reverse innovation case study

Bringing rich technical talent and experience to bear on the persistent and emerging challenges of the developing world.

Reverse innovation: why it fails, and how it can succeed.

“The reverse innovation process succeeds when engineering creatively intersects with strategy,” writes Amos Winter in the Harvard Business Review.

Reverse innovation is a term coined by Vijay Govindarajan to describe the phenomenon of goods and services being produced in emerging markets (such as India) and then exported, with a few “tweaks,” to developed markets such as Europe and the United States.

This goes against the grain of a traditional system in which products and technologies and created by, and primarily for, the developed world. Govindarajan has argued that reverse innovation encourages–even enforces–better, more cost-effective design. And while numerous large corporations want to use this technique to improve their ability to design for a global market, few have truly succeeded.

In a new article published by Harvard Business Review , Govindarajan and Tata Center faculty member Amos Winter write that reverse innovation “allows companies to enjoy the best of both worlds,” but only if they do it right.

In that spirit, Winter and Govindarajan lay out five “traps” that businesses routinely fall into, along with corresponding design principles to avoid those mistakes. For example, many companies try to “reduce the price by eliminating features.” Instead, Winter and Govindarajan argue they should “create an optimal solution, not a watered-down one, using the design freedoms available in emerging markets.”

The challenge is strict: “To win over consumers in developing countries, multinationals’ products and services must match or beat the performance of existing ones but at a lower cost. In other words, they must provide 100% of the performance at 10% of the price, as product developers wryly put it.”

Winter, an assistant professor of mechanical engineering at MIT and director of GEAR Lab, is no stranger to this kind of innovation. He spent six years designing the Leveraged Freedom Chair, a high-performance, low-cost wheelchair used in both India and the United States. Working with Tata Fellows, he is leading projects on water desalination , high-performance prosthetic limbs , design of tractors for small-scale farming , and more.

He and Govindarajan caution that many companies “still don’t realize that [the business world’s] center of gravity has pretty much shifted to emerging markets.” If they don’t figure out how to reach consumers there, the authors argue, they’re going to get left behind.

Full article in the Harvard Business Review 

Photo: Amos Winter with a user of the Leveraged Freedom Chair in India.

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• Research Summary

Reverse Innovation

Description.

VG and Chris Trimble reveal a bold discovery with far-reaching implications in REVERSE INNOVATION: Create Far From Home, Win Everywhere (Harvard Business Review Press; April 10, 2012; Foreword by Indra Nooyi): innovation flows uphill and its future lies in emerging markets.

Most global companies recognize that emerging markets have become today's last source of growth. But all they do is modify and export products that they developed in their home country. To capitalize on the full potential of emerging markets, they must head in the opposite direction - by innovating specifically for and in developing countries to create breakthroughs that will be adopted next at home and around the globe.

Today's poor countries are being tapped for breakthrough innovations that can unlock new markets in the rich world, and can even help solve its societal problems such as high cost - and poor access - to healthcare.

The book originated in 2008, when VG was chosen by CEO Jeffrey Immelt to advise GE on innovation as their first Professor-in-Residence and Chief Innovation Consultant. In these pages are an inside account of how reverse innovation is transforming GE's strategy, and secen additional in-depth case studies based on original interviews with senior leaders. They include:

• PepsiCo , which drew upon local teams and global resources to develop Aliva, a new savory cracker created by Indians for the Indian market, but with high global potential.
• Before employing reverse innovation, Logitech almost lost leadership of computer mice in China to an unexpected Chinese rival with a better understanding of local needs.
• P&G , which developed a globally successful tampon called Naturella in Mexico after discovering why its American product Always was losing market share to rivals there.
• In China and India, Harman designed from scratch a completely new infotainment system for emerging markets with functionality similar to their high-end products at half the price and one-third the cost . It has generated more than $3 billion in new business.

As these examples show, the biggest hurdles to reverse innovation are not scientific, technical, or budgetary. they ae managerial and organizational, and with the right mindset and tools can be overcome by any manager. Better yet, the evidence shows that companies can earn the same or even better margins and return on investment for a low-cost product designed for China or India than for a higher cost current product at home. The result is a win-win at home and abroad.

"Govindarajan and Trimble offer a framework for the next phase of globalization." - Jeffrey R. Immelt , Chairman of the Board and Chief Executive Officer , General Electric

"Reverse Innovation is a playbook for leaders who want to unlock growth in emerging markets." - Robert A. McDonald , Chairman of the Board, President and Chief Executive Officer, The Procter & Gamble Company

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Reverse innovation: a conceptual framework

• Conceptual/Theoretical Paper
• Published: 11 November 2019
• Volume 48 , pages 1009–1029, ( 2020 )

Cite this article

• Suresh Malodia 1 ,
• Shaphali Gupta 1 , 2 &
• Anand Kumar Jaiswal 3  

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Reverse innovation (RI) has emerged as a new growth strategy for MNCs to innovate in emerging markets and then to further exploit the profit potential of such innovations by subsequently introducing them not only in other similar markets but also in developed markets, thereby delivering MNCs a sustainable growth globally. In this study, we propose an overarching conceptual framework to describe factors that contribute to the feasibility of RIs. Using grounded theory with a triangulation approach, we define RI as a multidimensional construct, identify the antecedents of RI, discuss the outcomes, and propose a set of moderating variables contributing to the success of RIs. We also present a set of research propositions with their relative effects on the relationships proposed in the conceptual framework. Additionally, we provide future research directions and discuss theoretical contributions along with managerial implications to realize the strategic goals of RI.

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Introduction

Multinational corporations (MNCs) are increasingly facing market stagnation, financial instability, and recession in developed economies. At the same time, the large, growing, and untapped customer base in emerging markets has attracted the attention of these MNCs which are seeking sustainable growth and new market opportunities (London and Hart 2004 ). However, the glocalization approach alone cannot yield the desired results. Firms are required to comprehend the peculiar need of the given market (emerging or/and BoP) to develop successful inroads leading to sustainable business outcomes (Govindarajan and Trimble 2012a , b ; London and Hart 2004 ). Creating or innovating the products addressing the needs of this market is suggested to be an appropriate strategy for MNCs to capture the value in these peculiar markets (Brown and Hegel 2005 ; Hart and Christensen 2002 ). In fact, such innovations not only gain traction in emerging markets but also receive acceptance in developed markets for the value they deliver in terms of cost and performance effectiveness (Govindarajan and Trimble 2012b ). The phenomenon whereby an innovation designed for/in emerging markets gets adopted in developed markets is commonly known as reverse innovation (RI) (Immelt et al. 2009 ). For example RIs such as the handheld ECG machine, lullaby baby warmer, and the Discovery IQ PET/CT scanner were first developed by an MNC (GE India) in an emerging market, and they not only were successfully diffused and adopted in India and China but also received significant success when launched in developed markets.

Though RI has been a topic of conversation among academicians and practitioners, it is only recently that RI has achieved visibility in the global marketplace. However, since few MNCs become involved in the process of RI, it is understandable that before any firm can deep-dive into the RI process, a thorough understanding around RI as a phenomenon is necessary. The RI literature is evolving but has remained fragmented and disjointed regarding the factors affecting RI. Extant studies also remain equivocal on whether RI is an outcome or a goal to be achieved (Furue and Washida 2014 ). However, little knowledge is available on the complete process of RI which can be leveraged by MNCs to gain from this phenomenon (Von Zedtwitz et al. 2015 ). Also, given the limited availability of RI evidence, the literature is anecdotal, ultimately falling short in explaining the underlying dimensions of RI and defining it as a construct (Furue and Washida 2014 ). There is also a need to understand the drivers which will provide a conducive environment to stimulate RI in the firm. Also, a clear understanding of the expected outcomes is critical for initiating the RI process. Given these constraints experienced by MNCs while operating their business in a global marketplace, it is imperative to discuss the boundary conditions associated with RI.

To address these available gaps in the literature and the constraints experienced by firms, this study, employing a grounded theory approach, attempts to propose a conceptual framework for RI, define RI as a second-order construct, and identify antecedents, outcomes, and moderators. This study not only enhances the understanding around RI but also broadens the concept of RI as a multidimensional construct. Further, this study presents theoretical propositions regarding the determinants and strategic outcomes of RI, thereby providing implications to managers.

While proposing RI as a multidimensional construct, this study defines RI as clean slate, super value products that are technologically advanced created to meet the unique needs of relevant segments, initially adopted in the emerging markets followed by the developed countries. We recognize that as a process, fugal or local innovations would occur first in emerging markets, and subsequently RI would occur in developed markets. Although a large number of frugal/local innovations occur in emerging markets, only a few become RI. Further, a given frugal/local innovation may fail in emerging markets, but it can potentially be accepted in developed markets and become successful RI. The focus of our study remains on developing a conceptual framework of RI and identifying its determinants, consequences, and moderators.

We present our research as follows: First, we provide a review of the literature discussing the roots of the globalization of innovation and developing an understanding around RI. Then we explain the qualitative study (interviews and marketplace evidence) used for this study. Based on the grounded theory, incorporating the triangulation approach, we conceptualize RI explaining the underlying dimensions. Further, we propose a conceptual framework along with testable propositions followed by implications for firms and, finally, we provide future research directions.

Related literature

The onset of the twenty-first century witnessed a growing number of innovations coming out of emerging markets that eventually disrupted advanced markets (Brown and Hegel 2005 ; Hart and Christensen 2002 ; London and Hart 2004 ). Several factors such as the underserved large markets, growing purchasing power, and a greater talent pool contributed to shifting the loci of innovations gradually towards emerging markets. Perceived opportunities in emerging markets, in addition to the distinctiveness of market conditions and demand in these markets, encouraged MNCs to think of these markets as a place where innovation could take place (Birkinshaw and Hood 2001 ; Cantwell 1995 ). In an effort to comprehend the evolution of the innovation literature in the globalization context, especially occurring in the emerging market space, we attempt to capture various concepts evolved over the past few decades that explain the phenomenon of such innovations in the context of emerging markets and international business. We first discuss innovation concepts that are argued to be similar to RI and differentiate them from our conceptualization. Subsequently, we discuss the literature that explores RI to establish the gaps in the literature.

The emerging phenomenon of innovations originating from emerging markets, focusing on regular customers or specially bottom of the pyramid (BoP) customers, has been termed differently by different scholars. Bower and Christensen ( 1995 ) developed the theory of disruptive innovations, defining them as low-cost, cheaper alternatives to a premium product that is significantly lower in performance but still meets the basic need. Hart and Christensen ( 2002 ) referred to the disruptive innovations coming out of emerging markets as a “great leap.” Prahalad ( 2004 ) proposed the concept of “trickle up innovations” and defined them as innovations developed for BoP markets that later find their way to developed markets. Brown and Hegel ( 2005 ) proposed the concept of blowback innovations and defined them as innovations carried out by multinational enterprises from developed markets (DMNEs) in response to the competition created by multinational enterprises from emerging markets (EMNEs). Immelt et al. ( 2009 ) introduced the concept of RI, and explained the phenomenon by positioning RI as distinct from other innovations.

In this study, for better clarity around RI, we present a comparative analysis of RI with above discussed emerging market-based innovations. Table 1 concisely presents the comparison of all the pertinent innovation terms with RI. Likewise, there exist a few other innovation categories, such as grassroots innovation, social innovation, and jugaad innovation, which also originate in emerging markets to cater to the needs of either emerging markets generally or BoP customers specifically, therefore exhibiting some characteristic overlaps with RI (Gupta 2019 ; Gupta et al. 2019 ). However, the prevailing differences between these innovations are succinctly captured in Gupta et al. ( 2019 ) and Gupta ( 2019 ).

The concept of RI, coined by Immelt et al. ( 2009 ), was first introduced as antithetical to the concept of glocalization and a tool to pre-empt possible competition from emerging market competitors in developed markets. With an increase in the supply of technology and skills needed for innovations, domestic firms in emerging markets are likely to pose a severe competitive threat to MNCs from developed markets and hence would force MNCs to localize their R&D process to remain competitive (Corsi and Di Minin 2014 ; Govindarajan and Ramamurti 2011 ). Using examples from GE Healthcare, Immelt et al. ( 2009 ) provided anecdotal evidence highlighting the significance of factors such as investing in localized R&D centers, country-specific organizational structure, and financial autonomy. RIs coming out of GE’s Indian and Chinese subsidiaries were not only break-through for the local markets but were also successfully commercialized in developed markets. Govindarajan and Trimble ( 2012a , b ) further presented the adoption sequence as an important condition for defining RI and explained that RIs are first adopted in emerging markets and later flow back to developed markets. Von Zedtwitz et al. ( 2015 ) extended the discussion on the reversal of adoption of innovation and argued that reversal may happen at any stage during the innovation process, i.e., ideation, development, and diffusion, and further presented a typology of innovation flow.

The existing RI definitions and typologies provide insights on how innovation can be termed as reverse innovations (which is mostly based on the flow of diffusion from emerging to developed markets). However, a comprehensive definition of RI as a multidimensional construct is lacking in the existing literature. The literature provides various factors associated with RI; however, such factors are discussed in isolation and remain fragmented. Adopting the systematic literature review procedure, we classify RI-related factors as triggers, enablers, and barriers. We define triggers as a set of factors that initiate or cause MNCs to think divergently and innovate. They include factors such as market saturation in developed markets (Govindarajan and Trimble 2012b ; Leavy 2011 ; Li et al. 2013 ), increasing cost constraints in both emerging and developed markets (Judge et al. 2015 ), resource cum infrastructure constraints (Furue and Washida 2014 ; Govindarajan and Trimble, 2012a , b ; Judge et al. 2015 ; Zeschky et al. 2014 ), and cultural differences (Govindarajan and Trimble, 2012a , b ). Similarly, we define enablers as the factors that have contributed to the design and development of RIs. The current literature discusses enablers such as the internationalization of research and development (Govindarajan and Euchner 2012 ; Govindarajan and Trimble 2012b ), empowering local growth teams (Corsi and Di Minin 2014 ; Govindarajan and Euchner, 2012 ; Immelt et al. 2009 ), and building local partnerships and collaborations (Govindarajan and Ramamurti, 2011 ). In addition to the above triggers and enablers, MNCs face challenges in rolling out RIs effectively. We term these challenges as barriers of RI and define these barriers as factors that obstruct in the innovation process and lowers the possibility of creating RIs. The barriers discussed in the RI literature include factors such as centralized organizational structure (Wan et al. 2015 ), fear of cannibalization (Furue and Washida 2014 ; Immelt et al. 2009 ) and quality perception based on country of origin among developed market customers (von Zedtwitz et al. 2015 ).

