Inclusive Innovation in Emerging Markets

Abstract

With developed markets approaching saturation, multinational corporations are directing their attention and resources towards emerging market economies (EMEs). Traditionally, multinational companies (MNCs) target the top of the economic pyramid, represented by the wealthy elite. However, there is a visible trend in MNCs exploring the potential of the untapped market at the base of the economic pyramid (BoP), which now represents the fastest growing segment of the world’s population and an enormous business opportunity. Also, MNCs are experiencing increased pressure to address rising global societal issues, including poverty and disease burdens in bottom of the pyramid segment of developing countries. The “Base of the Pyramid” debate has become a popular topic in literature. This debate focuses on the notion of “eradicating global poverty via profits”. This notion advocates that private enterprises, governmental, non-governmental organisations and the less wealthy can collaborate to achieve simultaneous economic development and social transformation, otherwise known as “inclusive innovation”. Thus, the introduction of an innovative frugal technology, in this case biosimilars, into emerging markets has the potential to foster inclusive innovation and consequently help address growing global poverty and income inequality. This research project will attempt to examine whether the hypothesis of inclusive innovation, eradicating poverty via profits, is valid and whether it has manifested in reality. This will be done using a multi-level perspective approach which takes the incumbent regime and relevant technology transitions into consideration. Furthermore, socio-technical ethical scenarios will be developed based on this multi-level perspective. The immediate results of this project show that inclusive innovation can be considered an aggregate concept composed of improved social & economic development, alleviated disease burden and profit generation by MNCs. A reduction in income inequality is considered under the auspices of economic development. In addition, inclusive innovation has an intrinsic ethical consideration to it considering its proximity to improving the quality of human life at the bottom of the pyramid. It is also a multidimensional concept that does not translate into a single positive effect, but rather transcends different variants of well-being, such as social development, economic development and disease burden. That being said one scenario to fostering inclusive innovation, the one with the most potential, is the scenario where “collaborative synergies” are employed between MNCs and EMEs. Furthermore, based on the research conducted within the context of this project, inclusive innovation is defined as both an outcome and a process which has the end goal of improving the quality of life for the bottom of the pyramid, while simultaneously generating profit for involved multinational corporations. Improving the quality of life is achieved through generating innovation- driven employment opportunities for the BoP which is expected to help improve its economic and social status.