Reverse Innovation: A global strategy to exploit opportunities in emerging and developed markets - A case study based research on innovations that diffuse from emerging into developed markets

Sammanfattning: The strategy of Reverse Innovation, i.e. innovations that diffuse from emerging into developed countries, has recently gained attention within Academia and renowned business journals. However, extant research about Reverse Innovation has so far merely described the phenomenon and focused on risks and opportunities of Reverse Innovation for developed-market MNEs and the impacts on their organizational structure. In addition, existing research in the field did not include a linking to current theories of innovation and innovation diffusion. This thesis therefore contributes to existing literature by providing a broad empirical description as well as comprehensive theoretical framework. Specifically, it provides an empirical-based overview of the general characteristics of Reverse Innovations, their underlying market dynamics and company-internal motives and processes related to the concept of Reverse Innovation. Using a qualitative research approach, we analyzed 23 cases of Reverse Innovations as well as four in-depth case studies. Based on the insights of the analysis, we observed that Reverse Innovations are typically low-cost products with a great price-performance ratio. Usually, they are continuous innovations that are innovative based on the companies' business model. Reverse Innovations originally target the low-end emerging market and tend to be technological products. The market dynamics that lead to the emergence of the phenomenon showed to be the growing opportunities in emerging markets, the increasing competitiveness of low-cost emerging-country companies, global technology improvements, and Western world's growing demand for inexpensive or value-for-money products. From a company internal perspective, the development of Reverse Innovations is usually based on a frugal innovation approach, in which companies use local R&D engineers, and apply latest technology. Companies were found to diffuse the innovations into developed markets so that they can gain higher economies of scale, and because the innovation shows to be more profitable than its predecessors. Usually, companies target the low-end customer segment in developed markets. From a theoretical perspective, we identified that Reverse Innovations diffuse into developed markets due to their relative advantage, less complexity, and compatibility. Conclusively, our research illustrates that Reverse Innovation is a growing phenomenon that we suggest will affect and form the Western markets in terms of consumer preferences and values, industry actors and innovation grounds. The thesis also holds essential implications for theory and management practice.