The literature further reveals that RIs are discussed mostly with anecdotal evidence and with only a handful of examples of successful cases of RI. However, there exists unsuccessful RIs too. For example, the Leveraged Freedom Chair developed by GRIT (Global Research Innovation and Technology, headquartered in Cambridge) did not receive the expected traction in developed markets, though it was successful in emerging markets (Hadengue et al. 2017 ). Similarly, Fiat 147 from Fiat Brazil, was not a success in Europe. Likewise, Renault’s Logan, the high-end TV set-top box designed by ST Microelectronics, and five finger shoes designed by Vibram could not do well in developed markets (von Zedtwitz et al. 2015 ). Therefore, the question arises as to how the process of developing RI can be induced in multinational firms. What are the factors that contribute to the development of successful RI in any firm? What kind of unique outcomes can be derived from the successful diffusion of a given RI? What underlying conditions should be met for the successful diffusion of RI in the targeted market? Overall, the phenomenon of RI lacks conceptual clarity and hence, there is a need to build a conceptualization of RI as a construct, identify its dimensionality to develop a comprehensive understanding (von Zedtwitz et al. 2015 ). Also, in the literature, there exists no discussion about the antecedents of RI, its consequences nor is there any exploration of how external and contextual environmental factors would moderate the success of RIs. Therefore, this study first defines RI as a multidimensional construct and then provides a conceptual framework for RI explaining its antecedents, consequences, and moderators. Further, Table 2 briefly explains the critical literature and positions this study accordingly.

Qualitative study

We undertook a qualitative study with the dual objectives of (1) conceptualizing and defining RI as a construct along with the underlying dimensions of RI and (2) identifying the antecedents, outcomes, and moderators of RI. Given the limited state of knowledge around RI as to how to achieve these broad research objectives, we found a grounded theory approach suitable. A grounded theory approach is an established and well-accepted methodology for theory building when either the theory is not proposed for a phenomenon or when the theoretical questions remain unanswered (Corbin and Strauss 1990 ) but there are instances of usage in the practitioner literature (Martin 2007 ). In this method, qualitative research is used for inductive theory building which is often combined with insights drawn from the literature (Glaser and Strauss 1967 ) using two approaches: (1) the Eisenhardt method, which is based on case study observations (single case or few cases) including in-depth interviews of the concerned stakeholders, and (2) the Gioia method, which is an iterative thematic coding process (Gioia et al. 2013 ). In the current study, we follow both approaches subsequently.

Since there is a growing number of RIs coming out of emerging markets such as India and China, it was appropriate to examine the process of RI in this context. For this study, the in-depth interviews were conducted with all the relevant stakeholders including the top management and relevant executives of an MNC, i.e., General Electric (GE), with its research facilities in India and China, end-users both in emerging and developed markets, prominent academicians, and experts working in the domain of innovation and RI (Table 3 captures a brief profile of the interviewees). GE, widely known for developing multiple successful RIs, makes an appropriate case for this study because it not only pioneered the concept of RI but has also successfully demonstrated rolling out over 25 RIs in the last decade from its India and China research centers.

Six rounds of interviews with the relevant stakeholders were conducted over four years from 2014 to 2018 (please refer Table 3 ). The interviewees were selected based on the following parameters: (1) The GE officials who were involved in the design and development of RIs at GE India, such as baby warmers, ECG machines, PET CT scanners, and anaesthesia administration units; (2) the experts in the field with substantial knowledge and more than a decade of experience dealing in the RI context; and (3) academics who have studied this phenomenon in-depth and have published relevant articles and journal papers in the area of innovation; and (4) end-users, who have used the products or are still using and adopting new RIs, implementing them in their day-to-day operations. These in-depth interviews helped us understand the micro and macro aspects of RI from an institutional lens. Each interview lasted for 60–90 min and was recorded and then transcribed verbatim, and the transcripts of these interviews were then analyzed to understand the organizational perspective and the strategic intent towards the RI.

The interviews provided us with insights on the following critical issues: (1) how the product team absorbed and deployed past learning in the next phase of innovation; (2) the process of identifying the unique need of the given customer segment by the product development team; (3) why organizations want to delve into RI, and what is the strategic intent of the firm in initiating the RI process; (4) the technological hiccups and opportunities firms observe during the process once they decides to go ahead with RI; (5) how to comprehend the process from the firm’s perspective and differentiate RI from other innovations such as frugal and cost innovation; (6) how managers understand the process of carrying out RIs from inception to the commercialization stage, including the internal and external challenges faced by them during the process; (7) the shared experience of the interviewees in rolling out subsequent RIs one after another, indicating common factors across different innovations; (8) the importance of RIs from the perspective of business strategy; and (9) the end-users’ experience, indicating their motivations for using the product and the feedback on product performance. Collectively, the interviews were informative and provided us with enough evidence to validate the conceptual framework explaining the RI process holistically. Follow-up data collection was conducted in subsequent years through telephonic interviews, virtual meetings, and face-to-face meetings with GE officials, and was completed in January 2018.

Further, we carefully studied over 25 RIs as individual case studies; Appendix Table 5 provides a brief description of all RIs, their outcomes, and benefits in detail. This exercise significantly helped us to extract the antecedents, relevant moderators and outcomes for the proposed framework and also in conceptualizing RI as a construct. Triangulation of data between the literature, interviews, and marketplace evidence was conducted to ensure construct validity (Patton 1987 ).

Conceptualizing reverse innovations

In order to conceptualize and define RI as a construct, we followed the Gioia method to undertake the thematic content analysis, according to which the insights gathered from the triangulation study were thoroughly analyzed. Thematic content analysis is a “systematic coding and categorizing approach used for exploring large amounts of textual information unobtrusively to determine trends and patterns of words used, their frequency, their relationships, the structures and discourses of communication” (Vaismoradi et al. 2013 ). This approach helped us extract the attributes and dimensions defining RI.

Initially, for thematic analysis, a panel of six members, two professors, two practising experts, and two research assistants was formed, who then extracted the themes and categorized the data in the relevant dimensions for RI. They also identified the first-order and second-order factors (antecedents and outcomes) in the conceptual framework. Later, for reliability analysis, a panel of nine members was formed, comprising of three PhD students, four research assistants, and two faculty members. They independently examined the coded categories and were asked to report their degree of agreement on a 5-point ordinal scale. Inter-coder reliability was established using Fleiss Kappa, as our approach involved multiple panel members. The initial Fleiss Kappa value of 0.41 represents moderate agreement. However, after using the negotiated agreement method (Garrison et al. 2006 ), it was raised to 0.72, which indicates a substantial agreement.

The analysis procedures and findings were shared with academicians with expertise in qualitative research methods, in innovation linked with BOP or both. They reviewed the methods, interpretations, and findings, and provided suggestions and feedback. Incorporating their input further strengthened the results. In the final phase of analysis, for the purpose of content analysis and face validity, the extracted attributes, themes, and dimensions were further shared with two assessors with market expertise from the field of RI. Their feedback and suggestions were incorporated to further strengthen the propositions and enhance the face validity. Finally, in this process, three dimensions were recognized for conceptualizing RI, i.e., “clean-slate,” “super value,” and “technologically advanced.” Table 4 exhibits the coding of all of the relevant factors with their order categorization. Next, we discuss the RI dimensions.

Clean slate

RIs are clean slate in nature because they are mostly designed and created using a ground-up approach with a focus on identifying new solutions for the existing problems (Govindarajan and Trimble 2012a , b ; Leavy 2011 ). The attribute “clean slate” finds its roots in the value innovation theory that demands firms look beyond the lens of their existing assets and capabilities and start afresh (Kim and Maubourge 1997 ). For instance, the RI “embrace baby warmer” was designed as a blanket using a wax-like substance that can retain heat for a longer duration compared to a conventional photo-therapy bassinet, which was based on lighting technology to keep infants warm. RIs that exhibit clean slate thinking beyond the existing production platforms available to MNCs and which are designed from scratch are likely to achieve greater success in terms of adoption and diffusion (Borini et al. 2012 ; Leavy 2011 ). Clean slate also provides an opportunity to create a solution for unserved or underserved markets adopting entirely new technology or a new application of existing technology (Ali 1994 ; Lee and Na 1994 ). Such innovations being clean slate emerge as ideal solutions to emerging markets and may later appear as RIs (Govindarajan and Ramamurti, 2011 ; Leavy 2012).

Super value

Affordability has been the central theme of innovations originating from and targeted to emerging market customers (Angeli and Jaiswal 2015 ; Gupta 2019 ; Hammond et al. 2007 ; Hossain et al. 2016; Prahalad 2004 ). In the context of RI, the term super-value refers to disproportionate value creation, i.e., offering superior product benefits at a significantly lower cost. It is argued that customers in emerging markets require affordable solutions that are good enough to meet their basic needs (Bower and Christensen 1995 ). However, the above argument proves invalid in light of value innovation theory (Kim and Mauborgne 2005 ), suggesting that value innovations aim at creating a super value product focusing on reducing the cost without compromising the outcome performance aligned with the industry benchmark; rather, the idea is to further enhance the performance in the best cost scenario. For example, GE India’s $500 ECG machine offers a scan at less than 10 cents without compromising on the clinical efficacy that a $10,000 ECG machine would achieve at a much higher operating cost, and has been accepted favorably worldwide. RIs studied in the current study have showcased the super value phenomenon in multiple ways that include reducing the operating cost for users, offering superior features with improved functionality, and replacing the consumables/single-use components with reusable components that are of superior quality.

Technologically advanced

Most of the RIs adopt cutting-edge technologies to come up with novel products encompassing high performance at a low cost (Zeschky et al. 2014 ). RIs, initially designed with developing/emerging markets in mind, intend to provide solutions/products that are easy to use and require simpler operations skills. Such solutions are usually born out of ingenuity and backed up with progressive technology (Radjou et al. 2012 ). In this study, we observed that RIs encompass the application of a technology or an amalgamation of technologies that are radical and discontinuous (Dosi 1982 ). In the process, RI attains novelty, creating modular designs that are scalable, affordable, and technologically advanced. For example, the Discovery IQ PET/CT scanner has a modular design and is 40% cheaper, with increased efficiency in scanning technology, lower radioactive material exposure to the patient, and a reduced operating cost. Hence, RIs, unlike other cost innovations, are superior in the manifestation of advanced technology to come up with an innovative solution serving the needs of both emerging and developed markets.

The three dimensions discussed above jointly define and characterize the RI. Though there exist a few other emerging market-focused innovations that have similar characteristics, the presence of all of these underlying dimensions in unison constitutes an RI. Nonetheless, each element discussed above will have to be present in different proportions and degree of intensity across various product categories. In the following section based on this conceptualization, we attempt to define RI and present a conceptual framework along with research propositions.

Conceptual framework

RIs have the potential to make an impact in both emerging markets and developed markets. Identifying and understanding the determinants and factors that are important in creating RIs would help MNCs in crafting and realizing the full potential of RIs in all relevant markets. It would also interest policymakers to design conducive policy frameworks that would encourage RIs to benefit the customers in both emerging and developed markets. Hence, we propose an overarching conceptual framework of RI by extracting insights from the triangulation study (Fig.  1 ). The proposed framework identifies the antecedents, moderators and consequences of RI. Additionally, we advance several research propositions based on the relationships between the identified constructs. Given the paucity of literature around RI, we draw arguments for our propositions from the qualitative study as explained in the previous section.

Conceptual framework: Factors influencing RI and its outcomes

In the proposed framework, we first discuss the antecedents of RI, wherein the observed innovation routines are categorized as customer-related factors and firm-specific factors. Customer-related factors include understanding unique customer needs and defining customer problems scientifically . The firm-specific factors consist of local responsiveness (i.e., the firm’s ability to respond to the local requirements/problems in emerging markets) and technology bricolage (i.e., making use of the available technology) in order to provide a solution to the problem. The outcomes of RI were categorized based on the value RIs would generate for the firm as tangible and intangible outcomes. Tangible outcomes are comprised of global competitiveness and firm performance , whereas intangible outcomes reflect on knowledge capital and firm learning .

The proposed framework further discusses the moderating factors (boundary conditions) affecting the various proposed relationship paths. The moderators are categorized as feature enhancement , understanding the latent needs in developed markets , and geopolitical factors . For example, having an understanding of the latent needs of customers in developed markets would help MNCs in achieving the enhanced tangible and intangible outcomes. Next, we explain the proposed framework and propositions.

Antecedents to reverse innovation

Customer-related factors.

MNCs in emerging markets are losing their market share to domestic firms serving the low-income market segment (Angeli and Jaiswal 2015 ). The liability of foreignness Footnote 1 explains this disadvantage and institutional dualism Footnote 2 explains the root cause of the lack of customer centricity in emerging markets. Therefore, it is critical for the MNCs to comprehend the customer-related factors before carrying out the process of value innovations in the emerging markets. In the context of RI, the value innovation theory, which is driven by the knowledge-based view, may guide firms’ comprehension of the customer-related factors. Based on the tenet of value innovation theory, an innovation value may be significantly improved if it can address issues critical to the customers, thereby creating new markets for the innovation (Kim and Mauborgne 1999 ). This study proposes that understanding unique customer needs and defining customer problems scientifically in emerging markets will facilitate RI among MNCs.

