Implications of Reverse Innovation for Socio-Economic Sustainability: A Case Study of Philips China

Juan Shan,Miqdad Khan

doi:10.3390/su8060530

Abstract

The idea of reverse innovation, local innovation happening in emerging markets for the global market, has gained much academic and managerial attention in recent years. The purpose of this study is to understand how reverse innovation has successfully diffused into the product and market development strategies at Philips Inc., a prominent multinational company (MNC) of the modern era. Furthermore, the study presents the success achieved by these innovations at both the domestic and global levels, along with their implications regarding socio-economic sustainability in emerging markets. In order to investigate the research questions, a case study of Philips China was conducted involving three product innovations that were found to be suitable examples of reverse innovation. After the study of extant literature on the topic, drawing from research databases, newspaper articles, and company press releases, five semi-structuredinterviews were conducted with key managers and a market practitioner to gain sufficient understanding for this exploratory study. Subsequent case analysis concludes that these innovations are examples of reverse innovation representing a new paradigm change in innovation flow. This flow of innovation from emerging markets to developed markets as confirmed by Corsi’s framework could potentially disrupt developed markets as well as contribute to ensure healthy living conditions for the population living in developing countries. If so, this represents a sustainable socio-economic change in-line with the United Nations' Sustainable Development Goal (SDG) of “ensuring healthy lives and promoting well-being for all at all ages.” This is relevant as Philips aspires to be a prominent private sector player in achieving the above-stated goal by defeating non-communicable disease and strengthening local healthcare systems.

Highlights

The idea of reverse innovation, local innovation happening in emerging markets for the global market, has gained much academic and managerial attention in recent years
Using the in-depth case study of Philips Inc., the purpose of this research is to understand how reverse innovation is being organized at multinational company (MNC), the level of success achieved by their products, and the implications for socio-economic sustainability in emerging markets
This problem was further intensified by the fact that particulate matter was accompanied by volatile organic compounds (VOCs)

Summary

Introduction

The idea of reverse innovation, local innovation happening in emerging markets for the global market, has gained much academic and managerial attention in recent years. Govindarajan [1] first coined the term, which involves innovations emerging in the developing world considering the local constraints, and later traveling uphill to find applications in the developed world [2]. This phenomena is called “blowback innovation” [3]. Many multinational corporations (MNCs) are heading toward these emerging markets (such as China and India), which offers them the big growth opportunity to redefine trajectories of products and of technological and business model innovations. The most critical challenge for the MNCs will be how to design and diffuse such innovation strategies, which can help them to tap enormous emerging market potential [4]

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