In his article Rethinking Global Innovation  , Scott Anthony highlights the need for businesses to re-think their emerging markets strategy . With 80% of the world population and 40% of the world GDP ( measured at purchasing power parity) being generated from the emerging markets , they still contribute 10% of the revenues of S&P 500 companies. Emerging markets are strategic to MNCs both from bottomline perspective and as well as sources of innovation which can ” trickle up” to developed economies.  

The question that I am reflecting on is  that will MNCs operating in emerging  markets ” trickle up” innovation to developed economies and other emerging markets or already successful emerging markets companies will be the source of innovation in those markets?

The well established national emerging market companies with global ambition are preparing the grounds for transferring the innovation to other markets by establishing entry through mergers and acquisitions. The successful companies in the emerging markets have been innovating for a long time against the unique backdrop of these markets and are better placed to lead the innovation agenda.

Tata Steel after a rough 1990s emerged as the worlds lowest cost producer of steel in 2001. It nurtured a series of innovation to improve its efficiencies to be the best in class . In 2006 -2007 it took over Anglo-Dutch steel company Corus in a USD 7.6 billon deal . This single move helped Tata Steel to move from worlds 56th biggest steel producer to creating the worlds fifth largest group. It simultaneously paved the way for transferring the efficiency improvement innovations in these markets.

Indias largest telecom company Bharti Airtel has started talks to acquire 49% in MTN , Africas largest telco operator in a USD 23 billion merger deal . If the deal comes through , this will result in transfer of product and process innovation and insights between the two largest emerging market players.

The speed at which these companies will be able to execute their market entry strategies in developed and other emerging markets will define how much they will contribute in the innovation agenda in this century.