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Abstract

Economic growth in emerging countries has exceeded that in developed countries over the last few decades. Given the background, reverse innovation is a topic that attracts considerable interest from academics and practitioners. However, much of the available literature on reverse innovation is case-based study or qualitative in nature. The present study extends our knowledge on reverse innovation by conducting quantitative data analysis. Using the unique survey data from 290 SMEs in Japan, the research explored how Japanese SMEs (i) develop new products, taking advantage of overseas knowledge and (ii) promote their “modified” new products in their home market, Japan. Multinomial logistic analysis found that new products with reversed innovation do not necessarily accompany reduction in price when the firms sell the products in Japan; product localisation tends to play a more important role leading to reverse innovation. Contrary to the conventional view on reverse innovation, such findings will serve as a basis for future studies.