Lessons learned on innovation collaboration and sustainable growth opportunities in developing markets

Emerging and developing markets in Africa, Asia, Latin America and South-East Europe are a major growth opportunity for the future. They are marked with fast economic growth and account for most of the global population growth in the coming decades. They attract international investments creating market opportunities, for example, through large scale infrastructure projects – and some have become home economies for global investments and talent. Developing markets also attract increasing international attention, for example with recent advancements regarding the EU-India trade agreement and the EU-Mercosur partnership agreement. 

While seeking opportunities in emerging and developing markets can be riskier and more challenging than that in more developed markets, potential rewards can also be higher – especially for sustainable and innovation-driven companies. Growing developing markets can: 

• Become the first adopters of the most innovative technologies and solutions that have potential also to help them address a variety of sustainability challenges. 
• Provide space and greenfield for radical innovations with global scalability and market potential.

Yet, emerging and developing markets have been an underutilized growth opportunity by Finnish companies – including by innovation-driven companies. 

Business Finland helped Finnish companies develop innovative and competitive business for sustainable opportunities in developing markets in the framework of Developing Markets Platform from 2020 to 2025 – together with the Ministry for Foreign Affairs (MFA) and other Team Finland partners. As some functions of Developing Markets Platform were transferred to other Team Finland organizations at the turn of the year, it is now timely to consider some lessons learned for going forward – especially from the perspective of innovation-driven sustainable growth

Funding can enable and incentivize companies to tap into new growth avenues with international innovation collaboration, also in riskier emerging and developing markets.

A key feature of Developing Markets Platform was to strategically combine official development assistance (ODA) with research, development and innovation (RD&I) funding. Linking two types of funding in an enabling and encouraging way – ODA as a 75% top-up grant to R&D projects – was seen to have benefits in two ways:

• An enabler and an incentive for R&D-intensive companies to engage in innovation collaboration towards sustainable opportunities in riskier, but rapidly growing developing markets.
• An enabler and an incentive for companies already active in developing markets to engage in R&D work and innovation collaboration. 

Business Finland awarded funding to over 50 Finnish customers towards sustainable innovation in developing markets in the framework of Developing Markets Platform. This included a dozen research organizations and 40 companies with Asia and Africa as the most common target regions. Especially new company participation in innovation collaboration in the framework of Developing Markets Platform increased over time.

The enabling and incentivizing nature of funding towards local innovation collaboration was well recognized by different kinds of companies, as showcased by our published customer cases:

Companies can leverage international innovation collaboration towards emerging growth opportunities in diverse ways – in line with different strategies and business models. 

Companies funded by Business Finland in the framework of Developing Markets Platform pursued local innovation collaboration in developing markets in many ways and with various objectives, as illustrated by our published customer cases:

A. Market openings with new business models

Several companies saw further developing their solutions and related business models with local partners in developing markets as a way to advance new market openings. For example, university co-operation in Colombia and Malaysia helped Merus Power explore new business models for power quality in developing markets. The company has already expanded its operations in Colombia, including with contacts to wider Latin American markets. Eduten, as another example, piloted its digital learning solution and developed related business models in Uzbekistan, India, Sri Lanka and Mongolia in co-operation with local partners. Its current growth strategy relies heavily on the public sector that can play a significant role in adopting new solutions, especially in emerging and developing markets.

B. Competitive and scalable solutions with improved customer understanding

Others valued local innovation collaboration as a means of enhancing customer understanding in developing suitable solutions for the target market – and beyond. For example, KONE and Konecranes saw the importance of local collaboration in developing solutions for the vast and rapidly growing Indian market as a way to take local needs and user experience into account. Potential for global scalability of such solutions beyond India was also quickly recognized. 

C. Expanded commercial prospects with diverse development environments 

A few companies leveraged local innovation collaboration for diversifying development environments and expanding commercial prospects towards developing markets in tandem with developed markets. Crowdsorsa, for example, further developed its mobile gaming and data collection application together with local partners to function in environments with poor data connectivity in rural Malaysia. While the solution has great potential in developing markets, local innovation collaboration can enhance reliability of the solution also in other markets. 

D. International growth with innovation in value chains 

Some companies focused on innovation collaboration on their value chains in developing markets, which can in turn support their international growth in more developed markets. For example, the solution of Origin by Ocean is to process seaweed into ingredients to be used in cosmetics, textiles and the food industries and its end-customers can be found across Europe, Asia and the Americas. While sargassum seaweed used as a raw material can be found in the Caribbean, the company has developed upstream production concepts together with local partners in the Dominican Republic. As another example, Pure Waste Textiles sells fabrics and clothing made from recycled fibers to retailers and consumers. It has developed a recycling-based production process in collaboration with textile industry players in India, where cutting waste is generated. 

Companies can combine innovation and emerging growth opportunities across industries and markets with various sustainability goals.

Business Finland funded companies across industries ranging from scientific or technical activities to education, construction and electricity in the framework of Developing Markets Platform. Information and communication industry and manufacturing were the most typical industry fields. 

While the funded companies represented many industries, they also varied in ways to support the Sustainable Development Goals (SDGs). Altogether the company top-up projects funded by Business Finland covered over half of the 17 goals as primary SDG-targets, with many individual projects aiming to contribute towards more than one SDG. The SDG on industry, innovation and infrastructure stood out as the most indicated primary SDG-target by the companies.

Our customer cases illustrate well how different kinds of solutions from digitalization to green transition and circular economy can contribute to sustainability in many different ways:

• AI-based digital learning solutions of Eduten can help promote quality education, foster gender equality and reduce inequalities with the help of targeted interactive exercises, real-time feedback and data-driven decision-making. 
• Mobile gaming solutions of Crowdsorsa can contribute to resilient infrastructure and expand earning opportunities by crowdsourcing microtasks for data collection on infrastructure or environment. 
• Soil monitoring solutions of Soil Scout can help save irrigation water and promote sustainable food production with real-time data on soil temperature, moisture and salinity.
• Electrical engineering solutions by Merus Power can help promote renewable energy use and improve power quality and energy efficiency, also boosting sustainable industries. 
• Solutions by Origin by Ocean that transform seaweed into ingredients for industries can improve the conditions of marine ecosystems by removing excess nutrients caused by human activity from the sea.
• Solutions by Pure Waste Textiles that recycle cutting waste back into fibers and yarns can promote sustainable production methods and reduce waste in the textile industry.

Finally, an especially warm thank you to all those who drove the work of Developing Markets Platform forward together with passion, sisu and thinking big.