Affordability, sociability and the reverse knowledge flow from emerging markets

In rapidly growing emerging markets that exhibit a significant amount of heterogeneity, innovation activities by multinational corporations undergo a substantial transformation. This phenomenon can be summarized by the appearance of frugal innovation (innovation for emerging markets) and reverse innovation (innovation from emerging markets to the rest of the world). Although each of them is discussed individually, a few studies have investigated what kind of innovation specific to emerging markets is transferred to the multinationals’ headquarters. Using the communications theory, we explore the intrinsic value of the information as the main determinant of its transfer, and the aspect of frugal innovation that is valuable for multinational’s headquarters. Our findings indicate that sociality determines the fundamental level of transfer, and affordability moderates it positively. We examined it with using data from innovation projects for emerging markets of Japanese multinationals.