Doctoral Dissertation Research in Science of Science and Innovation Policy: Innovation by Users in Emerging Economies and Impacts on Innovation Policy: Evidence from Mobile Bank

Carnegie Mellon University, Pittsburgh PA

Investigators

Abstract

Traditionally innovation has been reserved for firms in industrialized nations, because these firms had access to the resources needed for innovation. However, in the age of globalization, communication is cheap, information is a commodity, and global trade increases technological diffusion. As a result, firms and users in emerging markets get early exposure to the latest technologies and information that, in combination with access to tools such as mobile phones, enables them to customize products to solve local needs. Large latent demand in emerging markets, which results from high need and a sparse offering of products and services, is a reason to expect increasing invention originating from less developed countries in the global South. This project studies emerging markets as new sources of innovation and discusses implications of the diffusion of these innovations for policy. In particular, it looks at characteristics of emerging markets that enable specific forms of innovation, such as user innovation and frugal innovation, and also analyzes how this encourages technology flows from emerging markets to industrialized nations. This research is structured around three research objectives. First, it explores whether users in emerging markets innovate. A unique hand-collected dataset on innovations in the mobile banking industry is used to understand whether users (as opposed to firms) play a role in service innovation in emerging markets, and whether those innovations are globally meaningful. Second, the project analyzes how new types of innovation such as user innovation and frugal innovation are leading to flows of technology in a reverse direction. In particular it focuses on South-North diffusion of emerging market innovations as well as different typologies of the diffusion of user innovations. Despite evidence that a growing number of new products and services originate in emerging markets, there is a dearth of innovation research on this topic. Third, a model is proposed ? based on empirical patterns? that explains how increased access to technology in combination with latent demand can drive innovation and entry in the South and how, subsequently, South-North technology diffusion can occur. Broader Impacts. The project will provide insight on the mechanisms that govern discovery, adoption and diffusion of technology in emerging markets, a largely understudied area. Because the locus of innovation is no longer unique to firms in Western countries and is shifting to users and firms in emerging markets, this is an important topic for both the academic community and policy makers. This study will contribute significantly because, while there has been significant research on user innovation in products, there exists virtually no research on user innovation in services or their diffusion, yet services often constitute the vast majority of economic activity. Furthermore, this project develops a data-collection and analysis methodology that can be applied to follow-on research, especially empirical studies looking at sources of innovation in services.