Track 5.4 - Global Innovations from and to emerging countries

Max VON ZEDTWITZ, KTU, SDU & GLORAD
Florence CHARUE DUBOC, École Polytechnique
Monika PETRAITE, KTU & GLORAD
Daniel PRUD'HOMME, EMLV & GLORAD
Tiago RATINHO, IESEG & GLORAD
Iris XIAOHONG QUAN, SJSU & GLORAD
Sihem BEN MAHMOUD-JOUINI, HEC Paris
Marine HADENGUE, GLORAD & SKEMA

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Track's Contacts : 

max.zedtwitz[AT]ktu.lt
marine.hadengue[AT]polytechnique.edu
florence.duboc[AT]polytechnique.edu
jouini[AT]hec.fr

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Economic globalization since the middle of the 20th century has led to a growing body of knowledge about how multinational corporations (MNC) leverage different geographies and organize functions and processes across locations (Vernon, 1966; Bartlett & Ghoshal, 1989; Gassmann & von Zedtwitz, 1999; Doz et al., 2001; see Forsgren, 2013 for a review). The globalization of innovation within MNCs is one of the latest to evolve and one of the most recent to be studied (Boutellier et al., 1999; Doz and Wilson, 2012, Ben Mahmoud-Jouini et al., 2015).

MNCs have often targeted emerging new economies as new markets and, occasionally, as local capabilities improved, as hosts for new R&D and innovation (Vernon, 1979). It is, however, a recent phenomenon that developing nations without much history of advanced science and technology have made significant inroads in the global distribution of innovation. These countries -- with limited resources, huge needs and low-cost local competition -- have pushed global companies to seek new ways to innovate for these new markets. The notion of the “fortune at the bottom of the pyramid” (Pralahad, 2005) has reinforced the drive for frugal innovation. Performance and cost-reduction imperatives drove what has since been dubbed “reverse innovation” (Govindarajan and Trimble, 2012). Many traditional companies (such as Intel, ABB, or Siemens) have reassigned R&D control to centers in emerging countries, and innovation no longer flows exclusively from the center to the periphery but also in the other direction. The innovation process may be centered on an emerging market, but the process itself is intrinsically distributed and truly global (von Zedtwitz et al., 2015). Renault, for instance, discovered that the development of a low-cost, high-quality car delegated to its Romanian acquisition Dacia, exceeded local competencies. The Romanian project was discontinued, and ultimately the Logan model was engineered by Renault’s major innovation center in France (Jullien et al., 2012).

Even more recent is the emergence of global innovators indigenous to emerging economies (von Zedtwitz, 2005), and we are still in the early stages of this latest wave of globalization of innovation. Firms such as Huawei, Infosys, or Embraer are establishing themselves as leaders in their respective markets, and start using R&D resources outside their home countries -- and specifically in the industrialized home countries of those traditional MNCS – to globalize their innovation processes.

The rise of emerging markets (EMs) and their significant middle-class consumers have forced these organizations to reconsider not only their market's boundaries but also their go-to- market strategies. Differences between these EMs and the historical developed markets are so large that continuing to act as nothing has changed would unlikely lead to success (Meyer, Mudambi, & Narula, 2011). Indeed, EMs are characterized by specific constraints that did not exist in the context of advanced markets (AMs) (Govindarajan & Trimble, 2012). On the one hand, all these constraints change the demand to which MNCs were used to respond. EM customers are demanding products that are optimized for their own local environment. On the other hand, EMs today own a growing local system of innovation composed of very skilled labor force (Mudambi, 2011). New local MNCs are growing fast, representing at the same time potential partners and aggressive competitors on both local and advanced markets. These elements, coupled with the decreasing level of wealth in developed countries, represent the opportunity for MNCs to put forth novel new solutions of great value for EMs as well as for more advanced ones. In other words, MNCs now have to optimize their local R&D in EMs while also ensuring the global integration of the innovations developed in that context, i.e. to also successfully transfer EM innovations into AMs.

This aspect of global business has not been well examined yet, let alone understood in its various implications for international business and innovation theory. In addition to the R&D conducted by these newly emerging MNCs, this phenomenon will likely affect innovation by traditional MNCs, and the science and technology capacity of host countries in markets of various industrial maturity.

In the context, companies from countries with decades of global R&D experience are meeting MNCs that are beginning to follow this path. These firms often need to collaborate but compete as well, both indirectly in their home and host markets, and directly in joint efforts to develop technology standards or to deliver multi-partner solutions to local customers. More importantly, it requires knowledge management and integration skills, so that the valuable resources anchored in various parts of the firm and the firm’s networks can be leveraged despite the structural and cultural boundaries. This trend may prefigure a more networked, center-less and emergent process as the next challenge, and indeed the gateway to global innovation.

The management of global innovation therefore becomes only more important for firms and is increasingly at the heart of competitive advantage.
In this track we welcome papers addressing these issues. Some of the themes that are related are listed below :

- Internationalization of front-end innovation
- Coupling processes between markets and technological knowledge at the inception stage and emerging markets
- Cross-disciplinary pre-competitive globalization of R&D
- Open global innovation
- Localization of frugal innovation
- Reverse innovation as a source of strategic disruption
- Global vs. local innovations: exclusive or dual strategies
- Knowledge integration and combination across various R&D centers and subsidiaries
- Managing multi-actor networks of innovators in different countries
- Subsidiary initiated innovation and their diffusion
- New roles for entities in the diffusion of global innovation
- Reverse innovation
- Special-purpose subsidiaries for leveraging capabilities in unique environments.
- Open innovation in emerging markets

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References

Bartlett, C.A.; Ghoshal S. (1989). Managing across borders: The transnational solution, Boston, MA: Harvard Business School Press.
Ben Mahmoud-Jouini S., Burger-Helchen T., Charue-Duboc F., Doz Y., 2015. Global organization of innovation process. Management International, 19, 4, 112-120
Boutellier, R. Gassmann O., von Zedtwitz M. (1999), Managing Global Innovation, Springer.
Doz, Y., Santos, J., Williamson, P. (2001). From global to metanational: how companies win in the knowledge economy, Harvard Business School Press, Boston.
Doz Y., Wilson, K. (2012). Managing global innovations, Harvard Business Press, Boston.

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