Innovation on Wheels in Emerging Economies: Lessons from Auto MNC’s Experience

Rifat Sharmelly

doi:10.5539/ijbm.v11n8p44

Abstract

Emerging economies (EEs) are increasingly being considered as new sources of growth and innovation opportunities for global auto multinational companies. Many multinational companies from developed countries are eager to prosper in these economies. However, the crucial challenge that companies face today is to identify what precisely are the approaches required to serve mass market customers in EEs. In this research, the case study of a foreign auto multinational operating in India has been utilized. Focusing on the product innovation for the Indian masses with the creation of the most affordable car ‘Figo’ from the reputed auto multinational Ford, this analysis reveal the importance of engaging same set of suppliers in trust based, recurrent collaborative linkages to enhance the innovative performance. In addition, ensuring an effective value-for-money proposition is needed to achieve innovations with required affordability and acceptability criteria. Furthermore, experimenting with modules and resultant learning about markets are needed to enhance the innovative performance. With the suggested testable propositions, this study has significant theoretical contributions as well as implications for managers of aspiring companies intending to serve EEs.

Highlights

How potential auto multinational companies (MNCs) can develop appropriate innovations for the mass market customers in emerging economies (EEs) is a vast strategically significant question in the auto industry today
There has been a dramatic shift of the global economic power towards the less developed, low income and rapidly growing economies known as the EEs (Cavusgil et al, 2002, Hoskisson et al, 2000)
Using the case study research method was justified as this approach enabled to draw empirical evidences from the case of an auto MNC to gain deeper insights of the context along with rich data (Dyer & Wilkins, 1991; Yin, 1984)

Summary

Introduction

How potential auto multinational companies (MNCs) can develop appropriate innovations for the mass market customers in emerging economies (EEs) is a vast strategically significant question in the auto industry today. The few MNCs that have entered EEs with minor adaptations of their highly specified products have invariably overshot the requirements of customers therein. In other cases, their simplistic pricing strategies of converting world prices into domestic currencies have ended up serving only the affluent few, with little consideration about the purchasing power prevailing among less affluent consumers or their precise technology needs (Arnold & Quelch, 1998; London & Hart, 2004)

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Discussion

Conclusion