What's good for business growth: Implications of innovativeness and price sensitivity for firms in developing countries

• DOI: http://doi.org/10.1002/jsc.2231
• Published date: 01 September 2018
• Date: 01 September 2018

RESEARCH ARTICLE

What's good for business growth: Implications of

innovativeness and price sensitivity for firms in developing

countries

Rajibul Hasan | Ashish Kumar Jha

Rennes School of Business, Rennes Cedex,

France

Correspondence

Rajibul Hasan, Rennes School of Business,

2, Rue Robert D'Arbrissel—CS 76522, 35065

Rennes Cedex, France.

Email: rajibul.hasan@rennes-sb.com

Abstract

There are selective innovative features and reasons for innovation that drive firm growth. Vari-

ous reasons are analyzed which are behind the innovation decisions undertaken by the firms

and innovative features' effects on revenue growth in Bangladeshi firms to better understand

the preferred determinants in certain geographic areas. This research investigates how the fea-

tures of firm-level innovation and the reasons to launch it can affect the revenue growth of

firms in developing countries. The findings suggest innovative features that are less expensive

to offer lead to higher revenue growth and offer strategic implications for firms implementing

innovations in developing countries.

1|INTRODUCTION

Since the early 1800s, innovation has driven economic growth

(Ahlstrom, 2010), and firm-level innovation fosters national economic

progress through business growth (Landes, Mokyr, & Baumol, 2010),

which, in developed countries, creates jobs, increases revenue, and

improves consumers' lives. For example, because of firm-level innova-

tion, a worker can now produce a product in 7 min that would have

taken an hour or more during the 1890s (De Long, 2000).

Firm-level innovation not only contributes to revenue growth but

also leads to a firm's superior performance (Pfeffer, 1998). This

increased productivity also translatesinto increases in consumers' stan-

dards of living in developing countries. For example, Abbot Labs intro-

duced several firm-level innovations that led to the company's rapid

growth and ability to develop a lower-end alternative of some expen-

sive diagnostics and nutritional products that opened the market to a

new group of patients(Christensen, Grossman,& Hwang, 2008).

Literature on innovation in developed countries abounds (such as

Plouffe, Hulland, & Vandenbosch, 2001; Shih & Venkatesh, 2004), but

there are few reports on firm-level innovation in developing countries

(Jha & Bose, 2016b) probably because researchers have historically

considered thosemarkets less important, even though they now repre-

sent major growth opportunities in the world economy.Firms exploring

opportunities to introduce firm-level innovations in developing coun-

tries must understand the constraints those countries face, including

unreliable electricity, infrastructure challenges, political instability, and

economic restrictions, such as low GDP and highinflation.

Firms exploring opportunities to introduce firm-level

innovations in developing countries must understand

the constraints those countries face, including unreli-

able electricity, infrastructure challenges, political

instability, and economic restrictions, such as low GDP

and high inflation

In addition, mainstream global product life-cycle theory suggests

that when an innovation has reached its maturity and is obsolete in

developed countries, firms can start launching that technology in

developing countries. However, this is no longer an effective solution.

Nowadays, firms in developing countries cannot introduce as innova-

tions outdated and obsolete products because firms and consumers in

developing countries have access to rapid information flows through

telecommunications, the Internet, and overseas travel, making them

less likely to accept these. Even without a proper technological

infrastructure, the developing market facilitates leapfrogging because

firms can directly implement state-of-the-art technology instead of

going through technological generations. For example, instead of tele-

communication firms installing a traditional cable-based network in

developing countries, they can directly implement radio- or cellular-

JEL classification codes: O30, P40, P45.

DOI: 10.1002/jsc.2231

Strategic Change. 2018;27:469–476. wileyonlinelibrary.com/journal/jsc © 2018 John Wiley & Sons, Ltd. 469