Skip to main content
SpringerLink
Log in
Book cover

Aiming Big with Small Cars pp 19–39Cite as

Developing Countries and Innovation

  • Chapter
  • First Online:

Part of the book series: India Studies in Business and Economics ((ISBE))

Abstract

This is how the late John H. Dunning, a highly distinguished scholar of international business management, has described America’s ascent as an economic powerhouse in the second half of the nineteenth century. Now, if we substitute the reference to the United States in the first sentence of the previous paragraph with “India” and imagine the time period in question to concern today’s times, we might as well feel stunned by quite a few striking parallels between the two countries and situations.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Path dependencies may be causing obstacles in the classical lead markets to take note of new, emerging opportunities. “An industry (or economy) can get ‘locked-in’ to a technological path that is difficult to get away from” (Arthur 2000: 107). Developing economies, at least in some respects, may still be having more technological options at their disposal due to less prevalence of legacy systems.

  2. 2.

    Interestingly, a recent study by Boston Consulting Group has also dwelled on striking similarities between the USA of the second half of the nineteenth century and today’s India and China in terms of economic and business activities and opportunities (Silverstein et al. 2012b).

  3. 3.

    Russia, much less taken note of by people at large, has even outperformed India on GDP growth, as Table 2.1 reveals. It is however likely that Russia’s GDP has been boosted by the surge in oil prices since the turn of the century. On the role of oil prices in Russia’s economy, see Rautava (2004).

  4. 4.

    A full list is available in Appendix A.

  5. 5.

    The acronym “BRIC” signifies Brazil, Russia, India, and China (Wilson and Purushothaman 2003).

  6. 6.

    The 34 member countries of the OECD are, by and large, advanced economies with some exceptions, most notably Chile, Mexico and Turkey. Not all advanced economies, e.g. Singapore and Taiwan, are members of the OECD. The OECD countries and the “advanced economies” in the IMF classification, though largely comparable, are not completely identical.

  7. 7.

    More recent data were not available as of June-end 2012.

  8. 8.

    Global innovation is of course not a one-way street. Multinational firms from emerging economies too are investing in R&D facilities overseas, including in the industrialized nations (Pradhan and Singh 2009; Schüler-Zhou and Schüller 2009; Sauvant et al. 2010; Tiwari 2011). Primary motives for the “reverse” trend can be also explained by the same drivers; their relative importance would however vary depending on the industry and target market (cf. Dachs et al. 2012).

  9. 9.

    In fact, several scholars have questioned the theory of disruptive technologies along similar lines or regarding its testability; see, e.g. Danneels (2004) and Tellis (2006).

  10. 10.

    An Indian term roughly comparable with “improvisation.”

  11. 11.

    Reduction of human resources is not necessarily a prime criterion in developing countries, generally well-endowed with a large and relatively “inexpensive” workforce. As a result, firms may opt for a labor-intensive method of production, if it helps to avoid/reduce cost of procuring expensive machinery.

  12. 12.

    A recent publication from the house of business consultancy firm BCG terms this approach as “paisa vasool”, which is a Hindi expression from India for getting full value of one’s money. The authors use this expression “to categorize a purchase or service as fully satisfying—high quality, great value, a complete package that delivers value for money”. The “paisa vasool” products, according to authors of the BCG study are “[l]ow-priced goods with deep, rich features” that enable “technical, functional, and emotional components at bargain prices” (Silverstein et al. 2012a: 213–224).

  13. 13.

    For instance, for the purpose of this study Hong Kong, China and Taiwan would constitute three different entities.

References

  • Ahlstrom, D. (2010). Innovation and growth: How business contributes to society. Academy of Management Perspectives, 24(3), 11–24.

    Article  Google Scholar 

  • Archibugi, D. (1992). Patenting as an indicator of technological innovation: A review. Science and Public Policy, 19(6), 357–368.

    Google Scholar 

  • Archibugi, D., & Pietrobelli, C. (2003). The globalisation of technology and its implications for developing countries: Windows of opportunity or further burden? Technological Forecasting and Social Change, 70(9), 861–883.

