Unpacking value creation through new product development at the bottom of the pyramid: evidence from local manufacturing firms in Ethiopia

Delivering value to customers and fostering new product success at the bottom of the pyramid (BoP) are major challenges for local manufacturing firms. At the BoP, local manufacturing firms (which originate in the local community and are owned by locals) pursuing the development of new products as part of their strategy have to deal with significant challenges such as poor infrastructure, poor distribution channels, high citizen illiteracy rates, corruption, and lack of enforceable legal frameworks. In order to deliver value to customers and realise new product success, local firms in BoP markets need to create ways to overcome these challenges. One key focus for local BoP firms is to effectively manage their intra (widening their resource base, deploying capabilities) and extra organisational processes (establishing collaboration) which may help better drive new product development (NPD) projects towards successful outcomes. Yet, the literature remains almost silent about how these intra and extra organisational processes affect NPD at the BoP. In an effort to raise awareness and address the silence of research on firms from BoP countries, this thesis develops three papers. The first paper (under 2nd round review at Industrial Marketing Management) examines how a firm's bricolage capability helps to enhance new product innovativeness and how social ties with civil society organisations and government bolster the impact of bricolage by moderating the relationship between bricolage and new product innovativeness. The study further discusses marketing capabilities as an important moderator of the relationship between product innovativeness and the firm's ability to create customer value. Data were obtained from managers of 150 Ethiopian local manufacturing firms and 325 active business customers. Drawing on the capability-based view and social capital theory, the findings show that bricolage has an inverted-U shape relationship with product innovativeness, and ties with civil society organisations attenuate this effect. Whereas our data do not support the moderating role of ties with governments. Further, the results demonstrate a significant moderating role for marketing capabilities in translating product innovativeness into customer value at the BoP. The second paper (under review at the Journal of Business Research) focuses on the role of NPD team's problem-solving creativity in enhancing new product performance. The paper seeks to identify factors (such as leadership style and role ambiguity) that facilitate or inhibit problem-solving creativity in NPD teams within BoP firms. Underpinned by social exchange theory and using a sample of 274 middle-level managers from local BoP firms in Ethiopia, the study shows that NPD team's creativity is a key to develop a new product that pays off financially in BoP markets. The study identifies that ambidextrous leaders (leaders who can deploy simultaneously transformational and transaction leadership styles) can reduce ambiguity in the minds of their NPD managers to foster their teams to look for new and better methods of performing tasks. The findings suggest that CEO's of BoP firms who engage in ambidextrous leadership attenuate the negative effect of role ambiguity on problem-solving creativity in their NPD teams. The third paper (under review at the European Journal of Marketing) examines underlying mechanisms linking collaboration with customers and suppliers to new product advantage en route to creating affordable product and enhancing new product performance for local firms at the BoP. The study further focuses on the contingent roles of two environmental factors relevant to the BoP market context (i.e., market turbulence and competitive intensity). Survey data were collected from three respondent groups including two managerial positions including marketing and NPD managers in local BoP firms and their customers. Drawing upon social capital and institutional theories, the findings show that collaboration with customers and suppliers enhance the ability of local BoP firms to create new product advantages. The relationship between collaboration with customers and suppliers, and new product advantage is, however, impacted by the level of market turbulence BoP local manufacturers face. Market turbulence diminishes the capacity of customer collaboration to generate new product advantage, while its effect on the supplier collaboration - new product advantage relationship was not supported. The study provides evidence for the view that new product advantage in the form of cost-efficiency and differentiation are determinants of affordability and new product performance at the BoP. The study confirms that new product advantage is translated into new product performance in environments with a higher level of competitive intensity. However, the benefit of product advantage in BoP markets to affordability diminishes at higher levels of competitive intensity