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Frugal innovations for the 'unserved' customer: An assessment of India's attractiveness as a lead Market for cost-effective products

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  • Tiwari, Rajnish
  • Herstatt, Cornelius

Abstract

This study builds on our previous work, which had questioned the validity of certain assumptions of the lead market theory in the face of changing ground realities in a globalized world. Sustained economic growth and proven technological capabilities in some emerging economies like China and India call for a reassessment of the appropriateness of the conventional wisdom that had held true until recently. While our previous study had re-built a theoretical background of the lead market model by introducing new elements, and doing away with certain others, with the help of two in-depth case studies; the purpose of the present study is to specifically assess India's potential as a lead market for cost-effective frugal innovations. The study crystallizes the inherent characteristics of frugal innovations, their development process and market success in the domestic and overseas markets by analyzing four successful product innovations from selected industries in India. The factors identified thus are then incorporated in the theoretic model to derive propositions about India's lead market potential. Whereas affordability and economies of scale have traditionally constituted the primary concern for frugal innovations, an increasing shift towards value proposition is identified. Intensifying competition and growing customer aspirations are changing the nature of frugal innovations. The hitherto unserved customer demands attractive designs and modern technologies to come out of his shell of non-consumption. Our research confirms that frugal innovations can benefit end-consumers and firms, simultaneously. Better-designed products also have positive impact on the lead market potential, creating a virtuous cycle. The study also discovered that the increasing need for sophistication coupled with continued cost pressures is shifting the product development processes into the domain of open global innovation, which also helps reduce the negative country-of-origin effects faced by developing countries. The research would have implications for location decisions in setting up global innovation/R&D activities. --

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Bibliographic Info

Paper provided by Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management in its series Working Papers with number 69.

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Date of creation: 2012
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Handle: RePEc:zbw:tuhtim:69

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References

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  1. 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.
  2. 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.
  3. 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.
  4. Frédérique Sachwald, 2008. "Location choices within global innovation networks: the case of Europe," The Journal of Technology Transfer, Springer, vol. 33(4), pages 364-378, August.
  5. 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.
  6. 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., vol. 7(03), pages 215-227.
  7. Gassmann, Oliver & von Zedtwitz, Maximilian, 1999. "New concepts and trends in international R&D organization," Research Policy, Elsevier, vol. 28(2-3), pages 231-250, March.
  8. Pradhan, Jaya Prakash, 2007. "Growth of Indian Multinationals in the World Economy: Implications for Development," MPRA Paper 12360, University Library of Munich, Germany.
  9. 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.
  10. Rennings, Klaus & Smidt, Wilko, 2008. "A Lead Market Approach Towards the Emergence and Diffusion of Coal-fired Power Plant Technology," ZEW Discussion Papers 08-058, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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Cited by:
  1. Maxim Kotsemir & Alexander Abroskin & Dirk Meissner, 2013. "Innovation concepts and typology – an evolutionary discussion," HSE Working papers WP BRP 05/STI/2013, National Research University Higher School of Economics.

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