    Article  Google Scholar 

  • Arthur, W. B. (Ed.). (2000). Increasing returns and path dependence in the economy. Ann Arbor: University of Michigan Press.

    Google Scholar 

  • Balasubramanyam, K. R., & Madhavan, N. (2008, November 16). Moon dust & hard business. Business Today, New Delhi.

    Google Scholar 

  • Baron, C. (1978). Appropriate technology comes of age: A review of some recent literature and aid policy statements. International Labour Review, 117(5), 625–634.

    Google Scholar 

  • Basham, A. L. (2004). The wonder that was India: A survey of the history and culture of the indian sub-continent before the coming of the muslims. London: Picador, Pan Macmillan.

    Google Scholar 

  • Becker, H. (2006). High noon in the automotive industry. Heidelberg: Springer.

    Google Scholar 

  • Brouwer, E., & Kleinknecht, A. (1999). Innovative output, and a firm’s propensity to patent: An exploration of CIS micro data. Research Policy, 28(6), 615–624.

    Article  Google Scholar 

  • Buse, S., Tiwari, R., & Herstatt, C. (2010). Global innovation: An answer to mitigate barriers to innovation in small and medium-sized enterprises. International Journal of Innovation and Technology Management, 7(3), 215–227.

    Article  Google Scholar 

  • Cécora, J. (1999). Cultivating grass-roots for regional development in a globalising economy: Innovation and entrepreneurship in organised markets. Aldershot: Ashgate.

    Google Scholar 

  • Chandrashekar, S. (2011). India and the peaceful uses of outer space. India Review, 10(4), 440–452.

    Article  Google Scholar 

  • Chesbrough, H. (2003). Open innovation: The new imperative for creating and profiting from technology. Boston: Harvard Business School Press.

    Google Scholar 

  • Chesbrough, H. (2006). Open business models: How to thrive in the new innovation landscape. Boston: Harvard Business School Press.

    Google Scholar 

  • Chesbrough, H., Vanhaverbeke, W., & West, J. (2008). Open innovation: Researching a new paradigm. Oxford: Oxford University Press.

    Google Scholar 

  • Christensen, C. M., & Raynor, M. E. (2003). The innovator’s solution: Creating and sustaining successful growth. Boston, MA: Harvard Business School Press.

    Google Scholar 

  • Dachs, B., Hanz-Weiss, D., Kampik, F., Leitner, S., Scherngell, T., Stehrer, R., et al. (2012). Internationalisation of business investments in R&D and analysis of their economic impact (Deliverable 7: Analysis report). Project commissioned by the European Commission, DG Research & Innovation (Contract Nr. RTD/DirC/C3/2010/SI2.563818). Vienna: AIT Austrian Institute of Technology (Foresight & Policy Development Department), and the Vienna Institute for International Economic Studies.

    Google Scholar 

  • Danneels, E. (2004). Disruptive technology reconsidered: A critique and research agenda. Journal of Product Innovation Management, 21(4), 246–258.

    Article  Google Scholar 

  • den Ouden, E. (2012). Innovation design: Creating value for people, organizations and society. London: Springer.

    Google Scholar 

  • Dhume, S. (2011, October 7). Unloved at any speed. Foreign Policy. Retrieved April 27, 2012, from http://www.foreignpolicy.com/articles/2011/10/07/tata_nano_unloved_at_any_speed?page=full

  • Dunning, J. H. (1958). American investment in British manufacturing industry. London: Allen and Unwin.

    Google Scholar 

  • Economic Times. (2009, December 8). Tatas do a Nano in water purifier at Rs 1k. Economic Times, Mumbai.

    Google Scholar 

  • Economist. (2010). The world turned upside down: A special report on innovation in emerging markets. London: The Economist.

    Google Scholar 

  • Eltis, D., & Engerman, S. L. (2000). The importance of slavery and the slave trade to industrializing Britain. Journal of Economic History, 60, 123–144.