Understanding unique customer needs refers to generating insights about the stated as well as unstated needs of emerging market customers in the context of their unique cultural, contextual, and cognitive environments along with their resource constraints. The knowledge-based logic in value innovation theory suggests that in order to create value, firms must match their offerings to the customers’ unique needs (Kim and Mauborgne 1999 ). MNCs address emerging market customer needs based on their similarities to developed market customers, assuming that the emerging markets will evolve similarly to developed markets (Govindarajan and Ramamurti 2011 ; Levitt 1993 ). Unlike developed markets, the emerging market customer needs are a function of constrained resources, lack of product knowledge, cognitive limitations, and socio-cultural barriers (Varadarajan and Jayachandran 1999 ). Therefore, understanding dissimilarities and unique customer needs in emerging markets is likely to promote lateral thinking and help firms to develop clean slate innovations that may become RIs serving the peculiar developed market customer segment. For example, the initial design of the low-cost ECG device launched by GE in India demanded higher skills to operate, whereas the end-user in the target segment required a user-friendly and an easy-to-operate device. One senior leader at GE stated:

When our engineers visited tier II and III towns, they learned that, the healthcare infrastructure in the segment was poor and trained manpower was the major constraint. Doctors and medical staff in these markets felt intimidated with our state of the art devices and expected equipment that were easy to operate. [ Respondent 1 ]

Leveraging this information, GE designed a user-centric, clean slate ECG machine with a simple one-touch operation that generated an easy-to-read report.

Understanding the unique needs of customer requires the ability to measure the unique value derived from the innovation as perceived by the customer, i.e., value-in-context and co-creation of that value by building trust (Raymond 1999 ). Value-in-context refers to understanding the customers’ needs in the context of their operating environment, i.e., their “setting of usage” (Von Hippel and Katz 2002 ). For example, it was reported during in-depth interviews that most of the scaled down versions of the high-end products failed, as they could not survive in the operating conditions of these markets. Similarly, building trust among the users is a pre-condition for receiving deep access in their environment. Highlighting the need for creating trust, one GE executive recalled:

In an attempt to conduct market research, the research team found that people were not willing to cooperate and the investigators were perceived as auditors and inspectors. To overcome this challenge, we collaborated with MART (a rural marketing research organization) which has deep access in rural markets. This allows us to build trust with the customers and therefore, we could successfully conduct research in more than 250 villages. [ Respondent 2 ]

In light of the above evidence, we propose that MNCs’ sincere efforts to understand unique customer needs will positively stimulate the process of creating innovations with greater acceptance in emerging markets (Dawar and Chattopadhyay 2002 ) and such innovations further can become prospective candidates for RIs.

Defining customer problems scientifically enables MNCs to address complex problems by considering the possible constraints in the environment of emerging markets and providing a solution by innovating a unique product. The essence of value innovation theory lies in creating value for the customer by adopting an inside-out problem-solving approach that enables firms to define problems by letting go of the existing methods and allowing space for fresh solutions (Barney 1986 ; Zhou et al. 2005 ). Therefore, defining customer problems scientifically facilitates discontinuous innovations that are clean slate and building a conducive case for RIs.

In the field interviews, it was reported that the starting point for all RIs is re-defining the customers’ problems using a “scientific approach” which was independent of the existing production platforms and had at least three underlying dimensions, i.e., the generic cause of the problem, contextual cause of the problem, and the customer’s cognitive perception about the problem. For example, while designing a ‘baby warmer’ to be a successful RI, the innovation team first comprehended the generic cause of jaundice, which was identified as inflated bilirubin. Second, the contextual issues around jaundice, i.e., the patient and his/her environment, were considered, and third, the cognitive understanding among the stakeholders around the occurrence of jaundice at the time of birth was taken into account. Referring to the need for scientifically defining the problem, one respondent recalled:

Jaundice is one of the major causes of infant mortality and is caused by inflated bilirubin. This can be cured with an exposure to light having a wavelength of 420 nano-meters. Hence, we started looking at the solution around the scientific explanation of the problem and not around our existing line of products. [ Respondent 3 ]

This understanding of the scientific cause and solution helped the product development team to explore and develop a light-based solution that could generate light waves in the specified range. Across over 25 innovations, the scientific approach of looking at the problem provided significant insights to GE’s Indian R&D centre to develop cost-effective, high-value solutions. Such solutions are not only technologically advanced and reliable but also offer easy-to-use functionality (Bessant et al. 2005 ; Winter and Govindarajan 2015 ). Understanding the customer’s unique needs and scientifically defining customer problems also helps firms to build adaptability and technological advancement in the RI to accommodate the need of customization if demanded by the customers in developed markets at the latter stages of the innovation adoption curve.

Firm-level factors

Firms vary in their ability to innovate, which can be attributed to several factors based on the dynamic capability theory, organizational agility theory, and bricolage theory (Damanpour 1991 ; Eisenhardt and Martin 2000 ; Hurley and Hult 1998 ; Teece et al. 1997 ; Teece et al. 2016 ; Winter 2003 ). Dynamic capability refers to the firm’s ability to “integrate, build and reconfigure internal and external competencies to address rapidly changing environment” (Teece et al. 1997 ). Similarly, the organizational agility refers to “capacity of an organization to efficiently and effectively redeploy/redirect its resources to value-creating and value protecting higher-yield activities as internal and external circumstances warrant” (Teece et al. 2016 ). Bricolage theory is primarily focused on the “construction or creation of work from a diverse range of things that are readily available, or a work created by mixed-media” (Senyard et al. 2014 ). The above-mentioned theories indicate that firms develop the capability to create high value by being responsive to the dynamic environment via efficiently deploying the available resources. Conforming to this discussion and based on grounded theory insights, this study proposes local responsiveness and technology bricolage as critical firm-level factors conducive to the process of creating RI in the MNCs.

Local responsiveness is the extent to which MNCs structure their emerging market subsidiary to respond to the local distinctions and specific needs arising from the emerging market’s external environment (Bartlett and Ghoshal 1989 ). The dynamic capability theory emphasizes “continuously adjusting, adapting and reconfiguring strategic directions in core business to match the requirements of the changing environment and create value” (O'Connor 2008 ). We identify that the firm’s local responsiveness can be reflected through component localization, promoting an “in-country-for-country” organizational structure, empowering local growth teams (LGTs), and building local partnerships.

Component localization refers to the ability of firms to use locally available resources efficiently. MNCs employ local resources mostly to gain a cost advantage; however, sometimes it is imposed by local legal and business regulations. In order to capitalize on the benefits of component localization, the firm needs innovative processes for efficiently selecting and integrating the locally procured components and resources (Martinez and Dacin 1999 ). Our interview insights suggest that component localization adds to the ability of MNCs to produce super value products by significantly reducing the operational cost. As one of the respondents recalled:

While sourcing components locally for MAC 400, we not only kept our product development costs significantly low but also generated deep knowledge about locally available resources equivalent to the USA quality standards at a lower cost. [ Respondent 7 ]

The organizational agility theory suggests that in order to capitalize on the available local market potential, the organization must develop a set of capabilities including realignment of the organizational structure (Dove 2001 ; Lu and Ramamurthy 2011 ) and its resources (Rugman and Hodgetts 2001 ; Subramaniam and Venkatraman 2001 ; Teece and Pisano 1994 ). The in-country-for-country attribute of local responsiveness refers to having an independent matrix organizational structure for emerging market operations, which is treated as an independent strategic business unit with its own profit and loss (P&L) account with its own separate growth strategy. One respondent during our interviews commented:

“In India for India” strategy allowed taking decisions about what projects to undertake, what resources to invest. This not only fast tracked the overall process of innovation but also permitted us to decide locally on providing adequate financial support for funding innovations. [ Respondent 5 ]

Emerging markets are often complex and characterized by a high level of heterogeneity (Angeli and Jaiswal 2016 ) and an in-country-for-country structure would grant a greater degree of autonomy to the firms, enabling them to respond locally (Luo et al.  2011 ). This also helps firms to create super-value, clean slate solutions targeted to the local marketplace. Further, to achieve local responsiveness, firms are required to empower LGTs. During our interviews, one respondent mentioned:

The innovation success was an outcome of shifting the power to the local growth teams in which the focus was to integrate technological R&D with a deeper understanding of local knowledge and issues. Localization helped us in technology transformation keeping the developmental cost and time significantly low. The new ECG device was developed within a short span of 22 months and with a development cost as low as $500,000. [ Respondent 1 ]

By empowering LGTs, there is a higher probability that the firm develops clean slate solutions with the help of LGT’s deep understanding of the context along with the firm’s accessibility to the technological prowess available at the global level (Ambos et al. 2010 ; Govindarajan and Ramamurti 2011 ). To be locally responsive, MNCs are required to build critical local partnerships to achieve technological diversity and lateral thinking necessary to innovate super-value, technologically advanced product that is clean slate in nature (Almeida and Kogut 1997 ).

Technology bricolage is defined as “making things do by applying combinations of the resources at hand to new problems and opportunities” (Baker and Nelson 2005 ). Though bricolage theory is discussed in the context of small firms, recently it is suggested that adopting bricolage holds equal significance for MNCs operating in emerging markets. It facilitates super-value innovations by creatively improvising upon the scarce resources and/or whatever else is at hand (Baker and Nelson 2005 ; Ernst et al. 2015 ; Garud and Karnøe 2003 ; Halme et al. 2012 ). Systematically extracting insights from the extant literature, we propose two strategic dimensions to bricolage: resource bricolage and component bricolage (Baker and Nelson 2005 ). In resource bricolage, the firm starts with mobilizing the resources it is closely familiar with and integrating them to overcome internal resource constraints (Baker et al. 2003 ; Ferneley and Bell 2006 ). During the interviews, a senior leadership official mentioned:

We start any new project now by looking at our global portfolio and charitably borrow resources from our other divisions and businesses. For example, when we started working on our phototherapy equipment, we approached our lighting business and requested them to develop a LED-based solution for the new product. [ Respondent 3 ]

Component bricolage is “creating a new application by using off-shelf components originally designed for other products” (Baker et al. 2003 ). It was reported during interviews that developing indigenous technology for all functionalities is not always a priority of product development teams. Rather, they first consider the available off-shelf technologies (i.e., existing technology) that could readily be used in the product development process. Since the broad architecture of the product is pre-defined and the interfaces of off-shelf are standardized, leveraging existing technologies brings in high synergies and cost advantages (Vanhaverbeke et al. 2002 ).

Leveraging technologies from multiple sources has received limited attention in the innovation literature (Howells et al. 2003 ; Tsai and Wang 2009 ). However, in the RI context, both resource and component bricolage is adopted extensively compared to any other mainstream innovations. In the mainstream innovation process, firms refrain from adopting open-source technologies subjected to the associated risk, whereas in RI, since the core technology remains with the organization, the cost and time advantage makes the risk relatively unimportant.

Innovations that are conceptualized and executed to satisfy unmet needs are more successful than innovations that are merely an extension of existing technologies and incremental in nature (Crawford 1987 ; Ortt and Schoormans 1993 ; Zirger and Maidique 1990 ). In this study, the firm-related factors, i.e., local responsiveness and technology bricolage facilitate the innovation process more than just the extension of existing technologies and adopting local practices, and therefore help convert the customer insights into an innovative product. Through marketplace evidence, it is evident that the success of RI largely depends upon the quality and accuracy of customer insights. MNCs often look at the customer insights from the lens of their world-wide learning and global efficiency, thereby failing to make successful inroads lacking the understanding of the unique needs of customers in emerging markets (London and Hart 2004 ). In the context of RI, it becomes even more important for MNCs to concentrate heavily on comprehending the unique needs of emerging market customers and further define them scientifically, independent of existing solutions (Judge et al. 2015 ; London and Hart 2004 ). Unless the needs are understood holistically, firms cannot initiate the process of RI to accomplish the requirements of both markets i.e. emerging and developed. Hence, we conclude that a better understanding of the customer-related factors will have a higher positive influence on the creation of RIs compared to the firm-related factors. Therefore,

The customer-related factors will have a higher impact on the development of RI compared to firm-related factors.

Outcomes of reverse innovation

The theories of the firm suggest that firms adopt business strategies such as globalization with the ultimate aim of attaining sustainable growth along with building innovation capabilities and organizational learning (Anderson 1982 ; Knight and Cavusgil 2004 ). However, the globalization strategy falls short in delivering the above goal and hence, RI has been proposed as a new firm strategy to deliver sustainable growth at a global level with positive outcomes both tangible and intangible (Govindarajan and Trimble 2012a , b ). We identify global competitiveness and firm performance as tangible outcomes and knowledge capital and firm learnings as intangible outcomes of RI.

Tangible outcomes

Global competitiveness at the firm level is defined as “the ability of the firm to design, produce, and/or market products superior to those by competitors” (D'Cruz 1992 ). Though the business firms in the environment of dynamic customer expectations acknowledge the importance of innovations across global markets, it is critical for the MNCs to focus on innovations that create superior value for the customers and help firms attain a long-term competitive advantage (Kim and Mauborgne 2005 ). The marketplace evidence considered in this study exhibits the ability of RIs to create a competitive advantage not only in emerging markets but also in developed markets. Carefully designed RIs open up new opportunities of growth as they facilitate MNCs to tap into new emerging markets and meet the requirements of resource-constrained customers, test the product concept, and later introduce them into developed markets (Zeschky et al. 2014 ). The developed market customers are looking for RIs since these markets have a growing segment of customers similar to the emerging market in terms of their affordability constraints. For example, Obamacare covers a significant section of the American population who cannot afford high-end treatment, and low-cost devices such as Discovery IQ can significantly bring down the cost of cancer treatment in the USA. Also, the micro-credit concept in the banking service industry has achieved a significant foothold in developed markets (Govindarajan and Trimble 2012b ). Therefore, RIs with their inherent super-value and technologically advanced attributes provide MNCs with a competitive edge in the global marketplace.

