Reverse Innovation and the Bottom-of-the-Pyramid Proposition: New Clothes for Old Fallacies?

Abstract

Analysing cases from India, this paper reveals flaws in recent claims that reverse innovation can help resolving some of the World's most urgent social problems. Reverse innovations diffuse to developed countries after being introduced to developing ones, and are therefore per definition irrelevant for the social needs of the latter. If understood more broadly, as a strategic approach, reverse innovation may help reducing some dimensions of inequality. Yet as the alleged instrument of poverty reduction, reverse innovation equals the known and compelling but doubtful proposition that Western MNEs may induce large-scale prosperity simply by doing business with the World's poorest.

Keywords: Reverse innovation, bottom of the pyramid, social impacts of innovation, innovation in emerging markets

JEL Classification: F23, L21, M14, N35, O19, O53, R11