Stigma or Signal: An Experimental Study on How Emerging Market Origins Shape Consumer Responses to Reverse Innovation An Abstract

The global innovation landscape is shaped by colonial legacies that position developed markets as the primary source of innovation, while stigmatizing innovations from emerging markets. In this study, we challenge entrenched hierarchical perceptions by examining the influence of the country of origin on consumers' perceptions of reverse innovation launched by emerging market firms. Reverse innovations are innovations first introduced in emerging markets and later diffused to developed markets. When launched in developed markets, reverse innovations may face a legitimacy deficit, as consumer perceptions can be influenced by biases, stereotypes, and stigmatization associated with their country of origin. Drawing on the legitimacy-as-perception framework, we conducted an experimental vignette study with 351 UK-based participants to investigate how reverse innovations from emerging markets are evaluated in comparison to innovations from developed markets across four dimensions of perceived value within diverse product categories. Our findings reveal interesting perceptual differences, specifically in high-involvement product categories, where reverse innovations from emerging markets are perceived as having lower functional performance and quality value, as well as emotional value. However, these negative perceptions do not lower the purchase intention towards these innovations. Most notably, mediation analysis demonstrated that the country of origin influences purchase intention through the emotional value, followed by the price and value for money aspects of functional value, rather than having a direct effect. Interestingly, social value neither mediates nor strongly influences purchase intention, indicating a potential weakening of social stigma associated with emerging market innovations. Our study contributes to the development and innovation literature by highlighting openness to reverse innovation, despite persistent stereotypes. These insights not only recalibrate theoretical understanding of the patterns of diffusion of innovation but also offer new insights into how reverse innovations can overcome legitimacy deficits in developed markets.