Firm performance is defined as achievement of the stated business goals measured in terms of profitability, market share, and shareholder value (Hult et al. 2004 ). The positive impact of innovation on firm performance has been documented unequivocally in the literature and is principally intended to deliver superior firm performance (Damanpour 1991 ; Hult et al. 2004 ). RIs are aimed at addressing unique customer needs, serving new markets segments, and positioning products differently with an objective to boost sales helping firms to attain greater market share. Besides market share, by embracing the principles of RI, firms also develop dynamic capabilities that boost firm performance by restructuring the firm’s resources, operational routines, and innovation competencies which deliver tangible benefits in terms of better economic performance (Helfat and Raubitschek 2000 ). Therefore, RIs positively influence firm performance by helping firms deal with the complexities and uncertainties of the business environment to accomplish business goals effectively.

Intangible outcomes

Intangible resources are becoming increasingly important with a global shift towards the knowledge economy, and firms are increasingly competing for knowledge and information (Subramaniam and Venkatraman 2001 ). The ability to seize and harness knowledge locally and the ability to transfer and deploy this knowledge are jointly becoming an important source of sustainable growth. RIs are capable of delivering intangible outcomes and can help MNCs gain a steep learning curve adding to the knowledge capital that may help firms to build superior product development capabilities using customer insights. This knowledge capital would help firms respond to the fast-changing business environment and foster synergies between various functions/departments/units within the firm. Additionally, creating RI over a period of time delivers enhanced firm learnings and helps firms to improve in their actions through a better understanding of new insights, need for new structures in organizations, creation of new systems and processes, and new actions points (Fiol and Lyles 1985 ). From interview insights, it is evident that RIs significantly affect the productivity of the firms by contributing to the process of developing new product development capabilities, attaining cross-functional integrations, and leveraging existing technologies in creating super-value products. It also enhances the firm’s capabilities to understand the latent and stated needs of the customers and the local environment. For instance, one of the interviewees mentioned:

There have been certain learning along the way while practising RIs, for an instance our initial ECG product was targeted at physician and small clinics, but we realized that we have not yet reached to the majority of the market. There are 700,000 doctors in India but there is no exhaustive list of these doctors with their details, no common magazine gets published which these doctors could read, no sales organization had the extensive data to call to these 700,000 doctors. So how do we apprise them about the innovative ECG machine they should consider in their day-to-day medical practices, how do we sell our innovation to them? How do we connect with them? How do we provide them product training to help them understand the innovation better? [ Respondent 1 ]

In the process of exploring the answers to all of these questions, the learnings become manifested in terms of building the knowledge capital for the firm and increases the overall firm learnings on multiple aspects such as a better marketplace understanding, go-to-market strategy, post-sales service strategy, building local distribution networks, and strengths of local suppliers. By creating over 25 RIs, GE has continuously demonstrated the manifestation of these learnings extending from one innovation to other innovations.

Although RIs have the potential to deliver both tangible and intangible firm-related outcomes, the fact is that while developing RIs the primary aim of the firms is to achieve the tangible outcome in the form of global competitiveness and increased firm performance. However, tangible outcomes are delivered by exhibiting operational excellence at all levels in a firm to bring about synergies both in upstream and downstream activities that lead to the realization of intangible benefits of RI such as building knowledge capital along with enhanced firm learnings. With enhanced global competitiveness, firms are likely to sell a higher number of innovation units and, as a result, gain a higher market share relative to other competitors. This ultimately provides firms with a positive learning curve with their experience with the new product. In the future, these intangible outcomes will pull in more tangible benefits. However, in the first place, the selling of the product in the targeted space is critical to facilitate these two-way interactions between the tangible and intangible outcome of RI.

The successful diffusion of RI would bring higher tangible outcomes as compared to intangible ones.

Moderating variables

Employing the triangulation approach and grounded theory, we identify and categorize moderators as follows: feature enhancement (moderator between antecedents and RI); and ‘geopolitical factors’ and ‘understanding latent needs’(moderators between RI and its outcomes).

Feature enhancement is defined as incorporating extra components and features in the primary model of the innovation that can offer additional benefits to the customers beyond the core offering of the product. RI initially offers a value innovation bundled with a set of core features and performance indices to the customers of emerging markets and then tries to make its way to developed markets in order to realize that value innovation as a RI. However, developed market customers demand for customization and use of sophisticated technology in the given value innovation (Corsi and Di Minin 2014 ; Hart 1995 ; Zeschky et al. 2014 ). Firms are required to identify and understand the need for feature enhancement prevailing in the developed market segments and incorporate the innovative design to bring about better functionality and enhance the perceived value of the given RIs. Enhancing the product features also strengthens the underlying dimensions of RI, i.e., super-value and technology advancement (Corsi and Di Minin 2014 ; Zeschky et al. 2014 ). Emphasizing on the need for feature enhancement one respondent recalled:

After launching RI- MAC 400, a super-value ECG device in India and China, we realized the potential in the product if launched in developed markets. However, given the developed market users are tech-savvy and use computers extensively we added features like USB and Ethernet port in MAC 400 to provide computer connectivity. The modified version was rebranded as MAC 800 in developed markets. With the added features, it achieved a high degree of acceptance and appreciation in these markets. [ Respondent 6 ]

Additionally, RIs make use of technology bricolage since it can enhance the value of innovations by using off-shelf technologies. Furthermore, a comprehensive understanding of the need for feature enhancement in developed markets can boost the process of RI by using technology bricolage effectively. It significantly enhances the value of innovation by keeping the design and product development time unchanged (Drucker 1985 ; Schumpeter and Backhaus 2003 ). For example, John Deere modified its tractor, initially designed for the Indian market, by adding more power, sophisticated features such as GPS, and an air-conditioned cabin targeted to the developed market users. With these enhanced features, the tractors proved successful in the USA. In the year 2010, almost 50% of tractors manufactured by John Deere India were sold in developed markets (Govindarajan and Euchner 2012 ).

Feature enhancement as discussed above is expected to influence the relationship between both understanding unique customer needs and RI as well as technology bricolage and RI. However, it is likely to have a higher impact on the former relationship for the following reasons. First, the primary aim of feature enhancement is to enable firms to serve to the unique needs of developed market customers such as technological compatibility and need for sophistication (Judge et al. 2015 ), therefore a thorough understanding of the unique needs of emerging market customer along with feature enhancement required by developed market customers would enhance the feasibility of RI. Second, indirectly, feature enhancement contributes to technology bricolage by engineering additional functional requirement employing existing technologies and components (Judge et al. 2015 ). Third, in the process of feature enhancement, super-value and technologically advanced dimensions of RI are strengthened (Corsi and Di Minin 2014 ; Judge et al. 2015 ) which may further enhance the diffusion and adoption of RI in the developed markets. Therefore, unless the firm precisely comprehends the additional features that are valued by developed market customers, technology bricolage would not be able to bring in the desired product up-gradation. Hence, we propose that.

Feature enhancement is expected to have a greater influence on the relationship between understanding unique customer needs and RI compared to technology bricolage and RI.

Understanding latent needs in developed markets refers to the unidentified and/or unaddressed needs existing among the diverse customer segments in the developed market context (Narver et al. 2004 ). Latent needs are manifested as new market segment identification and new product applications . The existence of latent needs provides an opportunity to the firms by placing their innovations in these heterogeneous customer segments by offering the multiple applications of the given RI. This allows firms to position the innovative products in the varied segments serving to the different needs and further facilitate the diffusion of RI in the developed markets, bringing about a higher value outcome. Innovations that target latent needs have the potential to change the structure of the marketplace by addressing the unstated needs or by satisfying the existing needs with a significantly different approach (Judge et al. 2015 ). Since the choice to introduce RIs by MNCs in their home or other developed markets is driven by the goal of attaining significant growth, the ability to identify latent needs in these markets is likely to boost the global competitiveness. One of the respondents recalled:

With a market share of 35% (approximately) in the USA ultrasound market, we were sceptical of cannibalizing our own high-end ECG machine market when we planned to launch the low-cost MAC 800 in the USA market. However, we realized that there is a huge opportunity in terms of addressing latent needs. For instance, MAC 800 opened up completely new market opportunities for us such as serving to primary care doctors, rural clinics, emergency rooms, ambulances, and accident sites. [ Respondent 4 ]

In another case, Ingersoll Rand (India) Ltd., innovated a battery-operated refrigeration unit for small-sized vehicles in emerging markets (especially for small size trucks and vans in India). Such vehicles have small engines and hence cannot support engine-powered refrigeration unit. Later Ingersoll Rand successfully reverse innovated this product to developed markets where the RI was adopted by restaurant owners and small catering firms. Since the refrigeration unit was easy to install and did not require engine power, these customers installed the unit in their delivery vehicles to keep the food fresh for small deliveries. Therefore, identifying the latent need for their innovation not only helped Ingersoll Rand to gain a competitive advantage but also improved their profitability. Similarly, identifying the newer applications of the given RI is likely to produce enhanced tangible and intangible outcomes. For example, the primary application of any baby warmer is in neonatal intensive care units (NICU) in hospitals to incubate premature babies. However, GE positioned one of its RIs, the ‘Lullaby Warmer,’ in US hospitals as an additional facility within the mothers’ private rooms. The size of the equipment and ease of use created this new application for the Lullaby Warmer, thereby unlocking the substantial demand for such baby warmers in the USA market and providing a significant competitive edge.

Though understanding the latent needs in developed markets will have an influence on both RI outcomes, it is expected to have higher influence over tangible outcomes compared to intangible outcomes for the following few reasons. First, a better understanding of the latent needs in the target market would enhance the diffusion of RIs by creating new markets, helping the firms to increase their profitability, extend the product life cycle of RIs, and reduce the negative consequences of RI, i.e., cannibalization of incumbent products of high-margin firms. Second, while serving the new set of customers (either by exploring a new segment or by developing a new application of the innovation) will offer better customer understanding contributing to the firm’s knowledge capital and learnings which ultimately equip a firm to receive better competitive advantage and firm performance at a global level. Therefore, we propose:

Understanding the latent needs in developed markets will have a higher impact on tangible outcomes of RI than on intangible outcomes.

The diffusion of innovations across nations is a complex phenomenon, which is closely regulated by various geopolitical factors (Fichman and Kemerer 1999 ; Harris et al. 2016 ). In the context of international business, geopolitical factors can be defined as the existence of formal and informal rules and regulations in global trade such as regional treaties, trade barriers and lobbying. Since RIs are seen in the context of international business where the firms attempt to introduce their emerging market-focused innovations to the developed markets, the geopolitical factors play a major role in the process (Foxon and Pearson 2008 ; Harris et al. 2016 ). With the potentially disruptive effect of RIs in the global marketplace, MNCs have raised various concerns regarding such geopolitical factors resulting from the change in political leadership and increased instances of protectionism and trade barriers (Rowthorn 2016 ). One respondent shared:

In one of the developed market, we carefully use the term reverse innovation, as the current political leadership is not in favor to the innovations coming from emerging markets even if it originates from our own subsidiary situated in emerging markets. [ Respondent 9 ]

Similarly, lobbying by local manufacturers in defence of their home markets is also reported to impact the diffusion of RIs in developed markets (Corsi and von Zedtwitz 2016 ). Therefore, firms with the ability to manage geopolitical factors are likely to enhance their competitiveness by successfully rolling out RIs in the global marketplace.

Since geopolitical factors are macro and often dynamic, dealing with these factors develops the upstream and downstream capabilities of the given firm, and in the process enhances the overall knowledge capital of the firm (Gupta and Govindarajan 1991 ). For example, GE circumvented the imposed trade barriers by manufacturing one of its products in their home country. Though the product ideation, designing, and prototyping occurred in the emerging market, the product was manufactured in the home market and later was imported to the targeted emerging markets. Therefore, firms that can effectively manage the geopolitical factors in the global business environment are expected to leverage their tangible (i.e., firm performance and global competitiveness) and intangible outcome (i.e., firm learning and knowledge capital).

Though geopolitical factors are expected to have its influence on both tangible and intangible outcomes, it is likely to have a greater influence over the tangible outcome of RI. We identify the following reasons for our proposed recommendation. First, geopolitical factors directly affect the ability of a firm to do business in international markets. For example, tariff war between the nations restrict multinational firms to do business in a particular geographic region limiting their profitability (Foxon and Pearson 2008 ) which is likely to affect firm’s overall performance in the global context. However, firms that can mitigate these barriers by exploring solutions such as benefitting from free trade zones can explore opportunities in markets beyond geographical boundaries and ensure better margins. Second, geopolitical factors directly affect the international business decisions such as selection of manufacturing plant location, setting up the R&D centers and recruitments of employee. These decisions are critical in any business as it directly affects the bottom-line of the business, therefore, influence the tangible outcomes of the firm (Rowthorn 2016 ). Hence, we propose:

Geopolitical factors will have a greater influence over the tangible outcomes of RI compared to the intangible outcomes.

Implications of the study

Following the grounded theory approach and triangulating the literature, interviews, and marketplace evidence, this study suggests that various customer-related and firm-related factors constitute antecedents that may foster RI in any given firm. In particular, understanding unique customer needs, defining customer problems scientifically, local responsiveness, and technology bricolage appear to support and enable RIs. Further, factors such as feature enhancement, understanding the latent needs in developed market and geopolitical factors provide important boundary conditions for implementing RIs successfully and leveraging the potential outcomes of RI. Additionally, this study for the first time provides a comprehensive conceptualization of RI and defines it as a multidimensional construct, contributing to the literature as well to the practice by comprehending RI compared to other available emerging market-based innovation typologies.

