Knowledge-Sharing Processes for Reverse Innovation

R&D is increasingly globalised and recent research attributes a growing global innovative power to R&D activities in developing economies. Innovations from developing markets that find application in advanced markets are defined as Reverse Innovations (RIs) as they flow against the direction assumed in traditional innovation theory. In the meantime, researchers have awarded important benefits to the pursuit of RI. Namely, from the commercialisation of RIs in advanced markets and the innovative contributions that developing economy-based R&D activities can hold for MNEs. Despite the increasing theoretical and practical relevance of RI, academic literature has failed to provide systematic approaches that MNEs can adopt to effectively manage the inversion of the flow of innovative knowledge. This paper fills that gap by adopting a knowledge-based view of the firm. Specifically, we investigate how MNEs manage their knowledge-sharing across developing and advanced economies to strategically enable explorative and exploitative RI. We do so through an abductive research approach based on interview data collected from thirty R&D executives of MNEs that operate in both developing and advanced economies. In correspondence to each phase of the RI process (von Zedtwitz et al., 2015), our study contributes to the RI literature by identifying the processes that are crucial for the systematic execution of RI. It also extends our understanding of the KBV to the context of cross-border knowledge flows from emerging to advanced economies.