Advanced Search
MyIDEAS: Login to save this paper or follow this series

India - a lead market for frugal innovations? Extending the lead market theory to emerging economies

Contents:

Author Info

  • Tiwari, Rajnish
  • Herstatt, Cornelius

Abstract

India has emerged as a vibrant and versatile source for cost effective, disruptive innovations of various varieties. Price-sensitive consumers in a large and growing market keep inducing firms to apply frugal engineering for creating affordable products and services without compromising excessively on quality. Because, as The Economist asserts: Frugal does not mean second-rate. Such innovations are characterized by high affordability, robustness, and good enough quality in a volume-driven market. Resource constraints motivate firms and entrepreneurs to think out-of-the-box. The trick lies in creating solutions that are able to circumvent given environmental constraints in a cost effective way. India's large and enormously young population faced with limited budgets, but well-endowed with high aspirations, provides an ideal experiment ground for many firms. Solutions created for the Indian market are often suitable for other developing countries in Asia, Africa and Latin America that frequently face similar socio-economic conditions. In some instances they succeed even in developed country markets by enabling significant cost reductions. This emergence as a hub for frugal innovations possibly suggests a lead market role for India. On the other hand, lead markets, as understood today, are characterized by high per capita income, great customer sophistication and high quality infrastructure. Such assumptions imply that lead markets, almost by default, can only exist in economically developed countries because only they can finance the development effort. Using two anchor-cases of product innovations aimed at price-sensitive segments in India we generate preliminary evidence to challenge some of the core assumptions of the lead market theory and propose that lead markets can emerge in developing countries too because market attractiveness (e.g. volume of demand, export possibilities) and technological capabilities are able to offset many other deficiencies. The supposed absence of customer sophistication is channelized into a challenge for supplier-side sophistication to design cost effective, good enough solutions (low-cost, thin-margin) that can meet the aspirations of consumers in a highly competitive market. In order to master this challenge companies need access to a competent and sufficiently large technical base with first-hand knowledge of the ground situation of targeted customer groups (social capital). --

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/55491/1/684438607.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management in its series Working Papers with number 67.

as in new window
Length:
Date of creation: 2012
Date of revision:
Handle: RePEc:zbw:tuhtim:67

Contact details of provider:
Postal: Schwarzenbergstraße 95, 21073 Hamburg
Phone: +49/ (0)40/ 42878 - 3777
Fax: +49/ (0)40/ 42878 - 2867
Web page: http://www.tu-harburg.de/tim/index_en.html
More information through EDIRC

Related research

Keywords: Lead Markets; Frugal Innovations; India; Globalization of Innovation; Internationalization of R&D;

