Is Asia

With China and India looking set to dominate Asian low price/low cost manufacturing, managers in the rest of the region now have no choice but to innovate to boost productivity. But many see major cultural, geographic and psychological obstacles to adapting the models that have worked in the West and Japan. INSEAD Deputy Dean Arnoud De Meyer and Research Associate, Sam Garg, surveyed senior managers across the region and found that, while the principles of innovation management might be the same as in more developed economies, the implementation could be a very different story.

by Arnoud De Meyer, Sam Garg
Last Updated: 23 Jul 2013

Managers in South and East Asian countries are increasingly being told that they must greatly boost their investments in innovation to preserve the impressive productivity growth levels they have now enjoyed for decades.

In general, the low price/low cost strategies that have served so many Asian countries well are seen as simply unsustainable Conventional wisdom holds that China and India will soon inevitably dominate the region and the world in this area. To be even vaguely competitive, companies elsewhere in Asia have no choice but to invest heavily in developing new products, services and manufacturing processes.

But many Asian executives feel that many of the innovation models now common in the West and Japan simply cannot be effectively duplicated in their home countries for any number of reasons. INSEAD Deputy Dean and Professor of Technology, Management and Asian Business and Comparative Management Arnoud De Meyer and Research Associate Sam Garg engaged in a two-stage study as to how and why the implementation of certain innovation management concepts that have succeeded in the West and Japan may actually be different in Asia.

The initial research stage was essentially an exploratory study that involved analysing more than 20 case studies, based both on desk research and on interviews with scholars, policy makers and leaders of innovative companies in these Asian markets. The secondary stage centred on a questionnaire the authors sent to 3,767 senior managers throughout South and East Asia, particularly in India, based on the findings of the initial research.

Starting with the basic question as to whether innovation management is fundamentally different in these countries than in more widely developed economies, De Meyer and Garg come to conclude that, while the principles of innovation management in these markets may fundamentally be the same as elsewhere, the implementation of these same principles might actually be quite different.

They see this as being influenced by certain contextual factors that they identified during the first stage of their research. They decided to categorise these into five major categories:

· Ineffective input from the market due mainly to a lack of sophisticated marketing experience, geographical distances, underdeveloped local markets, etc.

· Strong, but perhaps obsolete roles of governments, where overly rigid regulatory environments discourage innovation.

· Inadequate resources and skills, particularly in terms of the present quality and quantity of highly skilled technicians.

· Lack of appreciation for intangibles, such as brands or intellectual property

· An underdog mentality, leading to self-fulfilling prophecies of simply being incapable of the types and scope of innovation found in leading Western or Japanese corporations.

The second phase of the study was structured to test the hypotheses that resulted from these findings. These were translated into 32 statements about key success factors that would likely affect innovation management for better or worse, and sent to the surveyed managers.

The useable responses received by the authors indicating that, while innovation is being seen as more important to senior Asian managers, both the aforementioned and a host of other obstacles were seen as weakening their ability to make needed changes.

De Meyer and Garg then categorised the respondents into four clusters: the "innovation starters"; the "heritage fighters"; the "knowledge resource poor", and the "people that find themselves stuck in the muck of implementation". They conclude that any solutions that may be provided by managers or policy makers to help spur innovation in Asia may have to be adapted to the most prominent characteristics found in each of these groups.

INSEAD 2004

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