Capabilities for Mass Market Innovations in Emerging Economies
Total Page：16
File Type：pdf, Size：1020Kb
Capabilities for Mass Market Innovations in Emerging Economies Rifat Sharmelly MSc, B.IT (Hons.) This thesis is presented for the degree of Doctor of Philosophy at The UNSW Business School (School of Management), The University of New South Wales, Sydney Australia 2016 ORIGINALITY STATEMENT ‘I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgement is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project's design and conception or in style, presentation and linguistic expression is acknowledged.’ Signed ……………………………………………........... Date ……………………………………………............... 2 COPYRIGHT STATEMENT ‘I hereby grant the University of New South Wales or its agents the right to archive and to make available my thesis or dissertation in whole or part in the University libraries in all forms of media, now or here after known, subject to the provisions of the Copyright Act 1968. I retain all proprietary rights, such as patent rights. I also retain the right to use in future works (such as articles or books) all or part of this thesis or dissertation. I also authorise University Microfilms to use the 350 word abstract of my thesis in Dissertation Abstract International (this is applicable to doctoral theses only). I have either used no substantial portions of copyright material in my thesis or I have obtained permission to use copyright material; where permission has not been granted I have applied/will apply for a partial restriction of the digital copy of my thesis or dissertation.' Signed ……………………………………………........... Date ……………………………………………............... AUTHENTICITY STATEMENT ‘I certify that the Library deposit digital copy is a direct equivalent of the final officially approved version of my thesis. No emendation of content has occurred and if there are any minor variations in formatting, they are the result of the conversion to digital format.’ Signed ……………………………………………........... Date…………………………………………….............. 3 ACKNOWLEDGEMENTS I am indebted to many individuals whose contribution needs acknowledgement. A number of people have contributed to this work to whom I want to express my honest appreciations. At the outset, the inspiration behind this PhD thesis and research work is my supervisor Dr. Pradeep Kanta Ray whose constant guidance, support and encouragement throughout the work helped me to accomplish this doctoral thesis. Hence, I would like to express my sincere gratitude to Dr. Pradeep Ray. This thesis could have not been successfully completed without his help and advice. The invaluable support I received from my school also needs special acknowledgement. I am grateful to the Head of School, Professor Karin Sarnders and former Head of School, Professor Chris Jackson, for the invaluable support and encouragement throughout this research project. I am indebted for the inspiration of my co-supervisor Professor Stephen Frenkel, which strengthened my conviction to complete the thesis. I also thank the academic, administration staff of the School of Management and graduate research school (GRS) of UNSW for providing excellent infrastructure, funding opportunities and facilities to present my research findings in a number of local and international conferences, collecting data from India and carry out various research expenditures throughout my entire PhD program. Words cannot express my gratitude for my beloved Husband, Shajib Khadem whose encouragement is an everlasting source of inspiration in my life. I am deeply thankful to for his untiring support and unremitting patience during this work and beyond. I am also grateful to my parents, family members for their never lasting support. I share my joy with all of my colleagues and friends. My heartfelt thanks to all of you. 4 ABSTRACT This study examines what capabilities are required by firms to create appropriate innovations for mass markets in emerging economies (EEs) focusing on the Indian automotive industry. Although prior research emphasizes the critical role of capabilities for innovation, the focus of these studies are on the needs of customers from developed country markets. However, EEs are often characterised by multilevel pyramid structures reflecting large income disparities and highly discerning price–performance conscious customers demanding affordable and functional products. The meagre purchasing power of mass customers implies firms attempting to serve these markets need to be driven by a frugal approach and deliberate restraint on resources. Hence, it is important to determine what should be the approach to orchestrate resources to cater to the underserved masses. The research has utilised a mixed method approach combining qualitative and quantitative methodology. The qualitative part used comprehensive empirical case studies of two emerging market firms (EMFs) and two auto MNCs coupled with a cross case analysis and validated the detailed processes of capability development for mass market innovations. The quantitative part entailed a multivariate analysis using 12 years of panel data from the Indian automotive industry to statistically validate the qualitative findings across industry population. The findings revealed the salience of linkage formation capabilities to leverage existing blocks of local resources, sharing costs and risks associated with developing products/technologies for untested mass markets with very thin profit margins. The study also observed the significance of combinative capabilities to reconfigure an established system in new ways and frugally recombine existing core technologies rather reinventing the wheel to achieve an altered price- performance package. Lastly, the study identified the significance of capability to modularize to achieve low cost level, flexibility in product development and also to serve multi-tiered market segments in EEs. The scientific and evidence – based findings from systematic case studies, cross case validation combined with statistical analysis makes a new contribution to knowledge on the capabilities required to create innovations for the masses. The results challenge the traditional view of innovation based on the assumptions of affluence and abundance of resources. 5 CONTENTS ORIGINALITY STATEMENT -------------------------------------------------------------------------------------------- 2 COPYRIGHT STATEMENT ---------------------------------------------------------------------------------------------- 3 AUTHENTICITY STATEMENT ----------------------------------------------------------------------------------------- 3 ACKNOWLEDGEMENTS ------------------------------------------------------------------------------------------------- 4 ABSTRACT -------------------------------------------------------------------------------------------------------------------- 5 LIST OF FIGURES ---------------------------------------------------------------------------------------------------------- 9 LIST OF TABLES ---------------------------------------------------------------------------------------------------------- 10 ABBREVIATIONS AND ACRONYMS -------------------------------------------------------------------------------- 11 CHAPTER 1: INTRODUCTION ---------------------------------------------------------------------------------------- 13 1.1 BACKGROUND -------------------------------------------------------------------------------------------------------- 13 1.2 SIGNIFICANCE OF THE STUDY --------------------------------------------------------------------------------- 15 1.3 RESEARCH QUESTION AND OBJECTIVES ------------------------------------------------------------------ 15 1.4 MAIN CONTRIBUTIONS ------------------------------------------------------------------------------------------- 16 1.4 RESEARCH METHODOLOGY ------------------------------------------------------------------------------------ 18 1.4.1 Qualitative research methodology: Case study approach -------------------------------------------------- 20 1.4.2 Case study design and selection of cases --------------------------------------------------------------------- 21 1.4.3 Description of research setting: Selection of industry & cases -------------------------------------------- 22 1.4.4 Data collection methods and data triangulation ------------------------------------------------------------- 25 1.4.5 Data analysis method: Within–case and cross–case analysis --------------------------------------------- 28 1.4.6 Cross – case analysis -------------------------------------------------------------------------------------------- 29 1.3.7 Quantitative research methodology --------------------------------------------------------------------------- 30 1.5 THESIS STRUCTURE ------------------------------------------------------------------------------------------------ 32 CHAPTER 2: LITERATURE REVIEW ------------------------------------------------------------------------------- 35 2.1 INTRODUCTION ------------------------------------------------------------------------------------------------------ 35 2.2 TRADITIONAL