Reverse innovation as an inducer of centres of excellence in foreign subsidiaries of emerging markets

Abstract

This paper aims to understand how autonomy and integration influence reverse innovation in foreign subsidiaries in Brazil. Furthermore, this paper supports the idea that reverse innovation is associated with the formation of centres of excellence in subsidiaries in emerging markets and that autonomy and integration are relevant for centres of excellence, albeit indirectly, i.e., intermediated by reverse innovation. A survey was applied to 172 foreign subsidiaries in Brazil. The results confirm the association between autonomy and integration in the development of reverse innovation and the association of the latter with centres of excellence. Results also indicate that the rationale of centres of excellence in emerging markets is different from developed countries, demonstrating the importance of the structure of the multinational corporation to the occurrence of reverse innovation. The finds indicate managerial implication in terms of adjusting the structure of the relationship between headquarters and subsidiaries in favour of reverse innovation.