This study recommends that it is important for MNCs to revisit their globalization goal by embracing RI as a strategy to achieve sustainable growth. This study proposes that RIs can be adopted as a well-thought-of strategy for attaining sustainable growth and achieving a competitive advantage, especially in the emerging marketplace. Also, rolling out such innovations back to their home country can be seen as a great opportunity in achieving a global competitive advantage and serving the untapped market segment in the developed markets by creating value both in upstream and downstream activities. However, for two reasons it is critical for MNCs to pay attention and comprehend the emerging markets holistically in the RI context.

First, the emerging markets such as India and other BRIC and VISTA countries have emerged as significant markets in their own right, not only due to their sizeable customer bases but also because of the constant rise in the average family income, resulting in the vast demand for products and services. The scaled-down versions of products from the developed world often do not find customer acceptance in these markets. Therefore, it is significant that MNCs produce the offerings aligned with the requirements of the customers in such markets. The accrued benefits are apparent in terms of generating huge top-line volumes in BoP markets (Prahalad 2004 ) as well as the possibility of increasing the bottom-line margins by selling these innovations in developed markets. Mastering the art of RI, therefore, will add up to the capabilities of the organization to succeed both in the emerging and developed markets, which will play a crucial role in surviving global competition (Knight and Cavusgil 2004 ).

The second reason is the major shift in innovation trends globally. A continuous increase in the contribution of innovations from emerging markets to the global portfolio of innovations is reported in the recent literature (Borini et al. 2012 ; Hart and Christensen 2002 ; Wan et al. 2015 ; Zedtwitz et al. 2015). Therefore, MNCs seeking growth by adopting RI startegy need to revisit their parent–subsidiary relationships. This entails restructuring the organizational matrix and the strategic orientation of R&D function housed at their emerging market subsidiaries (Borini et al. 2012 ) in the light of antecedents and moderators proposed in our conceptual framework. Similarly, domestic firms from emerging markets are also opening up their markets and are becoming competitive globally, and the context in which these companies are globalizing is in stark contrast to the initial phases of globalization (Govindarajan and Trimble, 2012a , b ). The segment of marginalized customers in developed markets has grown substantially in the aftermath of the global recession and subprime crisis. This has resulted in a steep decline in the real income of the working population in developed countries, and it is expected that the downward trend in wages is likely to continue (Wan et al. 2015 ). With a constant decline in wage and employment levels, demand for super-value products in developed markets has shown a significant rise, making RI consequential. Therefore, it is important for MNCs operating in emerging markets not only to guard their existing market share and preempt disruption from the emerging market giants but also to grow their market size by addressing the latent needs of this segment in the developed markets with the help of innovations frugally designed in emerging markets.

A successful response to the above situation requires both a shift in the mindset and reorientation of approach towards innovations. Defining problems scientifically will not only enable the understanding of cognitive and contextual issues through indigenous problem solving but will also bring about a leap in the price–performance ratio and deliver higher-value propositions essential for unlocking mass markets in the emerging markets (Wan et al. 2015 ). Adopting a bricolage approach reduces both the time and cost of innovation. At the same time, the firm’s comprehending the unique customer needs and local responsiveness can deliver innovations congruent with the underlying expectations of the given market customers. This process ensures the scalability and brings in a high degree of customization which is beneficial in addressing the needs of both emerging and developed markets. For example, having a provision of adding sophisticated features in the given innovation (occurring in the emerging market) opens up enormous opportunities for reversal of innovation to the mainstream markets in the developed world. The marketplace evidence strongly suggests that the discussed antecedents and moderators such as feature enhancement are critical for implementing RI once the pre-conditions (Govindarajan and Trimble, 2012a , b ) of RIs are in place. It is equally important for the organizations to understand and adopt these antecedents because conventionally the innovation process predominantly focuses on technological or functional improvement with a focus on cost competitiveness.

The propositions advanced in this paper aim to identify the underlying factors that have the potential to create RIs. With the perspectives offered in this paper, firms can plan to design innovations that can reverse the flow from emerging to developed markets. The overarching framework we provide in this study may guide the firms to understand the systematic flow of processes to accomplish RI and its valuable outcomes. From our framework, it is clear that RIs are not accidental but can be carefully planned and strategically created by an organization with a focus on antecedent variables such as identifying the unique customer needs carefully and then develop a product employing a scientific problem-solving approach. The proposed framework further suggests the critical outcome of RI in the form of achieving enhanced global competitiveness, increased firm performance, and sharp elevation in the firms’ knowledge capital and learning. If a firm is able to manage the understanding of the latent needs in developed markets and geopolitical issues in its favour, then it can favourably provide a competitive edge in a global marketplace and enhance the firm’s performance.

Limitations and future research directions

This study attempts to consolidate the existing fragmentary knowledge on RI and defines RI as a multi-dimensional construct, explores antecedents, outcomes, and moderators of RI by proposing an overarching conceptual framework, but it does not empirically test it. In the future, scholars may attempt to develop a multi-dimensional scale for measuring the underlying dimensions of RI and can empirically validate and test the model. This type of measure, if developed, will be useful for the industry to gauge and anticipate the possibility of reversing the innovations, and MNCs may use the RI scale to gauge RI development from its initial stage of development. In future, research studies may also extend the proposed framework by identifying additional boundary conditions that may moderate the consequences of RI strategy.

In this study, the authors make theoretical contributions and argue multiple propositions between the constructs based on insights drawn from the triangulation approach. Future studies can verify the propositions by collecting empirical data from the firms involved in RIs across emerging markets and check the validity and generalizability of the framework. In the future, investigations can compare the performance of RI across various product categories and also compare RIs coming out of subsidiaries of MNCs versus emerging market firms. An empirical investigation comparing MNC versus domestic firm capabilities should provide interesting insights.

This study has been restricted in terms of sample size as it uses RI cases from a single organization, although the findings do suggest that these may apply in other contexts as well. However, it would be interesting to extend the concept of RI to other sectors. A study can also be conceptualized to compare and contrast RI from different emerging markets and the role of the market versus non-market factors in the success of RIs can be explored.

Liability of foreignness refers to social and economic costs that MNCs face when they operate in a foreign market.

MNC subsidiaries operating in emerging market are required to conform to the headquarter policies and practices in addition to the need to respond to external environment challenges in markets they operate.

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Acknowledgements

The authors would like to thank the special issue guest editors, Professors V. Kumar and Raj Srivastava and the anonymous reviewers for their continuous guidance, support and constructive feedback. The authors thank Bharat Rajan for providing valuable feedback in the process of the preparation of this manuscript. The authors are thankful to Prof. Shailendra Raj Mehta and Prof. Preeti Shroff for their encouragement and motivation during the development of this manuscript. The first and the third author thanks IIMA for providing support to conduct interviews with the executives of GE on the topic of Reverse Innovation and write two case studies. Authors thank MICA for providing the necessary research support to subsequently develop this research paper on Reverse Innovation. In addition, authors express our gratitude to the participants at the Thought Leaders Conference on Managing Business and Innovation in Emerging Markets, held at the Indian School of Business (ISB) Hyderabad, India from April 26-28, 2018, for their valuable feedback on this article.

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Malodia, S., Gupta, S. & Jaiswal, A.K. Reverse innovation: a conceptual framework. J. of the Acad. Mark. Sci. 48 , 1009–1029 (2020). https://doi.org/10.1007/s11747-019-00703-4

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DOI : https://doi.org/10.1007/s11747-019-00703-4

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Reverse Innovation in Tech Startups: The Story of Capillary Technologies

• Vijay Govindarajan and Sachin Deshpande

We’re witnessing a global shift of technology “trickling up” from emerging nations.

At its core, reverse innovation describes solutions adopted first in poorer, emerging nations that subsequently—and disruptively—find a market in richer, developed nations. But can reverse innovation be relevant in the world of high-technology? The very definition of “high-technology” hints at something typically reserved for the developed world. Furthermore, for the past half-century, technology solutions have inevitably come from developed nations and occasionally “trickled down” to the emerging markets.

• VG Vijay Govindarajan is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business at Dartmouth. He is coauthor of Reverse Innovation (HBR Press, 2012). Sachin Deshpande is Director of Business Development at Qualcomm Ventures, an investor in Capillary Technologies.

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Implications of reverse innovation for socio-economic sustainability: a case study of philips china.

1. Introduction

2. literature review, 3. data and methods, 3.1. research design, 3.2. case selection, 3.3. data collection and analysis, 3.4. assessing implications of sustainability, 4.1. automotive air purifiers (gopure), 4.2. noodle maker/pasta maker, 4.3. philips ultrasound machine elastpq, 5. discussion, 5.1. organizing reverse innovation, 5.2. managing sustainability.

• Goal 3: Ensure healthy lives and promote well-being for all at all ages;
• Goal 7: Ensure access to affordable, reliable, sustainable, and modern energy for all;
• Goal 12: Ensure a sustainable consumption and production pattern.

5.2.1. Ecological Sustainability

5.2.2. economic sustainability, 5.2.3. social sustainability, 6. conclusions, 6.1. implications of reverse innovation as a viable strategy for mncs in emerging markets, 6.2. implications of reverse innovation for the economy of china, 7. limitations, acknowledgments, author contributions, conflicts of interest, appendix 1. data.

Appendix 2. Sustainability Evaluation

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Shan, J.; Khan, M.A. Implications of Reverse Innovation for Socio-Economic Sustainability: A Case Study of Philips China. Sustainability 2016 , 8 , 530. https://doi.org/10.3390/su8060530

Shan J, Khan MA. Implications of Reverse Innovation for Socio-Economic Sustainability: A Case Study of Philips China. Sustainability . 2016; 8(6):530. https://doi.org/10.3390/su8060530

Shan, Juan, and Miqdad Ali Khan. 2016. "Implications of Reverse Innovation for Socio-Economic Sustainability: A Case Study of Philips China" Sustainability 8, no. 6: 530. https://doi.org/10.3390/su8060530

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‘Reverse Innovation’: GE Makes India a Lab for Global Markets

May 20, 2010 • 11 min read.

GE Healthcare is taking steps to make its India operations a center for "reverse innovation" -- in which cutting-edge products are first used in the developing world before spreading to more industrialized nations. At GE's John F. Welch Technology Centre in Bangalore, it has 1,100 engineers currently working on six medical equipment technology products; the goal is to cover each of its 30 categories in the next three years. While India's huge domestic market may justify the investment, GE Healthcare will face challenges in the distribution and servicing of its products, experts say.

• Health Care Management

During a recent visit to India, John Dineen, president and CEO of GE Healthcare, presented a dual-slice computed tomography imaging system called HiSpeed Dual, which he described as a “giant leap.” It was the first CT system that the health care arm of U.S. conglomerate General Electric had made in India, and the first high-end CT imaging system that anyone had made in the country. “Our dream is to make more such systems in India for Indian customers,” Dineen said.

GE Healthcare had previously imported the system for Indian customers. By manufacturing it in Bangalore, GE Healthcare can cut the price by 10%, reduce an 8- to 10-week waiting period, and boost sales. But this isn’t about increasing market share, Dineen says. “It is about creating new markets. Over time, this product will morph and get more specialized for the unique needs and characteristics of this market. The innovations from here could lead to an entirely new line of products which in turn could create whole new market opportunities for us.”

Dineen’s thinking encapsulates a strategy for all of GE’s businesses in India. GE Healthcare started selling its products in India in the 1960s. In 1990, the company created a joint venture with Azim Premji’s Wipro Group and, over the next few years, set up manufacturing plants in India. GE Healthcare began offering its feature-rich and high-priced CT, magnetic resonance imaging, X-ray, ultrasound and patient-monitoring systems to Indian customers. It tried to reduce cost by removing features, and it made some products locally. Now, however, the focus has turned to products made specifically for Indian customers.

Ashish Shah moved from the United States in 2006 to head GE’s technology organization in India as general manager, global technology. “Our engineering and marketing teams now interact closely with the customers here to understand their requirements,” says Shah, a 13-year GE veteran. “We look at their work flow, their environmental limitations, their profitability issues and other factors and we then price, design and manufacture the products accordingly.”

Despite GE’s long presence here, India accounts for less than 2% of GE Healthcare’s US$17 billion in revenue, which some say is well below its potential given India’s population and health care needs. This mattered less while business in the United States and Europe, which account for the bulk of GE Healthcare’s revenue, was going strong. But growth there has slowed recently, while India has been on the upswing. So GE leadership sought to maximize India’s potential. “We realized that the biggest impediment was that we were selling what we were making [rather than] making what the customers here needed,” says V. Raja, president and CEO of GE Healthcare-South Asia. “It was clear that if we had to grow here we had to shift gears and align our products to the needs of the customers.”

India’s importance to GE is magnified because three of the country’s key health care industry needs — accessibility, quality and low cost — are similarly important in other emerging markets. Officials believe that success in India can translate elsewhere — even to the United States, where the health care issue predominates.

Vijay Govindarajan, professor of international business at the Tuck School of Business at Dartmouth College, who spent the last two years as a GE professor in residence and chief innovation consultant, calls the company’s strategy “reverse innovation “ . “Historically, innovations have always happened in rich countries,” he points out, “But in the future, innovations will have to take place in countries like India and China, because this is where the bulk of the customers are. The needs are more pressing here and the sheer volumes will justify the investments that will be required for developing the appropriate products.”

GE has made significant investment in its infrastructure in India over the last two years. The engineers in its healthcare business who had been scattered across the country are now housed in a new facility within the 50-acre John F. Welch Technology Centre in Bangalore, one of GE’s largest integrated multidisciplinary research and development centers. The 50,000 square feet devoted to the technology team is one of GE Healthcare’s biggest laboratories, and the only one that houses all GE Healthcare products. It’s not a sales and marketing demo room, Shah emphasizes: “It is an engineering lab for our engineers to work hands-on.”

