Conception of the Inductive Reverse Innovation by developed-country multinational enterprises

In recent years, international enterprises in developed countries have tended to develop goods on the spot for emerging markets in emerging countries. This has been done in an effort to find cheaper manufacturing routes. However, a recent study on reverse innovation has shown a completely new type of dramatic innovation produced in developing countries `reversed´ to advanced developed markets. The goal of this study is to show the availability and utility of the reverse innovation framework, when employed by developed-country multinational enterprises (DMNEs). First, we explain the theoretical structure of reverse innovation, using previous innovation studies as well as some similar concepts, and hypothesize why and how specific innovations generated in developing countries reverse to developed markets. Second, we proposes a two-type classification system to explain multiple cases of reverse innovations, “Inductive Reverse Innovation (IRI)” and “Coincidental Reverse Innovation (CRI),” - and discuss the characteristics of goods likely to achieve reverse innovation. In order to examine these hypotheses, we interviewed a variety of global Japanese companies, which play an active role in emerging markets. Finally, we also discuss challenges in achieving IRI by developed country enterprises.