MNCs in India: focus on frugal innovation

Abstract

Purpose – Frugal innovation is a term that has been used to describe the low-cost products and services, as well as the systems and processes adopted by organizations to develop them. The purpose of this paper is to examine the experience of multi-national companies (MNCs) in India as they adopt the philosophy of frugal innovation to develop products that are high in technology but low in terms of cost to meet the requirements of the market conditions in India, and similar low-income economies. Design/methodology/approach – The case study methodology was adopted to understand the experiences of the Indian subsidiaries of two MNCs, Bosch India and 3M India. Data were acquired through interviews with key decision makers, documents, and publicly available information. Findings – The two MNCs have increased research and development (R&D) in India and adopted the philosophy of frugal innovation which combines high technology with low costs. Based on the analysis, some propositions are presented indicating that MNCs will shift R&D to India if there are market opportunities; they will adopt the philosophy of frugal innovation to produce high technology products that are lost cost and low cost over product lifetime and will also expand to new-to-the-world innovation and finally contribute to global innovation. Research limitations/implications – The study is based on only two case studies and a large sample study may be required before the findings can be generalized. Practical implications – Other MNCs can learn from Bosch India and 3M India in terms of adopting frugal innovation practices to be successful in low-income economies. Originality/value – The field of frugal innovation is quite new and largely based on anecdotal accounts of successful low-cost innovation. This paper provides a more detailed account of the experiences of two well-known organizations to present propositions that may be used to conduct a large sample study.

Inovação Frugal: origens, evolução e perspectivas futuras

“…According to Pisoni, Michelini and Martignoni (2018), the growing importance of emerging markets stimulated stronger global competition, forcing changes in the strategies of multinational companies (BORINI, COSTA and MIRANDA, 2012;RAY and RAY, 2010). The authors emphasized that multinationals that focus on low-income markets need to rethink their innovation efforts to meet these public's "unconventional" demand (OJHA, 2014). In this case, authors such as Brem and Ivens (2013) adopt the concept of 'reverse innovation' to describe the phenomenon of change in the traditional origins and destinations of innovation.…”

“…In the study by Pisoni, Michelini and Martignoni (2018), several scholars highlighted the need to leverage technological knowledge in different locations (connecting and mobilizing innovation developed by subsidiaries) as a key factor in helping multinationals to improve in terms of sustainable competitiveness (BEZERRA and BORINI, 2015;BORINI, OLIVEIRA JUNIOR, SILVEIRA et al, 2012;BORINI, COSTA and OLIVEIRA JUNIOR, 2016). In this sense, the potential for reverse innovations, that is, those designed by subsidiaries and absorbed and used by the parent organization, is reflected in rethinking the innovation architecture implemented by multinationals in their global structures and strategies (RAY and RAY, 2010;BORINI, OLIVEIRA JUNIOR, SILVEIRA et al, 2012;OJHA, 2014).…”

Inovação Frugal: uma Análise Bibliométrica da Produção na Base Scopus

“…Na área de gestão, por sua vez, a inovação frugal é abordada como uma importante estratégia para os negócios, estudos preconizam que a implantação de inovações ricas em tecnologias, mas baixa em termos de custos é essencial para as organizações que buscam atender às exigências de mercados emergentes de baixa renda (OJHA, 2014).…”

Capacidades organizacionais para a inovação frugal

“…Nesse contexto, baixo custo não significa o uso de baixa tecnologias no desenvolvimento de novos produtos frugais (Ojha, 2014b) As abordagens tradicionais do desenvolvimento de produtos para economias emergentes basearam-se na eliminação de recursos ou na substituição de material de alta qualidade por substitutos mais baratos. Porém essa prática já não é suficiente para alcançar estruturas de custos radicalmente reduzidas que garantam o ao mesmo tempo robustez, facilidade de uso e qualidade suficientes (Tiwari et al, 2014).…”