How can rural China achieve sustainable development through inclusive innovation? A tripartite evolutionary game analysis

Abstract

Promoting inclusive innovation is crucial for achieving inclusive growth and sustainable development. This study investigated the decision-making behaviors and interaction mechanisms among the government, enterprises, and base of the pyramid (BoP) customers in the context of inclusive innovation in rural China by applying evolutionary game theory. A tripartite evolutionary game model was developed, and evolutionarily stable strategies along with their corresponding conditions were derived. Numerical simulations were employed to analyze the dynamic evolution process of stakeholders’ strategy choices under various scenarios and their sensitivity to key parameters. The findings suggest that the government plays different roles throughout the lifecycle of inclusive innovation in rural China, acting as an advocate in the initial stage, a promoter in the growth stage, and gradually diminishing its involvement as the market matures. Furthermore, the study reveals that low subsidies are not conducive to the evolution of optimal solutions for the three stakeholders, while high supervision costs reduce the government’s regulatory willingness, thereby hindering enterprises and the BoP customers from implementing and engaging in inclusive innovation in rural areas. Based on these insights, this research proposed some promotional mechanisms tailored to the different developmental stages of inclusive innovation, drawing from the industry life cycle theory. The insights and model developed in this study extend beyond rural China and offer a valuable framework for enhancing sustainable development in rural areas across other developing countries and regions.