Abstract Title: Closing the gap between frugal and reverse innovation – Lessons learned from the case of the Tata Nano Authors: Martin Aschmoneit (martin.aschmoneit@gmail.com) Dijana Janevska (dijana.janevska@gmail.com) Supervisor: Malin Tillmar Date: May 27, 2013 Background: Emerging markets are growing and have become increasingly important for the global economy, while the growth of developed markets has slowed down. Emerging economies are the home of a new type of innovation that can help multinationals (both Western and local) to achieve further growth. Reverse innovation is a new approach that entails developing frugal products in emerging markets that are later introduced in advanced economies. Aim: To develop a framework of reverse innovation, and to use this framework to find critical issues necessary for the Tata Nano to enter developed economies. Hence, we develop our own definition and a model of reverse innovation that will be used in the analysis of the Nano, with a specific focus on: the search for reverse innovation features present in the case and the problems/obstacles in the reverse innovation process. Methodology: Qualitative approach using a single-case study based on predominantly secondary data. The case study of the Tata Nano was chosen due to its compatibility with our research aims. Completion and results: The case of the Tata Nano fulfills all but one of the requirements for a reverse innovation: the last step of the process or the transition of the innovation to a developed market. Several critical issues regarding the reversal process were identified and discussed. Keywords: reverse innovation, frugal innovation, emerging markets, multinational companies, Tata Nano.

A closer look at innovation for and from emerging markets respectively developing economies reveals that a variety of different terms and concepts related to this type of innovation exist. The goal of my conceptual paper is to present a comprehensive overview of related terms and concepts and to suggest theoretical based classification criteria in order to differentiate them. After a first investigation in relation to innovation for and from emerging markets the keywords ‘reverse’, ‘frugal’, ‘jugaad’, and ‘bottom of the pyramid / bottom of pyramid / bop’ were identified and used for searching the database of Google Scholar. For further investigation only texts were considered with at least eight various terms. 19 different texts were identified which classified for a further analysis. As results 33 identified terms in relation to innovation for and from emerging markets, various spellings and synonyms and references with at least two mentions in the identified texts are presented. As theoretical based classification criteria ‘market orientation’, ‘determinants’ (of innovation for and from emerging market)’, ‘nature’ (of innovation for and from emerging markets), sophistication’, ‘sustainability’, ‘novelty’ and ‘innovator type’ were identified.

Si l’explosion du système Est-Ouest marque la fin de l’idée de confrontation globale en tant que modèle de la guerre depuis la fin du second conflit mondial, on doit plus fondamentalement s’interroger sur les changements intervenus depuis les années 90 en ce qui concerne le statut de la guerre elle-même et sur le rôle des opérations de paix dans les relations internationales. Les crises politiques découlant de conflits internes sont des sources de déstabilisation et de fragilisation des institutions locales qui subissent le tumulte et affaiblissent la capacité des acteurs à sortir d’une telle situation politique. La nécessité de renforcer les capacités locales pendant cette période charnière afin d’éviter les crises récurrentes se traduit par la présence de la Communauté internationale qui déploie une multitude de stratégies. Il existe en effet, dans la grammaire des Nations Unies, un continuum de modes de gestion des crises qui va des formes les plus réservées de la persuasion à certaines modalités de diplomatie coercitive, impliquant un usage limité de la violence. Lorsqu’on examine les opérations de paix en RDC, un ensemble dynamique de tensions et de liaisons, oscillant entre ordre et désordre dans ses expressions institutionnelles, le constat qui se dégage est que la question de la paix exige une analyse qui prenne en compte plusieurs facteurs. D’où le recours à une approche interdisciplinaire, mobilisant des courants critiques au sein des relations internationales tout en alliant la sociologie des relations internationales. Notre approche interdisciplinaire qui est au centre de cette thèse peut aussi être d’un grand intérêt dans le renforcement de l’approche polémologique, elle-même fort utile pour appréhender les modalités de gouvernance par les groupes politico-militaires. Notre étude s’attache à évaluer la pertinence et la cohérence des pratiques et conduites des acteurs internationaux pour mieux dégager les contours axiologiques et idéologiques de la gestion des crises itératives. / If the explosion of the East/West system marks the end of the idea of global confrontation as model of the war since the end of the second world conflict, we more fundamentally have to wonder about the changes which took place since the 90s as regards the status of the very war and about the role of the peace operations in the international relations. The political crises ensuing from internal conflicts are sources of destabilization and weakening of the local institutions which undergo the tumult and weaken the capacity of the actors to go out of such a political situation. The necessity of strengthening the local capacities during this pivotal period to avoid the recurring crises is translated by the presence of the international community which spreads a multitude of strategies. There is indeed in the grammar of United Nations a continuum in the modes of crises’ management which goes the most reserved forms of the persuasion to certain modalities of coercive diplomacy, implying a use limited by the violence. When we examine the peace operations in RDC, dynamic set tensions and connections, oscillating between order and disorder in its institutional expressions, the report which gets free is that the question of the peace requires an analysis which takes into account several factors. Hence the use of an interdisciplinary approach, involving both critical currents in international relations (critical constructivism) while combining the sociology of international relations. Our study attempts to estimate the relevance and the coherence of the practices and the conducts of the international actors in a better way axiological and ideological outlines of the management of the iterative crises.

