Social unrest and warfare in emerging markets can create opportunities for innovation. By focusing on Colombia, where armed conflict and post-conflict challenges have motivated innovation in the military and business domains, this chapter examines innovation in places where social demands create opportunities for deep societal transformations. We describe the processes by which the armed forces developed innovative military strategies in wartime to win an unconventional and long-standing guerrilla war. During the post-conflict period, businesses created new business models, going much further than traditional practices of social responsibility to become real actors in building a peaceful society and contributing to the economic development of regions historically affected by the armed conflict.

The purpose of this chapter is to analyze the relationship of subsidiaries of multinational companies with local partners. The focus is on MNCs from advanced markets and their influence on the development of reverse innovations in emerging markets. Unlike the regular flow, reverse innovations consist of the development of new products, processes, and services created initially to meet the local demands of EMs, but that are later understood as fundamental by the multinational for generating gains of global competitive advantage, only to be disseminated to the headquarters and applied in developed markets. Through the use of statistical techniques in 113 subsidiaries of foreign multinationals operating in Brazil, we found that the quality of the relationship with local partners is significant, as it offers subsidiaries access to both local resources and the knowledge acquired by local partners. In addition, we found that innovations developed by subsidiaries were not restricted to them, thanks to the gains in competitive advantage they provide to headquarters and other units operating in developed markets. Finally, we point out that it is not only subsidiaries but also local partners who enjoy gains from such access, an indication of the strategic importance of quality relationships between local partners and subsidiaries in emerging markets for competitive gains on both ends.

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.

The rise of India’s national system of innovation (NSI) reflects a rapid catch-up process toward developed country innovation standards. However, industries have evolved at a varying pace, reflecting influences by government-driven activities, while others are more influenced by business strategies. Government policies and firm strategies have co-evolved with one another and a variety of endogenous/domestic and exogenous/foreign pressures. We analyze the impact of these pressures on locally based innovation processes within the Indian NSI. We examine three disparate industrial contexts: the wind turbine, pharmaceutical, and auto component industries, and present evidence of considerable industry-specific effects. Domestic firms largely drove innovation in the Indian wind turbine and pharmaceutical industries, drawing knowledge from abroad through various means. In contrast, innovation in the auto components industry was driven by domestic firms’ participation in global value chains coordinated by advanced country MNCs. Eventually, these domestic firms become eMNCs in their own right, some becoming global competitors. Our chapter contributes to the debates related to innovation policies, NSIs and the catch-up processes of eMNCs.

The chapter presents the analysis of the “Employees First, Customers Second” (EFCS) management philosophy at HCL Technologies (Global IT consulting company, Indian origin). EFCS proposes that it is the employees who create real value for the customers and HCL Technologies transformed the entire organization to empower them and ensure their wellbeing. As a result, the “value zone” was identified in the interface between HCL Technologies employees and customers for value co-creation. The case study followed a longitudinal in-depth analysis of the sustainability or annual reports from 2011 to 2019. The study also included HCL Technologies' former CEO Vineet Nayar’s public speeches, news reports, and research papers related to EFCS. The case provides evidence of a model of innovation based on value co-creation through employees. The model has three pillars: (a) employees’ wellbeing, (b) employees’ empowerment, and (c) innovation through value co-creation. Each pillar contains supporting management and human resource practices.

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.

This chapter sheds light on the growing relevance of frugal innovation as EMNCs leverage competitive advantages through its means. We highlight the three component parts (open, sustainable and cost innovation) of this process. Drawing on case studies and a survey of Brazilian MNCs, we demonstrate the stakes of frugal innovation as a catch-up strategy.

The extent and speed with which China has captured gains from R&D internationalization sets the country apart from other emerging economies and has furthered its aspirations to upgrade from innovation follower to innovation leader. In this chapter, we discuss how the internationalization of China’s industrial R&D has evolved in the interplay between firm strategies, domestic government policies and international policies and regimes. First, we outline the development of China’s R&D internationalization, identifying its major drivers and motives. Second, we link this to China’s broader domestic and international political economy: its growth model, domestic S&T upgrading (e.g., the Made in China 2025 plan), firm-level internationalization (e.g., in the Belt and Road Initiative), and the emergence of more restrictive inward FDI regimes in Western countries. Finally, we comment on the likely future trajectory of Chinese R&D internationalization against a global backdrop characterized by increasing economic nationalism, trade frictions, and geopolitical security concerns.

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.