Lead Markets: Drivers of the Global Diffusion of Innovations


Multinational corporations are often faced with regionally varying market conditions, local environments and demand preferences. This paper presents the lead markets concept of developing global innovation that takes advantage of the lead market phenomenon. A lead market is a regional market that is first to adopt global innovation designs. A system of five lead factors explains the lead role of a market: a demand advantage, a price advantage, an export advantage, a transfer advantage and a market structure advantage. The system of lead market factors is then evaluated in a detailed case study of the cellular mobile telephone industry. It is suggested that companies can harness lead markets for the development of global innovations. By developing and refining innovations in close interaction with the local environment of a lead market, a company can focus on a narrow range of preferences and feedback, lowering the risk of being locked into idiosyncratic environments, and generate true global innovations.

Keywords: international diffusion of innovation, R&D internationalisation, market entry strategy

Marian BEISE
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: (81) 78 803 7036
Fax: (81) 78 803 7059