    Google Scholar 

  • Enderwick, P. (2007). Understanding emerging markets: China and India. London: Routledge.

    Google Scholar 

  • Fontanella-Khan, J., & Munshi, N. (2011, October 9). Tata fails to engineer success for Nano. Financial Times, London.

    Google Scholar 

  • Gassmann, O., Enkel, E., & Chesbrough, H. (2010). The future of innovation. R&D Management, 40(3), 213–221.

    Article  Google Scholar 

  • Goldstein, A. (2007). Multinational companies from emerging economies: Composition, conceptualization and direction in the global economy. Hampshire: Palgrave Macmillan.

    Book  Google Scholar 

  • Govindarajan, V., & Ramamurti, R. (2011). Reverse innovation, emerging markets, and global strategy. Global Strategy Journal, 1(3/4), 191–205.

    Article  Google Scholar 

  • Grieve, R. H. (2004). Appropriate technology in a globalizing world. International Journal of Technology Management and Sustainable Development, 3(3), 173–187.

    Article  Google Scholar 

  • Grueber, M., & Studt, T. (2011). 2012 global R&D funding forecast. R&D Magazine, pp. 1–36. Northbrook, IL: Advantage Business Media.

    Google Scholar 

  • Gupta, A. K. (2010). Grassroot green innovations for inclusive, sustainable development. In A. López-Carlos (Ed.), The innovation for development report 2009–2010: Strengthening innovation for the prosperity of nations (pp. 137–146). Hampshire: Palgrave Macmillan.

    Google Scholar 

  • Haddock, R., & Jullens, J. (2009). The best years of the auto industry are still to come. Strategy + Business, Issue 55(Summer), 36–48.

    Google Scholar 

  • Hart, S. L., & Christensen, C. M. (2002). The great leap: Driving innovation from the base of the pyramid. MIT Sloan Management Review, 44(1), 51–56.

    Google Scholar 

  • Hawksworth, J., & Tiwari, A. (2011). The world in 2050. London: PricewaterhouseCoopers LLP (PwC).

    Google Scholar 

  • Herstatt, C., Tiwari, R., Ernst, D., & Buse, S. (2008). India’s national innovation system: Key elements and corporate perspectives. Economics Series, Working Paper No. 96. Honolulu, Hawaii: East-West Center.

    Google Scholar 

  • Herstatt, C., & Verworn, B. (2004). The fuzzy front end of innovation. In EITIM (Ed.), Bringing technology and innovation into the boardroom (pp. 347–373). Houndmills: Palgrave MacMillan.

    Google Scholar 

  • Hucko, M. (2012, May 4). Automarkt: Premiumautobauer deklassieren Massenhersteller. Financial Times Deutschland, Hamburg, p. 4.

    Google Scholar 

  • IMF. (2013). World Economic Outlook (April 2013): Hopes, realities, and risks. Washington, DC: International Monetary Fund.

    Google Scholar 

  • Islam, F. (2010). Socioeconomy of innovation and entrepreneurship in a cluster of SMEs in emerging economies. Competitiveness Review, 20(3), 267–278.

    Article  Google Scholar 

  • Jänicke, M., & Jacob, K. (2004). Lead markets for environmental innovations: A new role for the nation state. Global Environmental Politics, 4(1), 29–46.

    Article  Google Scholar 

  • Kalam, A. P. J. A., & Tiwari, A. (2002). Wings of fire: An autobiography. Hyderabad: Universities Press.

    Google Scholar 

  • Kalogerakis, K., Lüthje, C., & Herstatt, C. (2010). Developing innovations based on analogies: Experience from design and engineering consultants. Journal of Product Innovation Management, 27(3), 418–436.

    Article  Google Scholar 

  • Karamchandani, A., Kubzansky, M., & Lalwani, N. (2011). Is the bottom of the pyramid really for you. Harvard Business Review, 89(3), 107–111.

    Google Scholar 

  • Kodama, F. (1992). Technology fusion and the new R&D. Harvard Business Review, 70(4), 70–78.

