Capability building through innovation for unserved lower end mega markets

July 21, 2013 Editor 0

Publication date: Available online 20 July 2013Source:Technovation
Author(s): Chaisung Lim , Seokhee Han , Hiroshi Ito
Although product innovation for unserved lower end mega markets in large developing countries has been recognized as an opportunity for improving the competitiveness of local firms, limited research has been conducted that explicitly explores how innovation capabilities can be built for these markets. This study investigates Tata Motors’ Nano as an exploratory case of building innovation capabilities. This paper shows that the building of innovation capability could be achieved through creating a process that overcomes ‘the deficiency problem’ in generating radically cheap priced original products. The study’s contribution to the literature is that it addresses issues of building local firms’ innovation capabilities through creating original products for the unserved lower end market, in which advanced country firms have limited experience. Nano, as an unprecedented innovation in the automobile industry, reveals a path to building innovation capability that has not previously been observed. We show that detailed processes involved in generating an original product for the lower end market provide insights on the strategy in terms of target price setting, initiating innovation process overcoming ‘the deficiency problem’, and creation of complementary resources.

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Categories: Innovation, South-South

Tags: building innovation capability, end mega markets, innovation for unserved lower end, unserved lower end mega