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.

This study investigates the drivers and forms of business model innovation. It is built on the business model innovation typology proposed by Koen et al. (2011), we have developed its dimensions into Hurdle rate, technology, partners value network and customer value network. The study used these dimensions as a base to differentiate between the two approaches of the business model innovation which were identified as innovating the existing business model approach and multiple business model approach. The study used qualitative analysis, through a dual case study approach in the automotive industry, consequently Fiat and Tata Motors were selected as case studies. Furthermore, the study foundation is secondary data supported by primary data (i.e. interviews) to investigate how each of these two organizations has implemented business model innovation in each case study, by highlighting and contrasting their different approaches of business model innovation. The results of the study showed that each of the two approaches of business model innovation implies open innovation and expands the organization’s value network. However, innovating the existing business model focuses on improving the organizations’ performance, and sustaining innovation. On the other hand, the multiple business model approach aims to disrupt the industry or a competitor (i.e. New entrant), through disruptive innovation. Moreover, the study proposed a process based framework and a checklist on business model innovation, to assist the decision makers in organizations while choosing between innovating their existing business model or designing a new one.