    Google Scholar 

  • Kodama, F. (2012). MOT in transition: From technology fusion to technology-service convergence. Keynote address at the 21st international conference on management of technology. Hsinchu, Taiwan: IAMOT.

    Google Scholar 

  • Kohlbacher, F., & Herstatt, C. (Eds.). (2008). The silver market phenomenon: Business opportunities in an era of demographic change. Heidelberg: Springer.

    Google Scholar 

  • Krishnan, R. T. (2010). From jugaad to systematic innovation: The challenge for India. Bangalore: Utpreraka Foundation.

    Google Scholar 

  • Jaggi, O. P. (1981). Technology in ancient India (Vol. 1). Delhi: Atma Ram & Sons.

    Google Scholar 

  • Lee, Y., Lin, B.-W., Wong, Y.-Y., & Calantone, R.J. (2011). Understanding and managing international product launch: A comparison between developed and emerging markets. Journal of Product Innovation Management, 28(S1), 104–120.

    Article  Google Scholar 

  • London, T., & Hart, S. L. (Eds.). (2010). Next generation business strategies for the base of the pyramid: New approaches for building mutual value. Upper Saddle River, NJ: FT Press.

    Google Scholar 

  • Maddison, A. (1971). Class structure and economic growth: India & Pakistan since the Moghuls. London: Allen & Unwin.

    Google Scholar 

  • Maddison, A. (2006). The world economy (Joint volumes: 1. A Millennial perspective, and 2. Historical statistics). Paris: OECD Development Centre Studies.

    Google Scholar 

  • Malhotra, J. (2009, September 24). Questions and answers: Prof. Anil Kumar Gupta. Wall Street Journal, New York.

    Google Scholar 

  • Mani, S. (2010). India. In UNESCO (Ed.), UNESCO science report 2010: The current status of science around the world (pp. 363–377). Paris: United Nations Educational, Scientific and Cultural Organization.

    Google Scholar 

  • Murthi, K. R. S., Sankar, U., & Madhusudhan, H. N. (2007). Organizational systems, commercialization and cost-benefit analysis of Indian space programme. Curr Sci, 93, 1697–1827.

    Google Scholar 

  • Nakata, C. (2012). Creating new products and services for and with the base of the pyramid. Journal of Product Innovation Management, 29(1), 3–5.

    Article  Google Scholar 

  • Narayanan, K., & Bhat, S. (2009). Technology sourcing and its determinants: A study of basic chemical industry in India. Technovation, 29(8), 562–573.

    Article  Google Scholar 

  • OECD. (2006). Science, technology and industry outlook. Paris: Organisation for Economic Co-Operation and Development.

    Google Scholar 

  • OECD. (2008a). Internationalisation of Business R&D: Evidence, Impacts and Implications. Paris: Organisation for Economic Co-Operation and Development.

    Google Scholar 

  • OECD. (2008b). Open innovation in global networks. Paris: Organisation for Economic Co-Operation and Development.

    Google Scholar 

  • OECD. (2008c). Science, technology and industry outlook. Paris: Organisation for Economic Co-Operation and Development.

    Google Scholar 

  • OECD. (2010). Science, technology and industry outlook—Highlights. Paris: Organisation for Economic Co-Operation and Development.

    Google Scholar 

  • OECD. (2012). OECD.Stat extracts (Science, technology and patents). Retrieved June 29, 2012, from http://stats.oecd.org/Index.aspx?usercontext=sourceoecd

  • OECD. (2013). OECD.Stat extracts (science, technology and patents). Retrieved April 19, 2013, from http://stats.oecd.org/Index.aspx?themetreeid=-200#

  • OICA. (2008). 2007 production statistics. Paris: International Organization of Motor Vehicle Manufacturers (Organisation Internationale des Constructeurs d’Automobiles).

    Google Scholar 

  • OICA. (2012). 2011 production statistics. Paris: International Organization of Motor Vehicle Manufacturers (Organisation Internationale des Constructeurs d’Automobiles).

