ABSTRACT
Despite the recent interest by international business scholars in the importance of developing economies, there is still a lack of knowledge on how multinational enterprises (MNEs) do business in economies with the lowest incomes. By employing the inclusive innovation (ININ) literature together with dynamic capability (DC) theory, we develop our current understanding of the phenomenon of the ININ process and offer a process description of how MNEs enter bottom-of-the-pyramid (BOP) and other low-income markets. Drawing on evidence from a case study of Nokia, we offer an in-depth explanation of the challenging process of ININ creation in India and identify the constraints that relate to survival and growth in India’s dynamic and turbulent low-income markets. Our results show that MNEs utilize market-specific internal and external strategies to overcome constraints and create social empowerment in these target markets. External strategies result from processes and partnerships in the markets; we refer to this as “inclusive embeddedness”. Internal challenges are overcome through inclusive resource management strategies that help MNEs surmount production constraints. Lastly, we present a conceptual model with propositions and discuss the implications of DC theory for the ININ process for the benefit of future researchers and managers.
