‘In the Region for the Region’ – Tailoring Solutions to the Mid-Segmnet in Emerging Markets . A case study of Bühler Bangalore’s Mid-Segment Innovations

Abstract

Western MNCs active in emerging markets have traditionally catered the high-income customers of the premium-segment. Meanwhile, the economic growth in emerging markets, such as China and India, has led to a vast mid-segment with differing needs. In order to partake in this opportunity, literature has advocated that Western MNCs must re-evaluate their product offerings, business models and organizational structures. However, few studies have delved into how this phenomenon occurs, compared to the much more researched product innovation side. Hence, the purpose of this study is to outline how this development is organised within the local R&D unit, its implications for other departments, and which characteristics must be kept in mind when innovating for the mid-segment customers. By conducting a case study at Bühler Bangalore, subsidiary of the Swiss technology company Bühler Group, including 15 interviews with managers involved in the development of two mid-segment innovations, this paper contributes with four main findings; first, MNCs should not only innovate on the product side, but tailor each component of a business model to the characteristics of the mid-segment, by applying a network perspective on the development process. Second, mid-segment characteristics differ to the premium, implying time pressures on the development. Third, the underlying organisational structure has an impact on the process, facilitated by setting up a separate unit to spur local innovation. Last, this study finds increased interdepartmental collaboration, when innovating for this segment.