In this paper we argue that formal exchanges with poor consumers in emerging markets are hard to create and maintain, resulting in widespread market failure. More specifically, in emerging markets the institutions required for exchange either function poorly or are entirely absent, making it difficult for sellers to deliver affordable and accessible offerings to poor buyers in a financially sustainable manner. The marketing challenge thus becomes (1) developing a viable business model to facilitate market-based exchanges and (2) shaping the institutions needed to implement this business model. Drawing on institutional theory and extending it with insights from the marketing and business model innovation literatures, we develop a model of exchange in emerging markets. At the heart of our model is the idea that sellers often need to act as institutional entrepreneurs in order to create and deliver value when marketing to the poor in emerging markets. We discuss the implications of our model for future research on marketing, exchange and emerging economies, as well as the implications for managers seeking to market to the poor in emerging economies.
Foreword ix by Kevin Roberts CEO Worldwide, Saatchi & Saatchi 1 Jugaad: A Breakthrough Growth Strategy 1 2 Principle One: Seek Opportunity in Adversity 29 3 Principle Two: Do More with Less 57 4 Principle Three: Think and Act Flexibly 85 5 Principle Four: Keep It Simple 109 6 Principle Five: Include the Margin 131 7 Principle Six: Follow Your Heart 159 8 Integrating Jugaad into Your Organization 181 9 Building Jugaad Nations 201 Notes 229 Acknowledgments 259 About the Authors 261 Index 265
Radical innovation is an important driver of the growth, success, and wealth of firms and nations. Because of its importance, authors across various disciplines have proposed many theories about the drivers of such innovation, including government policy and labor, capital, and culture at the national level. The authors contrast these theories with one based on the corporate culture of the firm. They test their theory using survey and archival data from 759 firms across 17 major economies of the world. The results suggest the following: First, among the factors studied, corporate culture is the strongest driver of radical innovation across nations; culture consists of three attitudes and three practices. Second, the commercialization of radical innovations translates into a firm's financial performance; it is a stronger predictor of financial performance than other popular measures, such as patents. The authors discuss the implications of these findings for research and practice.
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