Reverse Innovation and the Bottom of the Pyramid Proposition

Abstract

Analysing cases from India, this chapter reveals flaws in recent claims that reverse innovation can resolve some of the world's most urgent social problems. Reverse innovation implies the diffusion of innovations from developing to developed countries, and is therefore, per se, irrelevant for the social needs of the former. If understood more broadly, as a strategic approach, reverse innovation may reduce some dimensions of inequality. However, as an instrument of poverty reduction, reverse innovation equals the known and compelling but doubtful proposition that developed country multinational enterprises may induce large-scale prosperity simply by doing business with the world's poorest. In this chapter, the authors assess the social impact of reverse innovations and contrast previous wholesale claims on those impacts with an in-depth analysis. The authors’ analysis reveals that these social impacts are not as significant as currently believed. The chapter concludes by suggesting future research avenues on the bottom of the pyramid, which will be of key relevance to academics and managers alike.