Consumer Innovation in the Poor Versus Rich World: Some Differences and Similarities

  • Sarah Praceus
  • Cornelius HerstattEmail author
Part of the India Studies in Business and Economics book series (ISBE)


Innovative, distinct products and no “cheaper” copies of the “rich” world are essential in order to succeed at the “Base of the Pyramid” (BoP). However, this type of innovation requires more, in-depth information on the BoP and solution spaces, which are both difficult to access. Literature proposes to generate innovations bottom up through user involvement but remains silent on how to identify and integrate BoP consumers into the innovation process. One obvious solution is to connect up with and cooperate with innovating consumers of the BoP. However, this raises the questions whether (1) user innovation exists at the BoP at what levels of quality and (2) how firms can support the innovators to implement them into real world solutions. In this paper we specifically address the first question and analyze patterns and characteristics of a large sample of innovations developed by people living at the Indian BoP collected by the Indian National Innovation Foundation (NIF). We compare these innovations to consumer innovations in the developed world and examine effects of demographic, knowledge and context factors on innovation activity and the outcome. We find similarities with consumer innovation in the developed world and at the same time adaptations to the BoP context, e.g. fulfillment of rather basic necessities than hobby-related needs. Innovation quality is mostly driven by the innovator’s knowledge and market recognition is highest for creative innovations developed for others. The paper further shows that consumer innovations are a good starting point for firms seeking solutions for BoP markets. Product needs can be systematically deducted and provide insights on how to identify promising consumer innovators at the BoP. Finally, this research contributes to better understand user innovation behavior in a specific context and by that enriches innovation research.


Base of the pyramid India Frugal innovation Consumer innovation Grassroots innovation 