    Google Scholar 

  • Palepu, K. G., Anand, B., & Tahilyani, R. (2011). Tata Nano—The people’s car, Case 9-710-420. Boston, MA: Harvard Business School.

    Google Scholar 

  • Porter, M. E. (1990). The competitive advantage of nations. New York: Free Press.

    Google Scholar 

  • Pradhan, J. P., & Singh, N. (2009). Outward FDI and knowledge flows: A study of the Indian automotive sector. International Journal of Institutions and Economies, 1(1), 106–133.

    Google Scholar 

  • Prahalad, C. K. (2005). The fortune at the bottom of the pyramid: Eradicating poverty through profits. Upper Saddle River, NJ: Wharton School Publishing.

    Google Scholar 

  • Prahalad, C. K. (2012). Bottom of the pyramid as a source of breakthrough innovations. Journal of Product Innovation Management, 29(1), 6–12.

    Article  Google Scholar 

  • Prahalad, C. K., & Hart, S. L. (2002). The fortune at the bottom of the pyramid. Strategy + Business, Issue 22(Spring), 2–14.

    Google Scholar 

  • Prahalad, C. K., & Krishnan, M. S. (2008). The new age of innovations: Driving cocreated value throuugh global networks. New York: McGraw-Hill.

    Google Scholar 

  • Prahalad, C. K., & Lieberthal, K. (1998). The end of corporate imperialism. Harvard Business Review, 76(4), 68–79.

    Google Scholar 

  • Radjou, N., Prabhu, J., & Ahuja, S. (2012). Jugaad innovation: Think frugal, be flexible, generate breakthrough growth. San Francisco: Jossey-Bass.

    Google Scholar 

  • Rautava, J. (2004). The role of oil prices and the real exchange rate in Russia’s economy—A cointegration approach. Journal of Comparative Economics, 32(2), 315–327.

    Article  Google Scholar 

  • Royal Society. (2011). Knowledge, networks and nations: Global scientific collaboration in the 21st century. London: The Royal Society.

    Google Scholar 

  • Santos-Paulino, A. U., & Wan, G. (Eds.). (2010). The rise of China and India: Impacts, prospects and implications. Hampshire: Palgrave Macmillan.

    Google Scholar 

  • Sauvant, K. P., Mendoza, K., & Ince, I. (Eds.). (2008). The rise of transnational corporations from emerging markets: Threat or opportunity? Studies in international investment. Cheltenham: Edward Elgar.

    Google Scholar 

  • Sauvant, K. P., Pradhan, J. P., Chatterjee, A., & Harley, B. (Eds.). (2010). The rise of Indian multinationals: Perspectives on Indian outward foreign direct investment. New York: Palgrave Macmillan.

    Google Scholar 

  • Schuh, G., Lenders, M., & Hieber, S. (2011). Lean innovation—Introducing value systems to product development. International Journal of Innovation and Technology Management, 8(1), 41–54.

    Article  Google Scholar 

  • Schüler-Zhou, Y., & Schüller, M. (2009). The internationalization of Chinese companies: What do official statistics tell us about Chinese outward foreign direct investment? Chinese Management Studies, 3(1), 25–42.

    Article  Google Scholar 

  • Sehested, C., & Sonnenberg, H. (2008). Lean innovation: A fast path from knowledge to value. Heidelberg: Springer.

    Google Scholar 

  • Seidler, C. (2012, May 4). Nasa-Chef Bolden: “Die USA müssen nicht immer der Anführer sein”. Der Spiegel, Hamburg.

    Google Scholar 

  • Silverstein, M. J., Singhi, A., Liao, C., & Michael, D. (2012a). The $10 trillion prize: Captivating the newly affluent in China and India. Boston: Harvard Business Review Press.

    Google Scholar 

  • Silverstein, M. J., Singhi, A., Liao, C., & Michael, D. (2012b). China and India: Boom or bust?. BCG perspectives. Boston: Boston Consulting Group.

