“India – A Lead Market for Frugal Innovations? Extending the Lead Market Theory to Emerging Economies”

The Institute for Technology and Innovation Management at Hamburg University of Technology (TUHH) publishes a new working paper on the topic: “India – A Lead Market for Frugal Innovations? Extending the Lead Market Theory to Emerging Economies“. The paper is authored by Rajnish Tiwari and Cornelius Herstatt (Working Paper 67, January 27th, 2012).

India has emerged as a vibrant and versatile source for cost effective, “disruptive innovations” of various varieties. Price-sensitive consumers in a large and growing market keep inducing firms to apply “frugal engineering” for creating affordable products and services without compromising excessively on quality. Because, as The Economist asserts: “Frugal does not mean second-rate”. Such innovations are characterized by high affordability, robustness, and “good enough” quality in a volume-driven market. Resource constraints motivate firms and entrepreneurs to think out-of-the-box. The trick lies in creating solutions that are able to circumvent given environmental constraints in a cost effective way. India’s large and enormously young population faced with limited budgets, but well-endowed with high aspirations, provides an ideal experiment ground for many firms. Solutions created for the Indian market are often suitable for other developing countries in Asia, Africa and Latin America that frequently face similar socio-economic conditions. In some instances they succeed even in developed country markets by enabling significant cost reductions. This emergence as a hub for “frugal innovations” possibly suggests a “lead market” role for India.
On the other hand, lead markets, as understood today, are characterized by high per capita income, great customer sophistication and high quality infrastructure. Such assumptions imply that lead markets, almost by default, can only exist in economically developed countries because only they can finance the development effort. Using two anchor-cases of product innovations aimed at price-sensitive segments in India we generate preliminary evidence to challenge some of the core assumptions of the “lead market” theory and propose that lead markets can emerge in developing countries too because market attractiveness (e.g. volume of demand, export possibilities) and technological capabilities are able to offset many other deficiencies. The supposed absence of customer sophistication is channelized into a challenge for supplier-side sophistication to design cost effective, “good enough” solutions (“low-cost, thin-margin”) that can meet the aspirations of consumers in a highly competitive market. In order to master this challenge companies need access to a competent and sufficiently large technical base with first-hand knowledge of the ground situation of targeted customer groups (“social capital”).
Keywords: Lead Markets; India; Frugal Innovations; Frugal Engineering; Disruptive Innovations; National Innovation System; Sectoral Innovation System.

DESY cooperates with Indian research centre

Agreement opens up top-class light sources to the Indian science community

Today (21.12.2011), in the Hamburg City Hall, an agreement was signed in the presence of Hamburg’s Science Senator and Second Mayor Dr. Dorothee Stapelfeldt that defines Indian participation at the X-ray sources PETRA III and FLASH. With this, the contracting partners DESY and Saha Institute of Nuclear Physics (SINP, India) concretise a general cooperation agreement which was concluded in May this year during the visit of Chancellor Angela Merkel to India. For five years, more than 3500 hours of measuring time at DESY research facilities will be made available to Indian scientists for their own and for joint research projects with DESY. In return, India contributes with a total of 14 million euros to the construction of the PETRA III extension at DESY, the world’s most brilliant synchrotron radiation source.

Professor Helmut Dosch, Chairman of the DESY Board of Directors: “This is a classical win-win situation. Large-scale research always was a forerunner of international cooperation, and at our top-class light sources, we bring together extremely talented and dedicated scientists from India and Germany.” Professor Helmut Dosch, Chairman of the DESY Board of Directors: “This is a classical win-win situation. Large-scale research always was a forerunner of international cooperation, and at our top-class light sources, we bring together extremely talented and dedicated scientists from India and Germany.”

DESY’s modern synchrotron radiation source PETRA III and the world’s first free-electron laser for soft X-ray light FLASH offer unique research possibilities and a great potential for innovative scientific experiments. Therefore, they are extremely attractive for the well-developed and highly qualified science community of India. PETRA III, which took up regular user operation in 2011, currently provides 14 beamlines of highly-intensive X-ray light for research. From 2013 to 2014, the facility will be extended with two additional experimental halls, hosting another ten beamlines in total.

India is planning to build an own synchrotron radiation source of the third generation for high-energy photons; thus, the country is very much interested in training young scientists at the DESY experimental facilities.

Dr. Dorothee Stapelfeldt, Second Mayor and Senator for Science and Research: “I am very glad that the cooperation agreement between DESY in Hamburg and Saha Institute of Nuclear Physics (SINP) in Kolkatais now successfully concluded. Already for several years, Indian scientists and DESY have been working together. The next important step is to further intensify this cooperation and to offer Indian scientists the possibility to participate in nano and materials science experiments. Particularly nanotechnology will be one of the key technologies of the 21th century. Nanotechnology has the potential to find important technological solutions for the major social challenges of our times, for example in the field of energy supply and climate protection. I am sure that this agreement is advantageous for both parties and will offer many new insights.”

Furthermore, DESY and SINP are discussing whether there are possibilities for additional cooperation in the field of particle physics and accelerators’ instrumentation.


Source: DESY press release dated 21.12.2011

Report: „Indians 2nd largest foreign student population in US“

According to a news item by Nida Najar of NYT News Service appearing in the Times of India (15.10.2011):

Indians are now the second-largest foreign student population in America, after the Chinese, with almost 105,000 students in the US in the 2009-10 academic year, the last for which comprehensive figures were available. Student visa applications from India increased 20% in the past year, according to the American Embassy.

Although a majority of Indian students in the US are graduate students, undergraduate enrolment has grown by more than 20% in the past few years.

The most interesting, and probably a worrying part of the whole story for the national innovation system is that those school students passing out with marks well over 90% are unable to get an admission in top-leauge colleges and universities in India. It cites the example of a Delhi girl who has „received scholarship offers of $20,000 from Dartmouth and $15,000 from Smith. Her pile of acceptance letters would have made any teenager smile: Cornell, Bryn Mawr, Duke, Wesleyan, Barnard and the University of Virginia“. The same girl was however denied admission by the top Delhi colleges for having scored „only“ 93.5% in her final board exams (12th standard), according to the report.

The report continues:

American universities and colleges have been more than happy to pick up the slack. Faced with shrinking returns from endowment funds, a decline in the number of high school graduates in the US and growing economic hardship among American families, they have stepped up their efforts to woo Indian students thousands of miles away.

Representatives from many of the Ivy League institutions have begun making trips to India to recruit students and explore partnerships with Indian schools. Some have set up offices in India, partly aimed at attracting a wider base of students.

The report, mercifully, also takes on the ills ailing the Indian education system without mincing words:

American universities have now become „safety schools“ for increasingly stressed and traumatized Indian students and parents, who complain that one fateful event – the final high school examination – can make or break a teenager’s future career. […]

But for some students, it is not merely the competition that drives them to apply to study in the US. It is also the greater intellectual freedom of an American liberal arts education. India’s educational system is rigid, locking students into an area of study and affording them little opportunity to take courses outside their major beyond the 11th grade. […]

Also see similar reports or slightly varying versions of the same report in other publications:

NDTV: Squeezed out in India, students turn to US

Hindustan Times: Exodus of Indian student to America continues

Economic Times: As Indian students rejected at home are lapped up by Ivy League institutions; HRD Minister Kapil Sibal says India doesn’t have quality institutions