In the last four years, Shah’s team has grown from 600 workers to 1,100, making it GE Healthcare’s second-largest pool of engineers. Shah expects that within two years it could overtake the 1,500-person team based in Milwaukee, GE’s largest in the health care division. More importantly, he says, his engineers have steadily moved from doing product piece work to developing their own technology. Shah expects the number of his engineers working on products for Indian customers to increase from 10% to 25% in the next three years. “Currently, six India products are in the project stage. Our target is that over the next three years we will come out with an India product in each of our [more than 30] product categories.”

A New Organizational Focus

GE has prepared for this India focus with organizational changes. In January 2009, India was made a separate GE Healthcare geographical division, with Raja reporting directly to Dineen. In its early days, GE’s India health care business had been part of Asia Growth Markets, whose leader reported to the head of the Europe division, and who in turn reported to the U.S.-based global health care leader. While GE Healthcare had operated in India as many different legal entities, Raja has in the last few months consolidated all but one — GE-BEL, a joint venture with Bharat Electronics — under the Wipro-GE Healthcare umbrella. The move is expected to accelerate growth through more effective management and resource utilization.

In October 2009, GE made the significant move of consolidating its India businesses under an executive of the rank as high as senior vice president. John Flannery, who was president and CEO of GE Capital in Asia, became president and CEO of GE India. Flannery reports to vice chairman John Krenicki Jr., who reports to GE’s chairman and CEO, Jeffrey Immelt. This gives India increased visibility within GE. In a news release, Immelt said, “We will treat GE India just as we would any other GE business with its own growth strategy, leadership development and budgeting processes.”

S. Raghunath, professor of corporate strategy and policy at the Indian Institute of Management, Bangalore, has tracked GE Healthcare since its inception here and sees the moves as significant. “Due credit must be given to GE headquarters for recognizing and acknowledging what can come out of India.” GE, Raghunath notes, has an incredible passion for creating and winning in new markets, and “these organizational changes show that it is willing to change its internal systems and processes to create value wherever it sees it happening.” Govindarajan, the Dartmouth professor, says the moves provide an immediate sense of GE’s commitment to India. “This is not a change in terms of just organizational structure,” he says. “It is a cultural change and a huge shift in mind-set.”

Dineen expects “many of the game-changing innovations and products of GE Healthcare in the future to come from Bangalore.” The first, which was rolled out two years ago, is GE’s Mac 400, an ultra-portable electrocardiogram (ECG) machine. The device was fully conceptualized, designed, sourced and manufactured in India according to the requirements of local customers. With the Indian market in mind, the MAC 400 is priced at one-third that of imported ECG systems of similar quality. To deal with power outages in many parts of India and an acute shortage of health care professionals, the MAC 400 is battery-operated and intended to be easy to use. Customers in the health care field wanted the machine to be portable so they could reach more patients; hence, it is lightweight. To ensure easy serviceability (especially in remote areas) and to lower costs, it comes with commercially available components instead of customized and proprietary parts.

Addressing customers’ wishes, Shah’s team recently introduced the variant of the ECG machine called the MAC i (“i” stands for India) at half the price of the MAC 400. By incorporating the Marquette 12SL analysis program, which is standard in GE’s premium ECG devices, GE has allayed any quality concerns. The MAC 400 and the Mac i incorporate the analysis program that is standard in GE’s more high-end ECG devices and include built-in software that interprets the ECG in English like any pathological test, a feature that previously was available only in GE’s very high-end ECG machines.

Health Care Game-Changers

GE sees the MAC 400 and the MAC i as potential game-changers. A quick look at health care in India shows why. Heart disease is the number one killer globally, and 60% of cases are from India. ECG testing is the first step in early detection. While testing can be performed by anyone with the right technical training, interpreting results can only be done by a cardiologist. Although 75% of India’s population lives in rural areas, 80% of India’s health care providers are clustered in urban centers; for a large part of the population, first-level screening is expensive when it is accessible at all. With the MAC 400 and the MAC i, GE made it possible to move ECG testing from the cardiologist’s domain to that of a general physician anywhere in the country. The company believes the devices create a new marketing opportunity.

GE Healthcare has sold 7,500 MAC 400s. Of these, 2,000 have been sold in India. Even as it rolls out the Mac i, Shah’s team is working on the machine’s next variant. Other products that GE Healthcare has developed over the last few years for the Indian market include baby warmers and X-ray and ultrasound systems. Dr. Devi Shetty, a Bangalore-based cardiac surgeon and founder of the Narayana Hrudayalaya Institute of Cardiac Sciences has been a GE Healthcare customer for many years, and believes GE is on the right track. “The mass market in health care is yet to evolve,” he says, “and having the foresight to move in this direction will make GE emerge as the undisputed leader in this area. Products like the MAC 400 and MAC i, for instance, can definitely change the rules of the game.”

GE Healthcare isn’t the only company on trying to focus on underserved areas. In 2008, Philips India, a unit of the Dutch multinational Royal Philips Electronics, acquired India-based companies Alpha X-Ray Technologies and Meditronics. With these acquisitions, Philips expanded its health care business to cater to the mass market segment for cardiovascular and general X-ray systems. Says Anjan Bose, vice president and business head of health care at Philips India, “Traditionally, we have been in the top and the middle of the pyramid, but with the whole model of health care delivery changing, we want to be present across the different value segments not only in India but in other markets too.”

Susnato Sen, practice head for infrastructure, at the management consulting firm Tata Strategic Management, says it is inevitable that medical equipment providers — including Indian companies such as BPL HealthCare and Larsen & Toubro, and multinational such as GE, Philips and Siemens — will begin to focus on developing products for all segments of the market. India’s health care industry is undergoing a sea change, Sen notes, and medical facilities are covering more of the population across all income levels. Each facility has unique medical equipment needs based on their business model and target population. “While some hospitals prefer to procure best-in-class, feature-rich equipment, many more hospitals now prefer procuring low-priced equipment [with] features [that are] sufficient to meet the requirements of most of the medical cases they encounter, as long as they don’t compromise on quality.”

Meanwhile, GE Healthcare faces the challenge of distribution and service. The company has 150 dealers in India, but its traditional model won’t suffice in reaching out to remote areas with low-cost products. Numbers alone won’t be enough; experts say the distributor network’s quality is also vital. Raja notes that options include possible partnerships with pharmaceutical companies. “It is an evolutionary process and we are still working it out,” he says. “What’s important,” GE Healthcare CEO Dineen adds, “is that we will do whatever it takes to succeed in this market.”

If Dineen and his India team succeed, they say their effort will not only transform GE’s global health care business; it can play a role in transforming health care globally. As Govindarajan says, “The game has just started and the full impact of this is going to be felt over the next couple of decades.”

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How social innovations spread globally through the process of reverse innovation: a case-study from the South Korea

Italian Journal of Marketing

Nowadays, innovation is no longer a peculiarity of developed economies. Indeed, more frequently, it occurs that innovations born in the so called "emerging countries" spread in the advanced ones. This phenomenon is well known as Reverse innovation (RI), and within the global innovation literature about RI, some authors refer to these reversed innovations as developed in order to solve social or economic issues, specific of emerging contexts. However, scholars use to connect innovation with social goal as primary benefit to another phenomenon: i.e., Social innovation (SI). Within the Social innovation literature, there is a lack concerning how it should be undertaken to spread globally. Thus, we applied the Reverse innovation process to Social innovations: through a case-study analysis, we link the two phenomena which have never been explored together in previous studies. The paper aims at understanding how Social innovations spread from emerging to more advanced markets, w...

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The aim of this article is to predict development trends based on social innovations. It introduces the concept of social innovations explaining the reasons of social changes marking transmodernity. By analyzing European Union policies in the fi eld, it provides grounds for practical implementation of social innovation projects. The results of the mapping exercise of social innovations in Croatia is presented in order to provide analytical data based on which public policies in the fi eld of social innovation may be designed. This is matched with theoretical knowledge on social changes and social innovations as to offer thoughts on future development trends.

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How social innovations spread globally through the process of reverse innovation: a case-study from the South Korea

Chiara cannavale.

Department of Management and Quantitative Studies, Università degli Studi di Napoli Parthenope, Via Generale Parisi, 13, 80133 Napoli, NA Italy

Lorenza Claudio

Michele simoni, associated data.

All data underlying the results are available as part of the article and no additional source data are required.

Nowadays, innovation is no longer a peculiarity of developed economies. Indeed, more frequently, it occurs that innovations born in the so called "emerging countries" spread in the advanced ones. This phenomenon is well known as Reverse innovation (RI), and within the global innovation literature about RI, some authors refer to these reversed innovations as developed in order to solve social or economic issues, specific of emerging contexts. However, scholars use to connect innovation with social goal as primary benefit to another phenomenon: i.e., Social innovation (SI). Within the Social innovation literature, there is a lack concerning how it should be undertaken to spread globally. Thus, we applied the Reverse innovation process to Social innovations: through a case-study analysis, we link the two phenomena which have never been explored together in previous studies. The paper aims at understanding how Social innovations spread from emerging to more advanced markets, while implementing this inversion of the flow. Further, we want to explore which is the potential that a Social innovation has in the host market: in other words, if SI could lose, hold, reduce, or increase their original social connotation.

Introduction

The recent pandemic era, caused by the spread of Covid-19, challenged people, economies, and the global health. In order to try to contain and limit the damages caused by the virus, several countries proposed different innovations concerning the testing and screening phase, or the treatment and the prevention to this disease. As a matter of fact, the deaths rate in some countries has been less impactful than in other geographic areas: some of the so called “emerging countries” with high innovative potential (i.e., South Korea) handled the pandemic better than the “advanced countries” (U.S. and United Kingdom), registering less Covid-19 deaths. These data (Fig.  1 ) have been collected through the platform “Our world in data” (OWID), an online database which includes data on confirmed cases, deaths, and tests performed.

Covid-19 confirmed death in United States, United Kingdom and South Korea.

Source : https://ourworldindata.org/

This result is due to different reasons, which might be considered. Certainly, we could not ignore a potential divergence in data gathering; for instance, some countries counted only hospital deaths, whilst others may include deaths in home and the cumulative confirmed Covid-19 deaths could suffer of inaccuracies because of the limited testing and the challenge in attribution of the cause of death. Secondly, even if some of the African and Asian countries do not have better standard of living in terms of income per capita, density of populations or public infrastructures, they already experienced in the past with similar health issues such as Ebola, SARS or Mers. For instance, South Korea learned the lesson of Mers (Han et al., 2020 ) and was able to perform around 15.000–20.000 detection tests per day, working closely to the private sector: they simply know better how to deal with these plagues. Thirdly, nowadays, emerging countries are developing their own innovative skills and capabilities, building their specific innovations.

In recent times, indeed, emerging countries are becoming the new epicentre of global economic growth and innovation (Shan & Khan, 2016 ): a part of literature labels the developing economies as the “hotbeds of innovation” (Hadengue et al., 2017 ; Petrick & Juntiwasarakij, 2011 ). The innovative process does not depend anymore necessarily on the advanced countries: more often, innovation is born in the emerging economies, and further spreads globally. This phenomenon is well known in the global innovation literature as “Reverse innovation” (RI).

The expression RI, commonly used by the press, but still not investigated in depth in scientific publications (Brem & Wolfram, 2014 ), was coined by Immelt et al. ( 2009 ) : it refers to innovations that come from emerging contexts and eventually trickle up in the more advanced ones. Thus,—in antithesis with the Product life cycle Theory of Vernon—we should consider the Reverse innovation as a process, through which innovations internationalize and flow worldwide.

According to several authors, RI is developed with the aim to solve economic, social or health problems (Govindarajan & Euchner, 2012 ; Govindarajan & Ramamurti, 2011 ; Lim & Fujimoto, 2019 ). However, in the literature, innovations related to economic, social, and health issues are commonly defined as Social innovation (SI). This concept has arisen quite recently, and it is enough contested, especially from a definitional point of view. What is new today is that SI, developed in the emerging countries, could have a full potential in the advanced economies too. Indeed, they can improve the life condition of people to health and diagnostics, considering consumers’ purchasing power and people who live at the bottom of the pyramid. The possibility that SI spreads through the process of RI is interesting, because it has many economic and competitive implications for firms in the advanced markets. Nonetheless, these two phenomena have never been linked in previous research and, until today, within the Social innovation literature, scholars focused particularly on the figure of the social entrepreneur/innovator and on the interactions of key actors: it becomes now necessary to study the SI process, and how it could be adequately undertaken.

Therefore, this paper aims at illustrating how Social innovations, reversing their flow, could diffuse from emerging to advanced countries. Further, we want to understand whether Social innovations, once expanded from home to the host market, potentially lose, hold, reduce, or increase their original social connotation.

In line with these goals, in this work we propose a case-study concerning a Social innovation coming from the South Korea, and further spreads in other countries: the “Drive-through” testing center, later become the “Walk-through” screening center, two innovative solutions, which enable monitoring the number of new cases and detect a huge amount of people per day. The initial “Drive-through” testing center, developed in the Province of Gyeonggi, South Korea, was firstly carried out in the United Stated, and later in several countries overseas, such as Italy, Denmark and even in Australia. Simultaneously, in the H Plus Yangji Hospital, this medical device has been turned into the “Walk-through screening center”: within a short time, this enhancement has been introduced in the United States, at the Massachusetts General Hospital (MGH) in Boston. This kind of Social Reverse innovation (SRI) could be potentially decisive in improving the global health situation, reducing the overall impact of the Covid-19.

Literature review

As suggested by Hadengue et al., Reverse innovation is an “old new idea” (Hadengue et al., 2017 , p. 143): new because it addresses a new flow of innovation; old since it could be easily considered as a normal evolution of existing concepts. This dual nature contributes to increasing the uncertainty related to the topic and makes difficult for scholars to give a unique definition of the concept.

