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'Glocalization & Reverse Innovation in Emerging Markets

Rema Viswanathan
Many of us would have travelled beyond our country borders at some point in time, enjoyed a different kind of consumption lifestyle and come back to our home environment naturally leading to comparisons! If this happened before the 1990s’, then those foreign trips would be etched strongly in our minds with regards to the variety of quality products consumed, the mechanized form of living (with gadgets & appliances) and all the great conveniences that came with it leaving us on return with a wistful feeling of not having them back home! Today the above wistfulness is a bygone era! Arrival of the 1990s, brought along liberalization and opening of our markets to soon merge into the westernized world across geographical borders enhanced further through explosive media. Today we are an integral part of that ‘global village’ – a result of globalization!
Glocalization as a Strategy
Glocalization as a strategy is being popularly practiced by MNCs in emerging markets which denotes “Thinking global, acting local”. The word as well as the idea came from Japan (Robertson, 1995:28) and was modeled on the Japanese word ‘dochakuka’which originally meant adapting farming technique to one’s own local condition. Roland Robertson, a British sociologist settled in United States, who popularized the term, conceptualized globalization in the twentieth century as “the interpenetration of the universalization of particularization and the particularization of universalism” (Robertson, 1992:100 emphasis in the original). The idea of glocalizationin its business sense is closely related to what in some contexts is called, in more straightforwardly economic terms, micromarketing: the tailoring and advertising of goods and services on a global or near-global basis to increasingly differentiated local and particular markets (Robertson, 1995). But the practice of glocalization is much older when the American car companies (The Big Three) had their operations in Japan between 1925 and 1936!
Khondker (1994), a sociologist from National University of Singapore, building on Robertson’s framework argued that globalization and glocalization should be seen as an interdependent process. “The problem of simultaneous globalization of the local and the localization of the global can be expressed as the twin processes of macro-localization (reverse innovation) and micro-globalization (glocalization)”.
Accordingly, glocalization (micro-globalization) is an adaptation strategy that was adopted to make the global product suit local market needs. But today glocalizationseems to be everywhere – in fashion, in services, in technology, in medicine, in media and arts, being adopted and practiced in different cultures across geographical boundaries. The phenomenon was corroborated in journal articles published during those periods, titled “I’d like to buy the world a Coke: Consumptionscapes of the Less Affluent Worlds” by Russel Belk (1996) and “McDonaldization of Society” by George Ritzer (1993). Since then, the term has become a buzzword in big business, with countless companies looking for ways to glocalize everything from hamburgers to Web sites. One major element of glocalizationis to connect the benefits of the globalization i.e. technology, information & economics (of the developed world) to the local market realities (of the developing world).
India has seen it All!
McDonaldization with glocalized menu like McVeggie, Chicken Maharaja-Mac, McAloo Tikki, McPaneer Royale etc. and the conquering of thirst through the Aamir Khan Ads “Thanda matlab Coca Cola”! Kellogs is not very far behind with its multigrain cereals like wheat & rice flakes, Muesli-Nuts delight besides the classic cornflakes! Another excellent example of similar adaptation is Nestle’s Maggie Noodles wherein you can get Veg Atta Noodles, Veg Multigrainz Noodles, and of course the 2-minute noodles available in different packaging to fit the budgets of both the urban and rural markets and to suit the Indian palate & food patterns! Sony and Vodafone have promoted their global products through native communications and imaging to match perceptions of Indian customers. So have LG and Samsung! There is no dearth for examples of micro-globalization in India! So is the case with other emerging markets.
The New Era of Reverse Innovation
The above era of glocalization is now being slowly overpowered by the new age of reverse innovations wherein the DMNCs (MNCs of developed nations) and the EMNCs (emerging-market MNCs) operating in the developing world have discovered that innovative products, services and processes created in these lesser developed markets are proving to be more adaptable and affordable to the consumers across the globe. Many of these are also being transferred to developed markets – for example the assembly line base
d Cardiac hospital of Narayana Hrudayalaya in Cayman Islands, Mahindra’s low HP Tractors (22 to 100 HP) in USA, Bharti Airtel’s ultracheap wireless telephony in South Africa, Tata Motors & Tata Beverages in Europe and Africa, GEs ultrasound, Embraer’s regional Jets, Nokia’s inexpensive cell phones, etc. (Govindrajan & Ramamurthi, 2011)
Jeffrey Immelt, Chairman and CEO of General Electric, had this to say: “If we don’t come up with innovations in poor countries and take them global, new competitors from the developing world – like Mindray, Suzlon, and Goldwind – will.
The above threat as visualized by Jefffrey has quietly materialized in the last few years in emerging markets, as these companies called the Indian Transnational Corporations or Indian MNCs have been expanding their global footprints into both emerging and developed markets in the last decade, adapting their indigenous products, processes and services to these new markets quiet successfully. Quoting from an article by Sanjay Dawar and Anurag Gupta of Accenture in Business Standard (Part I & II):
“During 2003-12, the outbound investment grew faster in India than in Japan, China and the Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan) – more than tripling from $10 billion to $37 billion. In cumulative terms, Indian companies have invested more than $344 billion in international expansion over the period 2003-12. Moreover, the number of Greenfield investments by Indian companies over the past decade constitutes the highest among the BRIC (Brazil, Russia, India and China) economies. More than 50 per cent of outbound investments from India during 2003-12 were targeted at Asia, West Asia and Africa. Resources, metals and chemicals remain the most favored sectors for outward investments for Indian companies”.
Macro-localization or reverse innovation was initially practiced by Japanese automobile manufacturers when they launched their smaller but elegant cars in the American market in the 1970s! Later they became member of the Triad group of developed Nations. We now have BRIC nations practicing it in a similar manner!
What does all this mean for marketing, government and society in the emerging markets of the globalized world? Will the locus of economic power shift from the developed world to the developing world? Are we in the Asian continent, moving from a liberalized era to a neoliberalistic era i.e. to an era of free-market capitalism, neoliberal governmentality rooted in entrepreneurial values such as competitiveness, self-interest, and decentralization that manifests itself through a set of public policies expressed in the ‘D-L-P Formula’: (1) deregulation (of the economy); (2) liberalization (of trade and industry); and (3) privatization (of state-owned enterprises). Do the latest policies of the new Indian government allude to it? What will be the long term impact on the global economy? These are some of the questions that need answers.
1.       Robertson, Roland (1995). Glocalization: Time-Space and Heterogeneity. Featherstone, Lash & Robertson (Eds.), Global Modernities, Pg. 25-44, Sage Publications, London
2.       Govindrajan, Vijay and Ramamurthi, Ravi (2011). Reverse Innovation, Emerging Markets and Global Strategy, Global Strategy Journal, 191-205, Strategic Management Society & Wiley Online library
3.       Khondker, H. Habibul (2004). Glocalization as Globalization: Evolution of a Sociological Concept, Bangladesh e-Journal of Sociology, Vol. 1. No. 2. National University of Singapore
4.       Ritzer, George (1993). McDonaldization of Society, Journal of American Culture, Vol.6, No.1, Pg. 100-107
5.     Ger, Guliz and Belk, Russel (1996). I’d like to buy the world a Coke: Consumptionscapes of the “Less Affluent Worlds”, Journal of Consumer Policy, 19: 271-304, Kluwer Academic Publishers, Netherlands

6.       Dawar, Sanjay & Gupta, Anurag. The three secrets of successful Indian Globalizers (Part I & II), June 9 &16, 2014, Business Standard

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