Co-creation in Emerging Markets: Building sustainable competitive advantage in dynamic environments

Nanna Hartmund

Student thesis: Master thesis


Executive Summary: The decelerating growth and maturing markets of developed markets, coupled with the rapid de-velopment of emerging markets has prompted many Western businesses to look for new opportu-nities for growth in these distant markets. For Western managers struggling to sustain growth, cut costs, and launch new products and industries, emerging markets can be an ideal answer. The abundant opportunities for growth are however stifled by a number of challenges that businesses must mitigate in order to create competitive advantage over local competitors. In addition, the ac-celerating pace of technological development is revolutionizing the way businesses and consumers communicate and interact, and this is stimulating the discovery of new sources of value for both businesses and consumers. There are an increasing number of studies suggesting that creating sus-tainable competitive advantage in dynamic environments require specific capabilities; that is, dy-namic capabilities. The focus of this thesis is on how Western businesses can take advantage of the opportunities that emerging markets offer – specifically focusing on the Asian – while mitigating the challenges by embracing a co-creation approach. The co-creation paradigm abandons the traditional firm-centric view of the market and instead emphasizes value-creation as a joint effort of the firm and external stakeholders. The objective of the thesis is to investigate and demonstrate how Western multina-tional enterprises can utilize a co-creation approach to facilitate the creation of dynamic capabili-ties. The thesis addresses three typical challenges that Western multinationals often face in Asian emerging markets – cultural distance, poor protection of intellectual property rights, and macro-environmental risk – and how utilizing a co-creation approach can mitigate these challenges. It approaches this by subdividing these three challenges into a number of specific problems. Analyz-ing how co-creation affects these problems has resulted in eight propositions. These propositions suggest that co-creation facilitates the creation dynamic capabilities in two main ways: by improv-ing the creation of knowledge of local conditions as a result of closer interactions with consumers; and by increasing strategic flexibility by focusing on access to, instead of ownership of, resources. Thus, the findings of the thesis suggest that a utilizing a co-creation approach improves conditions for creating sustainable competitive advantage in Asian emerging markets.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
Publication date2014
Number of pages79