Le travail de thèse porte sur l’innovation inverse et ses particularités managériales et organisationnelles au sein d’une filiale d’entreprise multinationale (EMN) localisée dans un pays émergent. Contrairement au modèle classique, l’innovation inverse peut se produire à partir d’un pays en voie de développement ou émergent, et ensuite être transférée vers un pays développé. Dans le cadre de cette recherche, nous nous intéressons au Brésil, un pays émergent où des entreprises mondiales disposent de centres de R&D de référence en Amérique Latine. L’innovation portée par la filiale d’une EMN est réalisée en fonction de divers facteurs et caractéristiques locales qui contribuent à ce que l’innovation menée par cette filiale se propage à l’échelle globale. Les objectifs de la recherche sont de mieux comprendre comment les EMN’s s’organisent dans une approche d’innovation inverse, de progresser sur l’éclairage théorique, et de proposer un modèle de management favorisant l’innovation mondiale à partir des initiatives locales dans un pays émergent. Nos travaux mettent en œuvre une démarche qualitative qui s’appuie sur une méthode d’études multi-cas. Notre contribution est un nouveau modèle théorique et fonctionnel pour l’innovation inverse prenant en compte les éléments qui contribuent à ce phénomène: l’intégration entre la maison mère et la filiale, la décentralisation de la R&D et la valorisation de compétences locales et l’insertion dans le système national d’innovation (SNI). Nos résultats de recherche ont mis en avant l’existence d’autres types d’innovations au-delà de l’innovation technologique qui induit une innovation mondiale. Nous avons observé que les innovations au niveau managérial, processus ou marketing sont absorbées au sein de la maison mère et diffusées vers d’autres filiales à une échelle mondiale. / Our research work concerns reverse innovation and its managerial and organizational features in a multinational corporation (MNC) subsidiary located in emerging markets. Unlike the traditional model, reverse innovation can occur from a developing or emerging country, and then be transferred to a developed country. Our empirical field is Brazil, an emerging country which hosts the reference R&D centers for Latin America of several global companies. The successful transfer to the global scale of an innovation coming from the subsidiary of an MNC depends on various factors and local characteristics that are explored in the thesis. The aims of this PhD dissertation are to better understand the mechanisms of reverse innovation in the context of MNCs, to advance theory and to propose a management model encouraging global innovation based on local initiatives in an emerging country. We show that practices carried out by MNC subsidiaries can have organizational, managerial and environmental implications that can account for the success of reverse innovation. Our research work implements a qualitative approach based on a multi-case study method. Our contribution is a new theoretical and functional model for reverse innovation that takes into account the elements that contribute to this phenomenon: the integration between the parent corporation and the subsidiary, the decentralization of R&D and the valorization of local skills and the insertion into the national system of innovation (SNI). Our research results highlight the existence of other types of innovation beyond technological innovation that lead to global innovation. We show that innovations at management, process or marketing level are absorbed within the parent company and disseminated to other subsidiaries on a global level.

A closer look at innovation for and from emerging markets respectively developing economies reveals that a variety of different terms and concepts related to this type of innovation exist. The goal of my conceptual paper is to present a comprehensive overview of related terms and concepts and to suggest theoretical based classification criteria in order to differentiate them. After a first investigation in relation to innovation for and from emerging markets the keywords ‘reverse’, ‘frugal’, ‘jugaad’, and ‘bottom of the pyramid / bottom of pyramid / bop’ were identified and used for searching the database of Google Scholar. For further investigation only texts were considered with at least eight various terms. 19 different texts were identified which classified for a further analysis. As results 33 identified terms in relation to innovation for and from emerging markets, various spellings and synonyms and references with at least two mentions in the identified texts are presented. As theoretical based classification criteria ‘market orientation’, ‘determinants’ (of innovation for and from emerging market)’, ‘nature’ (of innovation for and from emerging markets), sophistication’, ‘sustainability’, ‘novelty’ and ‘innovator type’ were identified.

Quelques chercheurs ont récemment étudié le rôle de levier d’innovation, voire même d’innovation inversé des projets social business ou BOP pour les multinationales des pays développés.Cette étude longitudinale analyse en profondeur le cas d’une multinationale de l’agroalimentaire, et explore le rôle des projets social business et BOP (SBOP) dans le renouveau stratégique de cette entreprise : l’aidant à être simultanément plus durable (face aux défis environnementaux et sociaux actuels) et compétitive. Elle analyse le processus de ce renouveau stratégique mené à partir des projets SBOP et les facteurs clés de succès de ce renouveau ; parmi eux : une double approche (« top down » et « bottom up »), articulée sur trois niveaux: individuel, collectif and organisationnel. Elle met aussi en valeur l’impact de l’orientation sociétale des projets, comme accélérateur et amplificateur de ce renouveau. / For a few years researchers have been focusing on the BOP as a lever for innovation and even reverse innovation for MNEs from developed countries. This in depth longitudinal study of an agrofood company explores the role of BOP and social business (SBOP) initiatives as a lever for strategic renewal of a whole company: helping it become simultaneously more sustainable (as regards our global environmental and social challenges) and more competitive. It analyses the process of this renewal and the key factors of its success; among them: a double (top down and bottom up) approach: articulated on three levels: individual, collective and organizational. It also analyses the role of a socially oriented focus as a booster of this strategic renewal.