Reverse innovation is an under investigated and still nascent phenomenon (von Janda et al., 2018 ): although it is relatively a new concept, it is attracting academics’ attention. Indeed, Govindarajan and Ramamurti asked themselves why this process occurs now and not earlier. According to the authors, Developed-country Multinational Enterprises (DMNEs) had always the skills and the technologies to develop products for emerging countries, but they did not have enough incentive to do it. With the economic liberalization and the technological changes in the last two decades, things have changed: “DMNEs realized that it is not enough to serve just the premium segment in emerging markets with products that are close variants of those developed for rich countries” (Govindarajan & Ramamurti, 2011 , p. 196); instead they have to create products that are specifically developed for their needs.

The first problem scholars face regarding Reverse innovation (RI) is its definition: several authors tried to give an exhaustive explanation. Immelt et al. ( 2009 ) introduced this concept for the first time, defining Reverse innovation as products that slide from developed to advanced markets (Immelt et al., 2009 ); Zeschky et al. ( 2014 ) added that a Reverse innovation could be considered as a frugal one that is developed in and for the emerging economies, but that eventually trickles-up to advanced countries (Zeschky et al., 2014 ). Implementing this trickling up innovation strategy is not as simple as it seems: Reverse innovation is not about creating lower-price products for emerging market, but rather, creating products that answer specifically to these people’s needs (Govindarajan & Euchner, 2012 ). For this reason, as suggested earlier, we should study this phenomenon as in contrast to the Product Life Cycle Theory (Vernon, 1966 ): RI should be considered as a process, through which innovations internationalize and flow worldwide.

Von Zedtwitz et al. ( 2015 ) try to expand the concept of RI and argue that in the market-introduction based definition, it is quite implicit that is purely the customer perception that determine the reversal character of an innovation: in other words, it is a new product to that specific market, without being new globally. According to the development-based definition “the reversal of innovation denotes a products or service developed in a developing country” (von Zedtwitz et al., 2015 , p. 16); thus, the locus of innovation matters for its classification. Subsequently the authors, starting from the four innovation phases—that are ideation, development, primary market, and secondary market introduction (Vernon, 1966 )—tried to elaborate the Model of Global Innovation Flows: a binary tree representation with 16 possible global flows of innovation. They define as reverse any global innovation that, at any stage of the process, inverts the flow from a developing to an advanced country; in line with their assumption, while ideation, development and first market represent key moments, secondary market does not. The model came out of the study is built on the distinction between advanced (denoted with “A” in the map) and developing countries (denoted with “D”) and its purpose is to shed light on the RI phenomenon, considering the confusing overlapping with all the other innovation related concepts: i.e. frugal innovation, cost innovation, disruptive innovation etc. (Hadengue et al., 2017 ). As further finding, the authors define a strong RI as the one “that has at least two of its key innovation phases taking place in a developing country” (von Zedtwitz et al., 2015 , p. 18), whereas a weak is an innovation which has merely one of its key innovation phases taking place in a developing country.

As Govindarajan states, “If a multinational won’t do something, a local company will do it” (Govindarajan & Euchner, 2012 , p. 16). As the authors underline, the power of a RI consists in being “an instrument for solving some of the world’s most vexing social problems” (Govindarajan & Trimble, 2012a , 2012b , p. 192). Lim et al. ( 2013 ) highlight another interesting point of view, stressing the importance of building innovation capabilities for local firms to overcome the “deficiency problem”, i.e. “a deficiency of in-house resources required to generate product innovation in the developing country firm (DCF), and a deficiency of resources of external firms, which could be created from experience in developing an innovative product” (Lim et al., 2013 , p. 392).

Lim et al. ( 2013 ) believe that creating original products for the unserved lower end market could represent not only a possible solution, but even a sort of competitive advantage over advanced country firms. In accordance with Govindarajan and Ramamurti ( 2011 ), business executives should rethink the concept itself of competitive advantage: the EMNEs (acronym for Emerging-country Multinational Enterprises) do not have only “ordinary resources”, instead they possess strengths in low-cost design and manufacturing, efficient distribution and moreover, awareness of local needs. In agreement with Vadera ( 2020 ) indeed, “RI as an inevitable process has immense potential to cater to the demands of the 500 million poor population across the world. Companies need to overcome certain challenges like lack of resources, performance, sustainability, Government regulations and lack of infrastructure to take advantage of Reverse innovation saga” (Vadera, 2020 , p. 45). Thus, within the global innovation literature about RI, the focus is mainly on the aim of these goods: we should qualify as RI, products developed to satisfy the needs of emerging countries’ customers (Govindarajan & Trimble, 2012a , 2012b ; Lim & Fujimoto, 2019 ).

Innovations, whose primary goal is to suit consumers’ social needs and enable to improve the wellbeing, are well-known within the literature as Social innovation (SI). This concept, as argued by Tracey and Stott ( 2017 ) is a contested term, especially from a definitional point of view, with no shared agreed among scholars. On one side, for instance, “it tends to be defined quite generically as the creation and implementation of new solutions to social problems, with the benefits of these solutions shared beyond the confines of the innovators” (Tracey & Stott, 2017 , p. 51).

On the other, the burgeoning Social innovation literature, including a large set of organizational forms, has been largely neglected by scholars (Cajaiba-Santana, 2014 ; Howaldt & Schwarz, 2010 ; Mulgan et al., 2007a ; 2007b ), who deepen mostly the social enterprise, which is just one of the manifolds existing types within the Social innovation landscape. Innovation researchers, indeed, outlined greatly the for-profit organizational firm, leaving the SI as a pretty unexplored area, with a referred literature that is “fragmented, disconnected and scattered among different fields”, (Cajaiba-Santana, 2014 , p. 42; Van der Have & Rubalcaba, 2016 ) namely: social entrepreneurship, regional development, social psychology and management. In addition, “there is a lack of literature and research on the Social innovation process” (Lettice & Parekh, 2010 , p. 142).

Despite the apparent novelty (Cajaiba-Santana, 2014 ; Grimm et al., 2013 ; McGowan & Westley, 2015 ), SI has mistakenly been analysed as a new phenomenon: according to the authors “[…]it is not: Social innovation as we currently understand it has a rich and fascinating history stretching at least as far back as the cooperative and social business movements of the Victorian era (McGowan & Westley, 2015 ) and probably much farther, but of course in a general sense Social innovation is as old as civilization itself” (Tracey & Stott, 2017 , p. 57).

Based upon another strand of literature, which defines SI as an emerging field (Lettice & Parekh, 2010 ), the rapid development “has led to a present lack of clarity or overview of what constitutes the field’s own history and current ‘jurisdiction’” (Van der Have & Rubalcaba, 2016 , p. 1923).

To compound this issue further, SI has been frequently overlapped with social entrepreneurship, with which has doubtless some analogies, and likewise certain discrepancies (Dawson & Daniel, 2010 ). As claimed by the authors “Social innovation extends beyond notions of social entrepreneurship in the engagement and ownership of the collective process of developing and steering strategies for social change by the groups involved” (Dawson & Daniel, 2010 , p. 18). Indeed, Tracey and Stott ( 2017 ) argue that social entrepreneurship, jointly with the social intrapreneurship and extrapreneurship, sets up a different typology of Social innovation.

Concerning the definitional controversy, Social innovations, using Mulgan et al.’s words, are commonly delineated as “innovative activities and services that are motivated by the goal of meeting a social need and that are predominantly developed and diffused through organisations whose primary purposes are social” (Mulgan et al., 2007a , 2007b , p. 8). While broadly accepted, this description may be confusing. More precisely, Social innovations may be differentiated “from business innovations which are generally motivated by profit maximisation” (Mulgan et al., 2007a , 2007b , p. 8); nevertheless, it seems incorrect to affirm that SI can never be driven also by a profit aim. In other words, while social goals represent a focal point, this does not exclude entirely some interest in revenues within these organizations (Altuna et al., 2015 ). Business and Social innovations are different, although they are overlapping concepts, and for this reason should not be blended together, in order to emphasize SI peculiarities (Pol & Ville, 2009 ). For instance, both face mostly the same challenges; however, the latter are usually described as more ambiguous and complex (Hall & Vredenburg, 2003 ), since “social innovators tend to need to satisfy a wider range of stakeholders, with different priorities and potentially conflicting interests and viewpoints” (Lettice & Parekh, 2010 , p. 141). Therefore, “these problems are often exacerbated by an increased complexity due to a wider network of diverse stakeholders” (Lettice & Parekh, 2010 , p. 155).

In line with the discourse around RI, the role of place in Social innovation, matters: the essence of SI challenges may vary substantially depending on the nature of the institutional context in which social innovators operate. As Tracey and Stott state ( 2017 ), this represents a possible area of inquiry for researchers: in the literature, it is now vital to “build theory about how the practice of Social innovation differs, for instance, between countries in the global north versus the global south” (Tracey & Stott, 2017 , p. 57).

The future trend foresees an increase of RI both at weak and strong level (von Zedtwitz et al., 2015 ); besides, concerning their diffusion, social inventions evolve into Social innovations only “when they are widely accepted and used” (Howaldt & Schwarz, 2010 , p. 34). So far, it is not yet clear to academics and researchers—but, more important, to business leaders—how to implement this RI process to Social innovations; hence, scholars and researchers should investigate this further.

The key findings concerning the literature review are summarized in Tables ​ Tables1 1 and ​ and2 2 .

Analytical framework organizing RI key aspects in literature review

Analytical framework organizing SI key aspects in the literature review

Methodology

In lines with the research aim, this work proposes a case-study analysis concerning a Social innovation, coming from the South Korea and after implemented elsewhere: the “Drive-through testing center”, subsequently enhanced in the “Walk-through screening center”. The research adopts a case-study methodology, which is useful to investigate a contemporary phenomenon in depth, within its real-life context (Baxter & Jack, 2008 ; Rosca et al., 2017 ; Yin, 2003 ). Moreover, since the boundaries of both the phenomena are not yet clear and evident, this qualitative approach seems to be suitable (Yin, 2003 ): particularly, the methodology applied is an exploratory single case study, since to the novelty of the topic and also of the specific field of study connected to the new medical devices. We did not select the case randomly: random selection is neither necessary, nor even preferable (Eisenhardt, 1989 ); conversely, the case has been chosen because of its newness, its relevance and overall, its suitability with the topic. The data employed for the analysis are secondary data i.e., journal articles, websites, and video. All the secondary data were summarized in Table ​ Table3, 3 , according to the typology. Although secondary data do not represent the best choice, we needed to use them because no other data were available for the Drive-through and the Walk-Through. The adopted protocol provides for an inductive approach: firstly, data were gathered through secondary sources; secondly, we tested the convergence of evidence, verifying the truthfulness of the sources. For instance, we checked where and when the Drive-through and the Walk-through flow, controlling for more than one source.

Secondary data sources

The case-study: the Drive-through testing center and its evolution in the walk-through

The Drive-through was inspired by the Drive through at McDonald and Starbuck stores, and it was firstly suggested by the Governor of Gyeonggi Province, Jaemyung Lee. The innovation was developed at the Kyungpook National University Chilgok Hospital in Daegu, in South Korea. This screening center was designed to respond to the increasing number of potential patients in South Korea. The Drive-through should be located away from urban areas, ideally in large parking spaces, whereas it could be implemented also in smaller spot, if well-organized, with an efficient reservation system. The flow of the Drive-through center should be managed with the following phases: entrance, registration, examination, specimen collection instructions and exit. During the entire procedure, the patients must not leave their cars and the healthcare workers (HCW) always must wear the entire personal protective equipment (PPE). Once entered, patients answer to some questions concerning personal information and related symptoms; based on their replies, if Covid-19 is highly suspected, the patients will be transferred to the hospital. At the time of the examination, while the healthcare workers take a nasopharyngeal and oropharyngeal swab through the nearest window, the car ventilation should be kept on the internal circulation mode (Kwon et al., 2020 ).

The Walk-through is the second evolution of the Drive-through and devised by the Director Kim Sang-il at the H + Yangji Hospital, an example of the highest standard of medical care in all the country, equipped with highly specialized staff and doctors. The Walk-through was born because of two reasons: a large portion of patient visits the screening center on foot and the lack of a large enough parking space to install the Drive-through. Thanks to this testing facilities, the number of tests performed tripled in a day. This testing center, labelled “Safety”, an acronym for “Safe Assessment and Fast Evaluation Technical booths of Yangji hospital”, consists of a plastic booth for one person, with internal negative pressure and rubber gloves inserted. It allows the healthcare staff to test the patient without coming into contact and to reduce drastically the risk of infection (Choi et al., 2020 ). Safety is also equipped with an interphone that facilitates the communication from the inside to the outside of the cabinet. The flow of Walk-through mostly follows the same principles: entrance, registration, wait, questionnaire, examination, instructions, and exit. Inside the waiting zone, patients could start the registration: social distancing is ensured, since chairs are positioned two meters away. When the patient left Safety, ventilation and disinfection are performed, before the next one enters in the booth (Kim & Lee, 2020 ).

Both the Drive-through and the Walk-through present of course some limitations and issues: we are going to discuss once at the time. Concerning Drive-through constraint, we could not mention the necessity of wide space to build it in an area with no traffic congestion, the indispensable availability of a personal car, and the possible crowding for unnecessary repeated tests. In this sense, Walk-through has removed the Drive-through insufficiency: it is applicable where patients move on foot and within small space. Although its effectiveness is well recognized, the Walk-through presents some challenges: i.e., the disinfection stage, which is very critical, in terms of disinfectant to use and time of ventilation.

The main obstacle concerning the containment of Covid-19 is related to the difficulties to screen the population without infecting the medical staff. The main point is not only testing people and tracking their movement and contacts, but preserving the functioning of the health system, and the possibility to guarantee treatments to all citizens. In this paper, we present a specific Social Reverse innovation, which enable to get this goal: screening people without endangering the medical staff (Choi et al., 2020 ).

