Abstract
The fields of frugal and reverse innovation as well as sustainability and its management have received tremendous interest in recent times. However, there is little literature on how both fields are related to each other. Hence, this paper gives an overview of research in both areas and provides a view of the relationship between frugal and reverse innovation, sustainability management and performance constructs. The link between frugal and reverse innovation on the one hand and sustainability performance on the other hand is established through a differentiated perspective on dimensions representing different fields of sustainability management, i.e. the sustainability of resources used in value creation, the sustainability of the actual value creation processes, and the sustainability of the outcomes of value creation processes. Moreover, we also argue for a positive link between the three dimensions of sustainability management and a company’s market performance.
Highlights
After years of hesitation, many businesses are actively working towards improving their sustainability performance (Hopkins, 2009). Epstein and Roy (2001) posit that sustainability performance leads to favorable stakeholder reactions which, in turn, improves long term corporate financial performance
Following Nunes and Breene (2011), we suggest to distinguish between frugal innovation as designing offerings for low-income market segments, and reverse innovation as new products developed in emerging markets which are modified for sale in developed countries
Drawing upon both the literature on innovation management and the literature on sustainability management, we develop and present a framework describing how frugal and reverse innovation are contributing to improvements in the areas of input resources, value activities, and outcomes, and how, in turn, it allows achieving increased sustainability performance as well as market performance, based on a sustainability management system (SMS)
Summary
Many businesses are actively working towards improving their sustainability performance (Hopkins, 2009). Epstein and Roy (2001) posit that sustainability performance leads to favorable stakeholder reactions which, in turn, improves long term corporate financial performance. Several examples from companies headquartered in developed countries, such as General Electric’s strategic initiative labeled “Ecomagination” (General Electric 2011) provide evidence that innovation and sustainability management are often closely intertwined today Factors such as new Journal of Technology Management for Growing Economies Vol 4 No 2 Oct 2013 pp. With this new strategy approach many emerging economy firms are deploying their earnings to invest in R&D as well as to acquire firms overseas to gain access to Journal of Technology Management for Growing Economies, Volume 4, Number 2, Oct 2013 sophisticated technological capabilities These companies are using this unique situation to consider aspects of sustainability management, as concepts like frugal innovation are not just about redesigning products; but about rethinking entire company processes and business models. Namely acquisition outside the home country and internationalization of R&D are leading to an interesting trend of movement of technology and innovation from the developed to the developing countries
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