Inclusive Innovation: Broader Market Coverage for Innovative Products with Deliberate Supply Chain Leadership
Professor Vish V. KRISHNAN
Professor and Sheryl and Harvey White Endowed Chair
Rady School of Management
University of California
New technological and product innovations, including some life-saving ones, conventionally traverse a sequentially downward path of gradually lowering costs and prices, which limits their initial availability and affordability to the lower-end of the market. In this paper, we focus on the central question of how to achieve broader market coverage for innovative products, which we refer to as inclusive innovation. We unearth a new innovation investment degree of freedom in a multi-tiered supply chain that offers product development firms the ability to expand market coverage. Through an analytical model grounded in industrial practice, we show that deliberately choosing which firm in a multi-tiered supply chain invests in product quality improvement and acts as a leader by initiating contract offers can have a significant impact on the market coverage of the product. We derive several key results and discuss implications.