  1. Acosta, P., Kim, N., Melzer, I., Mendoza, R. U., & Thelen, N. (2011). Business and human development in the base of the pyramid: Exploring challenges and opportunities with market heat maps. Journal of World Business, 46(1), 50–60.CrossRefGoogle Scholar
  2. Amabile, T. M. (1982). Social psychology of creativity: A consensual assessment technique. Journal of Personality and Social Psychology, 43(5), 997–1013.CrossRefGoogle Scholar
  3. Amabile, T. M. (1983). The social psychology of creativity: A componential conceptualization. Journal of Personality and Social Psychology, 45(2), 357–376.CrossRefGoogle Scholar
  4. Amabile, T. M. (1996). Creativity in context. [Updated edn.]. Boulder, CO: Westview Press.Google Scholar
  5. Anderson, J., & Billou, N. (2007). Serving the world’s poor: Innovation at the base of the economic pyramid. Journal of Business Strategy, 28(2), 14–21.CrossRefGoogle Scholar
  6. Anderson, J., & Markides, C. (2007). Strategic innovation at the base of the economic pyramid. Harvard Business Online, 49(1), 83–88.Google Scholar
  7. Backhaus, K. (2008). Multivariate Analysemethoden. Eine anwendungsorientierte Einführung. 12. vollst. überarb. Berlin: Springer (Springer-Lehrbuch).Google Scholar
  8. Baldwin, C., Hienerth, C., & von Hippel, E. (2006). How user innovations become commercial products: A theoretical investigation and case study. Research Policy, 35(9), 1291–1313.CrossRefGoogle Scholar
  9. Banerjee, A. V., & Duflo, E. (2007). The economic lives of the poor. The Journal of Economic Perspectives, 21(1), 141–167.CrossRefGoogle Scholar
  10. Bhaduri, S., & Kumar, H. (2011). Extrinsic and intrinsic motivations to innovate: Tracing the motivation of ‘grassroot’ innovators in India. Mind and Society: Cognitive Studies in Economics and Social Sciences, 10(1), 27–55.CrossRefGoogle Scholar
  11. Bogers, M., Afuah, A., & Bastian, B. (2010). Users as innovators: A review, critique, and future research directions. Journal of Management, 36(4), 857–875.CrossRefGoogle Scholar
  12. Christensen, L. J., Parsonsand, H., & Fairbourne, J. (2010). Building entrepreneurship in subsistence markets: Microfranchising as an employment incubator. Journal of Business Research, 63(6), 595–601.CrossRefGoogle Scholar
  13. de Jong, J., & von Hippel, E. (2009). Transfers of user process innovations to process equipment producers: A study of Dutch high-tech firms. Research Policy, 38(7), 1181–1191.CrossRefGoogle Scholar
  14. Edmondson, A. C., & McManus, S. E. (2007). Methodological fit in management field research. Academy of Management Review, 32(4), 1155–1179.CrossRefGoogle Scholar
  15. Franke, N., & Shah, S. (2003). How communities support innovative activities: An exploration of assistance and sharing among end-users. Research Policy, 32(1), 157–178.CrossRefGoogle Scholar
  16. Franke, N., & von Hippel, E. (2003). Satisfying heterogeneous user needs via innovation toolkits: The case of Apache security software. Research Policy, 32(7), 1199–1215.CrossRefGoogle Scholar
  17. Franke, N., von Hippel, E., & Schreier, M. (2006). Finding commercially attractive user innovations: A test of lead‐user theory. Journal of Product Innovation Management, 23(4), 301–315.CrossRefGoogle Scholar
  18. Gerpott, T. J., & Mahmudova, I. (2006). Ordinale regression. Wirtschaftswissenschaftliches Studium, 35(9), 495–498.CrossRefGoogle Scholar
  19. Gupta, A. K. (2006). From sink to source: The Honey Bee Network documents indigenous knowledge and innovations in India. Innovations: Technology, Governance, Globalization, 1(3), 49–66.CrossRefGoogle Scholar
  20. Hahn, R. (2009). The ethical rational of business for the poor–integrating the concepts bottom of the pyramid, sustainable development, and corporate citizenship. Journal of Business Ethics, 84(3), 313–324.CrossRefGoogle Scholar
  21. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.Google Scholar
  22. Hammond, A. L., & Prahalad, C. K. (2004). Selling to the poor. Foreign Policy, May/June(142), 30–37.CrossRefGoogle Scholar
  23. Herstatt, C., & von Hippel, E. (1992). From experience: Developing new product concepts via the lead user method: A case study in a “low-tech” field. Journal of Product Innovation Management, 9(3), 213–221.CrossRefGoogle Scholar
  24. Im, S., & Workman, J. P., Jr. (2004). Market orientation, creativity, and new product performance in high-technology firms. Journal of Marketing, 68(2), 114–132.CrossRefGoogle Scholar
  25. Kalogerakis, K., Lüthje, C., & Herstatt, C. (2010). Developing innovations based on analogies: Experience from design and engineering consultants. Journal of Product Innovation Management, 27(3), 418–436.CrossRefGoogle Scholar