The drive-through and its inversion of the flow

The Drive-through was developed in South Korea and opened on the 26 th of February, and it represents the first step of the innovation spread and the first evolution of the product: it has not already been released in other countries and there has not yet been its development into the Walk-through. These free Covid-19 screening stations reduce the number of new cases drastically from the beginning of the pandemic. According to the Our World in Data platform (OWID), the number of new cases reached the peak on the 29th of February 2020, with 9.090 new cases and then lowered with average of 700 new cases in the month of July (See Fig.  2 ). Thus, we could easily affirm that this contraction is an immediate and evident effect of this innovation.

Covid-19 new cases in South Korea.

While designed in an emerging country, due to its efficiency in testing and controlling an extensive number of patients, the Drive-through reversed its flow and diffuses in advanced countries: this produces the so called trickling up process, underlined by Immelt et al. ( 2009 ). Indeed, the diffusion step of the innovation process involves US and other countries: while the idea of “Drive-through” was not new itself, its potential use against Covid-19 is new. US was the first to adopt and implement the innovation produced in South Korea. Similarly, and subsequently, the Drive-through flows in Mongolia, Italy, Denmark, Australia and doubtless it will be employed in several other geographic areas. For instance, in US the Drive-through was prior carried at the Massachusetts General Hospital (MGH) in Boston, and later all over the States: i.e., at the FoundCare Healthcare Center in Palm Beach County, since the 16 th of March, in Colorado, Connecticut and Washington. In Italy, instead, The Drive-through spreads in Milan at the San Paolo and Carlo Hospital, starting from the 16 th of November for students and school staff.

Moving from the first evolution of the innovation to the second, the innovators were able to observe and explore the external environment in which the Drive-through works, understanding what elements could represent a possible hurdle to the effective functioning of the screening center.

The Walk-through and its inversion of the flow

The Walk-through, inaugurated on the 10 th of March in South Korea, represents the second evolution of the innovation and—as mentioned before—was designed to solve some of the major Drive-through gaps: Yangji Hospital in the southern Seoul was experimenting the Drive-through with disappointing results. Because of the experience with MERS and SARS, southern-Korean government was aware of the importance of tracking people testing positive for the Covid-19; nonetheless the Drive-through was not succeeding as hoped. Indeed, the hospital location in a crowded neighbourhood and near the subway station, makes it hard, inconvenient, and complex the use of a private car. As the director of the hospital and the inventor Kim Sang-Il stated, he hopes that the Safety booth could act as an efficient example for all the small clinics in the country, who are experiencing troubles in testing people. He applied for a home and overseas patent to protect their intellectual property. Indeed, in April 2020 the H Plus Yangji Hospital entered into an agreement on the public use and development of its intellectual property with the Korean Intellectual Property Office (KIPO). The home patent application has been completed in August 2020. The inventor clarifies that their aim is not to monopolize the innovation; rather he wants to promote a wide use of this innovation, which is completely in agreement with our discourse on the SRI. The office, based on what it states, will provide funds for the commercialization and a brand certification. The Walk-through testing facility will be labelled and commercialized as “K-walk-thru”. The KIPO office, further, stated that the registered patent technology will be unveiled to 61 countries. Starting from April 2020, South Korea will share with the international community its Covid-19 related technologies: indeed, the KIPO has broaden the innovation’s information available on its website, providing especially an English version of the information uploaded. Beside a video tutorial, they share the complete name, the origin of the innovation, and the method. This last section is particularly important for those who are interested in replicating the technology: they indicate the Manufacturer’s name with a phone number and a website; the features and the capacity of the innovation. Based on the Patent act, in a national emergency, it is possible to give up to the patent rights. South Korea has received several requests to share patent’s information and, according to KIPO Commissioner Park Won-joo, their strategy is completely aimed at contributing to the cross-border partnership, to overcome the epidemic crisis. The patent has been also filed with the European Patent Office at the beginning of April 2020. Consequently and because of its effectiveness, hospitals around the South Korea and elsewhere start to endorse their own version of the Walk-through, some independently and others thanks to the help of the inventor and to a relationship of close collaboration and knowledge sharing with the Yangji Hospital. Among the latter, we found the Massachusetts General Hospital in Boston: as the CEO of the American MGH recognized the Walk-through’s high efficacy, he wanted to learn and develop it with the help of the in-house innovation team, the Springboard Studio. After some struggling, and with the precious help of the Korean inventors, MGH was able to install the booths device in all its hospital network in the Boston region, with significant benefits: a more effective sanitization, a strong reduction in the usage of personal protective equipment (PPE), and an increased number of patients tested per day.

Later, the inventors of the Walk-through presented it for the first time at the K-Hospital Fair, held in Seoul on the 21st to 23rd of October 2020. During its presentation, foreign and local visitors expressed great interest.

The inversion of the flow takes place at the diffusion stage, since the health facilities diffuse from the emerging context of South Korea, to the more advanced of US. This reversal is the result of medical agreements and a global collaboration among different institutions. In this advanced network, which involves different and distant geographic areas, knowledge sharing, and cooperation become an imperative. Certainly, without a mutual effort of all the actors embroiled, it is not possible to successfully achieve the inversion of the flow.

The conceptual framework

We summarize the key findings of this paper in a conceptual framework that shows the factors affecting the process of RSI (see Fig.  3 ). In our framework, SI moves from the emerging to the advanced context, thanks to two main types of factors: (a) factors related to context of origin of the SI and (b) factors related to the nature of the innovation. Several elements can be identified among the factors related to SI’s context. Regarding the factors related to the context of origin, the first factor is South Korea's previous experience with similar diseases (Han et al., 2020 ): as mentioned in the introduction, South Korea learned how to best manage outbreaks such as SARS in 2003 and MERS in 2005. In this way, South Korea developed the know-how to deal with and eventually design effective solutions for the COVID 19 pandemic.

Conceptual framework: How Social innovations spread globally through the process of Reverse innovation

The second factor is the country's innovative capabilities and competencies, similar to other emerging economies (Hadengue et al., 2017 ) which as Hadengue et al. ( 2017 ) argue are becoming the "hotbeds of innovation". As evidence of its innovative capabilities, South Korea has been ranked number one in Bloomberg's Innovation Index for 6 years and ranked second after Germany in 2020. According to the 2020 Global Innovation Index, which is a measure of the innovative capabilities and achievements of the world's economies, South Korea ranks 10th among the 131 economies featured.

The third factor is the resources possessed and available in South Korea and other developing economies to effectively address local needs (Govindarajan & Euchner, 2012 ) through low-cost solutions in terms of product design, manufacturing, and distribution. Regarding the latter, Drive-through initially used containers as test centres, which were enormously expensive. Later, these were replaced with medical tents to simultaneously save on cost and infection risk (Lee & Lee, 2020 ).

Together, the three factors described above contributed to strengthening the innovativeness and effectiveness of the solution proposed by South Korea to address the COVID 19 pandemic and thus reducing the potential resistance of advanced countries in adopting a social innovation born in a less developed context. As a result, the reverse flow of the diffusion of this SI occurred without any particular barriers.

Regarding the factors related to the nature of SI, the first factor is stakeholder engagement. The stakeholder involvement typical of each SI is related to the propensity of the actors involved in the innovation to share the knowledge related to the new solution without particular barriers, in order to make the solution more impactful for the intended social problem resolution. In the case analysed in this study, this propensity is demonstrated by the availability of information from the KIPO. Specifically, the agents involved in the process—i.e., the scientists, the physicians, and the inventor in the domestic market—were all characterized by a willingness to distribute knowledge about these medical devices to help solve the pandemic. In fact, when the U.S. CEO of MGH asked for guidance, Director Kim Sang was willing to provide all the needed support. As a result, the stakeholders involved in the development of the Walk-through solution facilitated the diffusion of this SI.

The second factor is the social and global benefit from the innovation developed. Because the pandemic is affecting almost the entire world, South Korea's innovation was easily recognized as something relevant by many countries. As a result, a huge potential global demand for the Walk-through solution emerged around the world making it easier to move the innovation from an emerging to a mature economy (Govindarajan & Euchner, 2012 ; Govindarajan & Ramamurti, 2011 ; Lim & Fujimoto, 2019 ; Vadera, 2020 ).

The third factor is the nature of SI innovation largely based on know-how rather than physical assets. Because the advanced contexts capable of adopting the new solution (i.e., the United States or Europe) already had the skills and experience to build and produce their own version of the screening center, the only problem in having RI diffusion was the transfer of the relevant knowledge from the emerging context to the advanced context. In fact, the MGH scientists in the Springboard study, once they obtained the know-how from South Korea, were able to build their own screening center.

These three factors, related to the nature of SI, jointly promoted a sense of international mutual cooperation between innovation developers and innovation adopters, which, in turn, lowered the resistance to reversal of the innovation diffusion flow and had a positive impact on the occurrence of SRI.

Conclusion and limitation

In accordance with Govindarajan and Euchner ( 2012 ), while advanced economies were challenged in managing the virus, they were not able to come up with such innovative solutions: indeed, emerging countries go into the game.

The battle against the pandemic Covid-19 is still long, but it is undeniable the central role that these two innovations play within the actual global situation, allowing to screen a major number of people per day, and keeping safe all the healthcare staff involved (Choi et al., 2020 ).

As discussed before, both the Drive-through and the Walk-through flow from an emerging economy to the more advanced and wealthier, such us the United States and Denmark. This inversion of the flow, scilicet the RI, depending on reciprocal cooperation of the actors involved, is boosted to spread more easily in other countries because of its social power. In other words, in line with what Govindarajan and Trimble ( 2012a , 2012b ) and Govindarajan and Euchner ( 2012 ) suggested, the reversal of the flow is more effective since we are dealing with a Social innovation that could be potentially decisive in improving the global health situation, reducing the overall impact of the Covid-19: indeed, early diagnosis is a key factor to prevent the spread of this disease.

The case-study presented not only provides evidence of how Social innovations could diffuse from emerging to advanced countries, by means of the reversed flow; rather, the two innovations prove how SI could hold and increase the social significance, when extended in the host market.

Concerning the methodology, case-studies are considered a powerful instrument when exploring how a phenomenon occurs and studying its progress. Furthermore, among the limitations, a single case-study could present some replicability issues for the analysis: it seems necessary to develop deepen the research and enlarge the analysis, including more case-studies. Gathering data from South Korea was not easy because of the language barrier and privacy. However, the description on the implementation of the process could be enhanced but it suffers for the lack of information concerning the medical devices and both SI and RI literature.

Regarding the limitations, one controversy concerns the definition of South Korea as emerging country: we are discussing about one of the largest economies in the world, with one of the faster growing rates for the last 50 years. However, the index frequently used by investor to classify a geographic area to invest in, disagree about South Korea’s classification. The FTSE Russel ( 2020 ) and Woods ( 2013 ) categorize South Korea as a developed economy, based on GDP and GNP metrics: South Korea, while having a GDP per capita lower than other developed markets, exceeds the GDP of the emerging.

On the contrary, the MSCI classifies South Korea as emerging: according to the MSCI Market Classification Framework, despite Korea meets the criteria of economic development and liquidity, “it currently fails the accessibility criteria” (MSCI, 2012 , p. 1).

Despite the limitations, this paper presents an interesting case-study which gives the possibility to explore the issue connected to social and Reverse innovation, and more specifically on the reverse flow which amplifies the effects of a Social innovation in advanced countries. It also offers an interesting insight into the management of the COVID-19 emergency.

Future research and managerial implication

The case study presented has different implications: on one side, it highlights that innovation today could origin also from the emerging countries (the so-called Reverse innovation). On the other, if these inverted innovations are Social innovations, the process of diffusion will be enhanced by several factors: the stakeholder engagement, the mutual collaboration of the actors involved, the previous experience and the innovative capabilities of the country where the product is ideated, their resources, in terms of human and economic resources; and finally, the social and global benefit stemming from the innovation. Concerning the latter, a focal point of this work is that these SIs, once launched in the advanced economies, have a full potential to be commercialized also there. Nowadays, indeed, all the innovations with social connotations can be at the same level, independently of the context where they have been created. This, on the one hand, increase the possibilities to innovate. On the other hand, it enhances competition in terms of innovation development. As a result, it is important for scholars to fully explore RI as an internationalization strategy and SI as a type of innovation that can facilitate the diffusion of new solutions from emerging to advanced economies.

Once illustrated that a SI could diffuse from an emerging context to and advanced one, thanks to the inversion of the flow and because of its social connotation, an interesting area for future research emerges. When we are dealing with a SI, is it possible that the reversal of the flow is easier than the traditional process of diffusion? In other words, is it reasonable that a Social innovation developed in an emerging economy spreads to the advanced ones more simply, rather than vice versa? Further, the environmental context of the pandemic, in which these innovations were born and spread, might have significantly affected the flowing from emerging to advanced economies, because of the global state of emergency. Once the virus will be defeated, future research could investigate if our results are confirmed, testing the inversion of the flow under normal conditions.

Open access funding provided by Università Parthenope di Napoli within the CRUI-CARE Agreement.

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On behalf of all authors, the corresponding author states that there is no conflict of interest.

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• DOI: 10.5437/08956308X5704215
• Corpus ID: 154082141

Reverse Innovation at Speres: A Case Study in China

• S. Corsi , Alberto Di Minin , A. Piccaluga
• Published 1 July 2014
• Business, Economics
• Research-Technology Management

28 Citations

Business models for reverse innovation, reverse innovation: a new world order for global innovation, technology management: case of cost, frugal and reverse innovations, research on the path of reverse innovation: a case study of high-tech industry latecomer firms in china, reverse innovation and reverse technology transfer: from made in china to discovered in china in the pharmaceutical sector, reversing gears, building blocks of the reverse innovation process, is microcredit a reverse innovation.

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