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Innovation began to emerge as its own field of study in the 1960s, but it did not garner attention from scholars across a wide range of disciplines until the later years of the twentieth century. Recently, experts in fields ranging from economics to social sciences to business studies have explored innovation’s role as a driver of growth and social change, and innovation is now widely considered central to economic growth and development. Outside of academia, policymakers, business leaders, and even the public at large have increasingly embraced innovation. Innovation policies figure high in the policy agendas of many countries, and “innovative nations” and “knowledge-based economies” are becoming keywords in today’s economic policy manifestos.
At the turn of the millennium, emerging markets (EMs) bent the arc of the global economy. China, India, Latin America, and Africa witnessed over a decade of growth, increased foreign direct investments (FDIs), and pro-market reforms. These shifts gave cause and effect for the expansion of consumer markets and the accumulation of wealth.
This chapter outlines the elements of an innovation framework for emerging markets. It discusses the institutional context and drivers, types, and outcomes of innovation as the basis for the book’s overall structure. Throughout, it describes the distinctive aspects of innovation in emerging markets, the relevance of institutional environments, the impact of innovation on social development, and the “catch-up” dynamics in the transition from copycats to leaders.
Chapter 4 explores the role of government involvement as a driver for innovation and highlights the variety of approaches followed in EMs. The chapter examines this issue through two very distinct case studies. One is the case of State Grid Corporation of China (SGCC), a state-owned company operating in the electricity sector and the fifth-largest firm in the world by revenues. SGCC has rapidly expanded globally, partly thanks to a technology it developed that reduces energy losses during electricity transmission. Its case illustrates the determined and proactive role played by the state to make China an innovation leader in a number of areas. The other is the case of INVAP, an innovation-based state-owned Argentine company that specializes in the production of nuclear reactors and satellites. INVAP and SGCC are just two samples of a greater universe of highly competitive SOEs, that have the capabilities to innovate and grow. Both cases illustrate case how the collaboration of the state and the firm has encouraged internationalization and innovation.
This chapter examines the broader stance of emerging economies on innovation. It accounts for progress made by emerging markets at the macro level using the Global Innovation Index, and at the firm-level, presents innovative firms by rank according to the European Union industry scoreboard. We conclude with a call for policy coordination with stakeholders, the sine qua non for a promising innovation ecosystem.
The past five years have seen a remarkable rise of entrepreneurial companies in digital technology. Chapter 5 examines this phenomenon through several case studies of e-commerce firms from various emerging economies: Alibaba (China), Flipkart (India), Jumia (Nigeria), and Mercado Libre (Argentina). It probes the business models aligned with the local environments these firms have honed, resulting in innovations such as pay-on-delivery, as well as different logistics and modes of delivery. It investigates the extent to which these firms have proven disruptive in their respective markets, their ability to expand regionally or globally, and future prospects.
In recent years, emerging markets have come to represent the largest share of global GDP and have made gains in economic development and political influence. In turn, emerging market companies have taken on a new level of importance in driving innovation, local development and global competition. Advancing an integrative view that captures the diversity of innovation among companies in emerging markets, this book highlights the rapid evolution of emerging markets from imitators to innovation leaders. Building upon research conducted by the Emerging Multinational Research Network (EMRN) in collaboration with several universities in North and South America, Europe and China, this rich and expansive collection includes studies of innovation in regions yet to receive focused analysis in the field. The authors also re-examine dominant theories of innovation and capability creation based on a broad range of case studies and research insights. Offering a taxonomy of emerging market innovations, this collection reveals the unique drivers, types, and outcomes of innovation in emerging markets.
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