  26. Karnani, A. (2009, September). Reducing poverty through employment. Ross School of Business Working Paper #1132. University of Michigan, Ann Arbor, MI.Google Scholar
  27. Lettl, C., Herstatt, C., & Gemuenden, H. G. (2006). Users’ contributions to radical innovation: Evidence from four cases in the field of medical equipment technology. R&D Management, 36(3), 251–272.CrossRefGoogle Scholar
  28. Lilien, G. L., Morrison, P. D., Searls, K., Sonnack, M., & von Hippel, E. (2002). Performance assessment of the lead user idea-generation process for new product development. Management Science, 48(8), 1042–1059.CrossRefGoogle Scholar
  29. London, T. (2007). The base-of-the-pyramid perspective: A new approach to poverty alleviation. William Davidson Institute & Ross School of Business, University of Michigan, Ann Arbor, MI. Retrieved May 15, 2012, from Scholar
  30. London, T., Anupindi, R., & Sheth, S. (2010). Creating mutual value: Lessons learned from ventures serving base of the pyramid producers. Journal of Business Research, 63(6), 582–594.CrossRefGoogle Scholar
  31. London, T., & Hart, S. L. (2004). Reinventing strategies for emerging markets: Beyond the transnational model. Journal of International Business Studies, 35(5), 350–370.CrossRefGoogle Scholar
  32. Lüthje, C. (2000). Characteristics of innovating users in a consumer goods field-An empirical study of sport-related product consumers. Working Paper No. 8. Institute for Technology and Innovation Management, Hamburg University of Technology.Google Scholar
  33. Lüthje, C. (2004). Characteristics of innovating users in a consumer goods field: An empirical study of sport-related product consumers. Technovation, 24(9), 683–695.CrossRefGoogle Scholar
  34. Lüthje, C., Herstatt, C., & von Hippel, E. (2005). User-innovators and “local” information: The case of mountain biking. Research Policy, 34(6), 951–965.CrossRefGoogle Scholar
  35. Magnusson, P. R. (2009). Exploring the contributions of involving ordinary users in ideation of technology based services. Journal of Product Innovation Management, 26(5), 578–593.CrossRefGoogle Scholar
  36. Mahr, D., & Lievens, A. (2011). Virtual lead user communities: Drivers of knowledge creation for innovation. Research Policy, 41(1), 167–177.CrossRefGoogle Scholar
  37. Morrison, P. D., Roberts, J. H., & von Hippel, E. (2000). Determinants of user innovation and innovation sharing in a local market. Management Science, 46(12), 1513–1527.CrossRefGoogle Scholar
  38. Nair, A. K., Tiwari, R., & Buse, S. (2012). Emerging patterns of grassroot innovations – A conceptual study based on selected case studies from India. Working paper No. 70. Institute for Technology and Innovation Management, Hamburg University of Technology.Google Scholar
  39. Nakata, C. (2012). From the Special Issue Editor: Creating new products and services for and with the base of the pyramid. Journal of Product Innovation Management, 29(1), 3–5.CrossRefGoogle Scholar
  40. Nakata, C., & Weidner, K. (2012). Enhancing new product adoption at the base of the pyramid: A contextualized model. Journal of Product Innovation Management, 29(1), 21–32.CrossRefGoogle Scholar
  41. Norušis, M. J. (2012). IBM SPSS statistics 19 advanced statistical procedures companion. Upper Saddle River, NJ: Prentice Hall.Google Scholar
  42. O’Connell, A. A. (2006). Logistic regression models for ordinal response variables. Thousand Oaks, CA: SAGE (Quantitative applications in the social sciences, no. 146).CrossRefGoogle Scholar
  43. Ogawa, S., & Pongtanalert, K. (2011). Visualizing invisible innovation continent: Evidence from global consumer innovation surveys. SSRN working paper. Retrieved May 15, 2012, from
  44. Osborne, J. W. (2008). Best practices in quantitative methods. Los Angeles: SAGE.CrossRefGoogle Scholar
  45. Piller, F. T., & Walcher, D. (2006). Toolkits for idea competitions: A novel method to integrate users in new product development. R&D Management, 36(3), 307–318.CrossRefGoogle Scholar
  46. Prahalad, C. K. (2010). The fortune at the bottom of the pyramid. Eradicating poverty through profits (Rev. and updated 5. anniversary ed., 2. Printing). Upper Saddle River, NJ: Wharton School Publishing.Google Scholar
  47. Prahalad, C. K. (2012). Bottom of the pyramid as a source of breakthrough innovations. Journal of Product Innovation Management, 29(1), 6–12.CrossRefGoogle Scholar
  48. Prahalad, C. K., & Hart, S. L. (1999). Strategies for the bottom of the pyramid: Creating Sustainable Development. 2–26.Google Scholar
  49. Prahalad, C. K., & Hart, S. L. (2000). Raising the bottom of the pyramid: Strategies for sustainable growth. Retrieved May 15, 2012, from