    Google Scholar 

  • Simon, S., Näher, U., & Lauritzen, M. D. (2008). R&D: Aligning the interface with production. In E. Abele, T. Meyer, U. Näher, G. Strube, & R. Sykes (Eds.), Global production: A handbook for strategy and implementation (pp. 350–371). Heidelberg: Springer.

    Chapter  Google Scholar 

  • Singh, M. G., Gambhir, A., & Dasgupta, J. (2011). Innovation in India: Affordable innovations. In S. Dutta (Ed.), The Global Innovation Index 2011: Accelerating growth and development (pp. 77–86). Fontainebleau: INSEAD.

    Google Scholar 

  • Statistisches Bundesamt. (2012). Jahresschätzung Arbeitskosten: Arbeitskosten je geleistete Stunde im Jahr 2011. Wiesbaden: Statistisches Bundesamt (Federal Statistical Office).

    Google Scholar 

  • Subrahmanyan, S., & Gomez-Arias, J. T. (2008). Integrated approach to understanding consumer behavior at bottom of pyramid. Journal of Consumer Marketing, 25(7), 402–412.

    Article  Google Scholar 

  • Tellis, G. J. (2006). Disruptive technology or visionary leadership? Journal of Product Innovation Management, 23(1), 34–38.

    Article  Google Scholar 

  • Thapar, R. (2003). The Penguin history of early India: From the origins to AD 1300. New Delhi: Penguin.

    Google Scholar 

  • Tiwari, R. (2011). Indian investments in Germany: Innovation and R&D gain momentum in a stable partnership. In: Annual review 2011 (pp. 119–123). Mumbai: Indo-German Chamber of Commerce.

    Google Scholar 

  • Tiwari, R., & Buse, S. (2007). Barriers to innovation in SMEs: Can the internationalization of R&D mitigate their effects?. In: The 1st European conference on corporate R&D (CONCORD 2007). Seville: European Commission’s Directorate General Joint Research Centre and Directorate General for Research.

    Google Scholar 

  • UNCTAD. (2005). Globalization of R&D and developing countries: Proceedings of the expert meeting. New York: United Nations Conference on Trade and Development.

    Google Scholar 

  • UNESCO. (2010a). Measuring R&D: Challenges faced by developing countries. Paris: United Nations Educational, Scientific and Cultural Organization.

    Google Scholar 

  • UNESCO (Ed.). (2010b). UNESCO science report 2010: The current status of science around the world. Paris: United Nations Educational, Scientific and Cultural Organization.

    Google Scholar 

  • van den Waeyenberg, S., & Hens, L. (2008). Crossing the bridge to poverty, with low-cost cars. Journal of Consumer Marketing, 25(7), 439–445.

    Article  Google Scholar 

  • van Welsum, D., & Vickery, G. (2005). Potential offshoring of ICT-intensive using occupations. Working Party on the Information Economy. Paris: Organisation for Economic Co-operation and Development.

    Google Scholar 

  • Vernon, R. (1966). International investment and international trade in the product cycle. Quarterly Journal of Economics, 80(2), 190–207.

    Article  Google Scholar 

  • Wilson, D., & Purushothaman, R. (2003). Dreaming with BRICs: The path to 2050. Global Economics Paper No. 99. New York: Goldman Sachs.

    Google Scholar 

  • Winters, L. A., & Yusuf, S. (Eds.). (2007). Dancing with giants: China, India, and the global economy. Washington, DC: The World Bank and the Institute of Policy Studies.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Institute for Technology and Innovation Management, Hamburg University of Technology, Hamburg, Germany

    Rajnish Tiwari & Cornelius Herstatt

Authors
  1. Rajnish Tiwari
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Cornelius Herstatt
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer International Publishing Switzerland

About this chapter

Cite this chapter

Tiwari, R., Herstatt, C. (2014). Developing Countries and Innovation. In: Aiming Big with Small Cars. India Studies in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-02066-2_2

Download citation

Publish with us

Policies and ethics

Search

Navigation