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Frugal Innovation in Emerging Markets

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abstract The quality and number of innovations developed by multinational companies from emerging countries is increasing dramatically. In particular, frugal innovations - “good-enough,” affordable products that meet the needs of resource-constrained consumers - have created tremendous demand in emerging markets. While the development of such products has largely been the domain of local corporations in emerging countries, Western corporations have recently started to engage in frugal innovation as well. This is a diffi cult task for Western firms, however, because their business models and organizational structures are traditionally designed for the development of advanced products for the affl uent few at the top of the economic pyramid. Using Swiss weighing-instrument manufacturer Mettler Toledo as a case example, this article suggests that frugal innovations are largely developed by local R&D subsidiaries of Western fi rms in emerging countries. A substantial degree of autonomy for those local R&D subsidiaries, including product-portfolio responsibilities, can facilitate the development of frugal innovation.
   
type journal paper
   
keywords frugal innovation, emerging markets
   
language English
kind of paper journal article
date of appearance 7-2011
journal Research Technology Management
publisher Industrial Research Institute (Washington DC)
ISSN 0895-6308
ISSN (online) 1930-0166
DOI 10.5437/08956308X5404007
volume of journal 54
number of issue 4
page(s) 38-45
review double-blind review
   
profile area SoM - Business Innovation
citation Zeschky, M., Widenmayer, B., & Gassmann, O. (2011). Frugal Innovation in Emerging Markets. Research Technology Management, 54(4), 38-45, DOI:10.5437/08956308X5404007.