stages of RI, a similarity of factors is found in the innovation which is already in the immediate next stage of RI. Similar trend is also seen for barriers. The second analysis is the comparison of all the three case studies together in different categories where it is seen that there are a greater number of common factors in the earlier stages of RI. In the later stages of RI when the innovation is transferred to the developed country, the factors are more towards the international elements that can affect an innovation’s penetration in the country. For example, ‘forex transaction’. Further, more fiscal factors can be seen when the innovation moves to developed countries. For example, ‘relying on tax-benefits’. Whereas in the initial stages of RI, when the innovation is trying to be widespread in the emerging country itself, technical and business-model related factors are seen profusely over other factors. For example, ‘local R&D’, ‘collaboration with partners’, and so on. The third analysis is the case comparison with the literature findings in three stages of RI where the factors are divided according to different categories. It is an adjusted list of all the factors from both literature and case studies. This analysis gives new factors from the case studies which have not been mentioned in the literature before. The final and fourth analysis is the inclusive list of common factors from both literature and case studies. This list includes the factors from literature and the generalizable factors from all the three case studies. There is only one factor that is generalizable from all the three case studies in the drivers and none in the barriers.

The topic of Reverse Innovation is fairly novel and the results obtained from this research cannot be generalised to the entire population. However, the sample size of case studies can be increased to provide more factors and views on the already documented factors. It may increase the reliability of the results. This thesis is an addition to the existing list of drivers and barriers of RI from literature which have not been assimilated in a stage-wise manner of RI lifecycle before. This research adds to literature, the practical relevance and experiences of EMNEs with the help of elaborate case studies in terms of RI. The research deliverable may aid future researchers and managers to understand the pivotal factors for EMNEs that undergo RI approach. It captures an essence of Management of Technology course which is to analyse technologies and new approaches and understand the commercial impact for firms. This research also provides an analysis, review and explanation to new and challenging business contexts by discussing challenges faced by case studies which also adheres to the course structure of Management of Technology.