With the profound reshaping of the global innovation landscape, the business philosophy of foreign - invested enterprises in China is shifting from “In China, For China” to “In China, For the World” at an accelerated pace. Emerging markets represented by China and markets in the Global South are transforming from global manufacturing bases to sources of innovation. An increasing number of innovations originating from markets such as China and India have successfully entered developed countries in Europe and America. For example, the iPhone night - mode developed by Apple inspired by the needs of Chinese customers and the Halcyon radiotherapy system designed by Varian Medical Systems, a subsidiary of Siemens Healthineers, for the Chinese market have been successfully applied in developed countries. This phenomenon runs counter to the classic diffusion path of global innovation (from developed to developing countries), so it is called reverse innovation in the field of international business. However, a core proposition surrounding reverse innovation urgently needs in - depth exploration: why can some innovations emerging from emerging markets successfully enter developed countries?

In April 2026, the research team led by Professor Deng Ziliang from the National School of Development and the Institute of South - South Cooperation and Development at Peking University published a paper titled “A Demand - Based View of MNEs' Reverse Innovation” in the international business journal Journal of World Business. The team innovatively introduced the demand - based view into reverse - innovation research, systematically exploring how the demand gap between Global South markets and developed countries affects the reverse - innovation behavior of multinational corporations.

Core Argument

The demand similarity between emerging markets and developed countries is an important foundation for multinational corporations' reverse innovation.

The paper points out that the systematic differences in consumer demand, preferences, and usage scenarios between emerging markets as the source of innovation and developed markets as the application destination of innovation have a negative impact on the reverse diffusion of innovations from emerging markets by multinational corporations. This impact unfolds along two paths. First, in the knowledge - creation stage, the demand gap prompts multinational corporations to develop highly localized products and technologies in emerging markets. Although these can better meet the needs of the host - country market, they may reduce the universality of the innovation in the developed - country market. Second, in the knowledge - transfer stage, the demand gap intensifies the perception of uncertainty among developed - country consumers towards emerging - market innovations, thus increasing the barriers to innovation adoption.

The paper constructs a unique panel database of subsidiaries of OECD multinational corporations located in BRICS countries, providing empirical support for the above - mentioned proposition.

Contributions of the Paper

First, it emphasizes the importance of the demand - side perspective, enriching the literature on the internationalization of R & D innovation of multinational corporations in the field of international business. Breaking through the paradigm of examining the antecedents of reverse innovation from the supply - side perspective and the few attempts to explore the demand - side impact only at the conceptual level, this paper calls for more refined theoretical and empirical research on the consumption and demand characteristics of emerging markets and developed countries in future studies.

Second, by conducting a cross - national comparison between the innovation - source market and the innovation - application market, it deepens the discussion on demand - driven innovation. The paper proves that the demand similarity between the developed - country home countries of multinational corporations and the emerging - market host countries constitutes the basis for global knowledge transfer, enriching the research on the consequences of the dynamic evolution of the demand structure.

Third, it demonstrates the unique value of the demand structure in emerging markets for multinational corporations' innovation. The multi - level demand structure in the dynamic evolution of these markets includes both high - end consumption scenarios in developed countries and mass demands in developed countries, providing a unique soil for multinational corporations to cultivate innovations with both local adaptability and global diffusion potential. The conclusion of this paper encourages multinational corporations to continuously increase their R & D and innovation activities in emerging and Global South markets.