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Birgit Kuchler & Jan Goebel, 2003. "Smoothed Income Poverty in European Countries," Discussion Papers of DIW Berlin 352, DIW Berlin, German Institute for Economic Research.
  2. Herstatt, Cornelius & Tiwari, Rajnish & Buse, Stephan, 2008. "India's National Innovation System: Key elements and corporate perspectives," Working Papers 51, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  3. Chaudhuri, Kausik & Schneider, Friedrich & Chattopadhyay, Sumana, 2006. "The size and development of the shadow economy: An empirical investigation from states of India," Journal of Development Economics, Elsevier, Elsevier, vol. 80(2), pages 428-443, August.
  4. Gassmann, Oliver & von Zedtwitz, Maximilian, 1999. "New concepts and trends in international R&D organization," Research Policy, Elsevier, Elsevier, vol. 28(2-3), pages 231-250, March.
  5. Tiwari, Rajnish & Buse, Stephan & Herstatt, Cornelius, 2007. "Innovation via global route: Proposing a reference model for chances and challenges of global innovation processes," Working Papers 49, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  6. Frédérique Sachwald, 2008. "Location choices within global innovation networks: the case of Europe," The Journal of Technology Transfer, Springer, Springer, vol. 33(4), pages 364-378, August.
  7. Marian Beise, 2005. "Lead markets, innovation differentials and growth," International Economics and Economic Policy, Springer, Springer, vol. 1(4), pages 305-328, January.
  8. Martin Jänicke & Klaus Jacob, 2004. "Lead Markets for Environmental Innovations: A New Role for the Nation State," Global Environmental Politics, MIT Press, MIT Press, vol. 4(1), pages 29-46, 02.
  9. Pietro Moncada-Patern�-Castello & Marco Vivarelli & Peter Voigt, 2011. "Drivers and impacts in the globalization of corporate R&D: an introduction based on the European experience," Industrial and Corporate Change, Oxford University Press, vol. 20(2), pages 585-603, April.
  10. Brown, James E. & Hendry, Chris N. & Harborne, Paul, 2007. "An emerging market in fuel cells? Residential combined heat and power in four countries," Energy Policy, Elsevier, Elsevier, vol. 35(4), pages 2173-2186, April.
  11. Rammer, Christian & Beise, Marian, 2003. "Local User-Producer Interaction in Innovation and Export Performance of Firms," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 03-51, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Narayanan, K., 1998. "Technology acquisition, de-regulation and competitiveness: a study of Indian automobile industry," Research Policy, Elsevier, Elsevier, vol. 27(2), pages 215-228, June.
  13. Tiwari, Rajnish & Herstatt, Cornelius, 2011. "Role of "Lead Market" factors in globalization of innovation: Emerging evidence from India & its implications," Working Papers 64, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  14. Tiwari, Rajnish & Herstatt, Cornelius, 2009. "The emergence of Indian multinationals: An empirical study of motives, status-quo and trends of Indian investments in Germany," Working Papers 56, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  15. Marian Beise & Heike Belitz, 1998. "Trends in the Internationalisation of R&D - the German Perspective," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, DIW Berlin, German Institute for Economic Research, vol. 67(2), pages 67-85.
  16. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "India - a lead market for frugal innovations? Extending the lead market theory to emerging economies," Working Papers 67, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  17. Kumar, Nagesh, 2001. "Determinants of location of overseas R&D activity of multinational enterprises: the case of US and Japanese corporations1," Research Policy, Elsevier, Elsevier, vol. 30(1), pages 159-174, January.
  18. Stephan Buse & Rajnish Tiwari & Cornelius Herstatt, 2010. "Global Innovation: An Answer To Mitigate Barriers To Innovation In Small And Medium-Sized Enterprises?," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 215-227.
  19. Johny K Johansson & Ilkka A Ronkainen & Michael R Czinkota, 1994. "Negative Country-of-Origin Effects: The Case of the New Russia," Journal of International Business Studies, Palgrave Macmillan, vol. 25(1), pages 157-176, March.
  20. Beise, Marian & Rennings, Klaus, 2005. "Lead markets and regulation: a framework for analyzing the international diffusion of environmental innovations," Ecological Economics, Elsevier, Elsevier, vol. 52(1), pages 5-17, January.
  21. Cantwell, John, 1995. "The Globalisation of Technology: What Remains of the Product Cycle Model?," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 19(1), pages 155-74, February.
  22. Marian Beise & Klaus Rennings, 2004. "National Environmental Policy and the Global Success of Next-Generation Automobiles," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University 154, Research Institute for Economics & Business Administration, Kobe University.
  23. Beise, Marian & Cleff, Thomas, 2004. "Assessing the lead market potential of countries for innovation projects," Journal of International Management, Elsevier, Elsevier, vol. 10(4), pages 453-477.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "Open global innovation networks as enablers of frugal innovation: propositions based on evidence from India," Working Papers 72, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  2. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "Frugal innovations for the 'unserved' customer: An assessment of India's attractiveness as a lead Market for cost-effective products," Working Papers 69, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  3. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "India - a lead market for frugal innovations? Extending the lead market theory to emerging economies," Working Papers 67, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:tuhtim:67. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.