How EMNEs Open Up Strategy to Build Innovation Capabilities?

Although natural resources, such as forests, ores, and agriculture crops, are essential for emerging market firms to build innovation capabilities that contribute to their global competitive advantage, existing innovation research has mainly built on studies of emerging market firms in manufacturing-intensive industries. As the conditions in these two contexts are very different, this article explores how emerging market multinationals (EMNEs) operating in natural resource–intensive industries build their innovation capabilities. Based on a single longitudinal case study of the largest Brazilian cosmetic company, Natura Cosmetics, from 2001 to 2018, we show how Natura integrated open strategy and open innovation as an intertwined and evolutionary process, making changes to this process in several phases. The findings highlight how participative forms of strategy formulation (i.e., open strategy) and collaborative innovation (i.e., open innovation) help to build unique innovation capabilities for EMNEs. The findings also point to the dynamic and temporal character of capability building and suggest that EMNEs implement open strategy and open innovation in emerging markets in several phases through the continuous interaction and re-adjustment of innovation plans, innovation goals, and open innovation processes. The article presents how Natura initially implemented open innovation to address specific technology problems (initiation and formation phases) to generate opportunities for the Brazilian national ecosystem (establishment and consolidation phases)