  50. Prahalad, C. K., & Hart, S. L. (2002). The fortune at the bottom of the pyramid. Strategy + Business (26):2–14.Google Scholar
  51. Prahalad, C. K., & Mashelkar, R. A. (2010). Innovation’s holy grail. Harvard Business Review, 88(7-8), 132–141.Google Scholar
  52. Raasch, C., Herstatt, C., & Lock, P. (2008). The dynamics of user innovation: Drivers and impediments of innovation activities. International Journal of Innovation Management, 12(3), 377–398.CrossRefGoogle Scholar
  53. Schettino, F., Sterlacchini, A., & Venturini, F. (2008, March). Inventive productivity and patent quality: Evidence from Italian inventors. MPRA Paper No. 7765. University of Munich.Google Scholar
  54. Schreier, M., & Prügl, R. (2008). Extending lead‐user theory: Antecedents and consequences of consumers’ lead userness. Journal of Product Innovation Management, 25(4), 331–346.CrossRefGoogle Scholar
  55. Sekaran, U., & Bougie, R. (2010). Research methods for business. A skill-building approach (5th ed.). Chichester, NH: Wiley.Google Scholar
  56. Shah, S. (2000, March). Sources and patterns of innovation in a consumer products field: Innovations in sporting equipment. MIT Sloan School of Management Working Paper #4105. MIT, Cambridge, MA.Google Scholar
  57. Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448–469.CrossRefGoogle Scholar
  58. Sieg, K. (2011). Wandern auf dem Pfad der Erkenntnis. Flur und Furche, 1, 18–24.Google Scholar
  59. Strauss, A. L., & Corbin, J. M. (1991). Basics of qualitative research. Grounded theory procedures and techniques. 3. printing. Newbury Park, CA: SAGE.Google Scholar
  60. The Economist (Ed.). (2010). The world turned upside down. A special report on innovation in emerging markets.Google Scholar
  61. Thomke, S., & von Hippel, E. (2002). Customers as innovators: A new way to create value. Harvard Business Review, 80(4), 74–81.Google Scholar
  62. United Nations Statistics Division. (2012). International standard industrial classification of all economic activities (Rev. 3). Retrieved May 9, 2012, from
  63. Urban, G. L., & von Hippel, E. (1988). Lead user analyses for the development of new industrial products. Management Science, 34(5), 569–582.CrossRefGoogle Scholar
  64. Utz, A., & Dahlman, C. (2007). Promoting inclusive innovation. In M. A. Dutz (Ed.), Unleashing India’s innovation. Toward sustainable and inclusive growth (pp. 105–128). Washington, DC: World Bank.Google Scholar
  65. Viswanathan, M., & Rosa, J. A. (2010). Understanding subsistence marketplaces: Toward sustainable consumption and commerce for a better world. Journal of Business Research, 63(6), 535–537.CrossRefGoogle Scholar
  66. Viswanathan, M., & Sridharan, S. (2012). Product development for the BoP: Insights on concept and prototype development from university-based student projects in India. Journal of Product Innovation Management, 29(1), 52–69.CrossRefGoogle Scholar
  67. Viswanathan, M., Sridharan, S., & Ritchie, R. (2010). Understanding consumption and entrepreneurship in subsistence marketplaces. Journal of Business Research, 63(6), 570–581.CrossRefGoogle Scholar
  68. von Hippel, E. (1976). The dominant role of users in the scientific instrument innovation process. Research Policy, 5(3), 212–239.CrossRefGoogle Scholar
  69. von Hippel, E. (1994). Sticky information and the locus of problem solving: Implications for innovation. Management Science, 40(4), 429–439.CrossRefGoogle Scholar
  70. von Hippel, E. (1995). The sources of innovation [Nachdr.]. New York: Oxford University Press.Google Scholar
  71. von Hippel, E. (2010). Democratizing innovation. Merzig: Creative Commons.Google Scholar
  72. von Hippel, E., de Jong, J., & Flowers, S. (2010, September). Comparing business and household sector innovation in consumer products: Findings from a representative study in the UK. MIT Sloan School of Management Working Paper. MIT, Cambridge, MA.Google Scholar
  73. von Hippel, E., Ogawa, S., & de Jong, J. (2011). The age of the consumer-innovator. MIT Sloan Management Review: MIT’s Journal of Management Research and Ideas, 53(1), 27–35.Google Scholar
  74. Weidner, K. L., Rosa, J. A., & Viswanathan, M. (2010). Marketing to subsistence consumers: Lessons from practice. Journal of Business Research, 63(6), 559–569.CrossRefGoogle Scholar
  75. Wuchty, S., Jones, B. F., & Uzzi, B. (2007). The increasing dominance of teams in production of knowledge. Science, 316(5827), 1036–1039.CrossRefGoogle Scholar

Copyright information

© Springer International Publishing Switzerland 2017

Authors and Affiliations

  1. 1.Hamburg University of TechnologyHamburgGermany

Personalised recommendations