Industry pioneers could do a lot more to help the various parties in their nascent sectors think through and install the necessary rules.
Technology leaders are not shy about pushing the boundaries of their industries, and sometimes they go further — challenging the prevailing rules of society at large. Gene editing and stem cell treatments, for example, are advancing so rapidly that they threaten to redefine health and social norms. The eagerness of entrepreneurs to test limits isn’t surprising to Tarun Khanna, the Jorge Paulo Lemann Professor at Harvard Business School, who has spent more than two decades studying how business strategies play out in emerging markets.
Khanna has written several books on emerging market economics. His latest book, Trust: Creating the Foundation for Entrepreneurship in Developing Countries (Berrett-Koehler, 2018) argues that developing-world entrepreneurs need to build networks that compensate for weak public institutions — what he refers to as a web of trust composed of clients, workers, partners, and other stakeholders in society. While tech innovators and entrepreneurs in developing countries may seem like distinct breeds, Khanna, who cofounded a venture firm in Bangalore that supports early-stage companies, thinks the former can learn a lot from developing markets about how to design ecosystems and navigate unfamiliar terrain — skills that can provide long-term benefits both to their industry sectors and their own organizations.
MIT Sloan Management Review correspondent Frieda Klotz spoke with Khanna about the similarities and differences in navigating the two worlds. What follows is an edited and condensed version of their conversation.
MIT Sloan Management Review: You have written that technology innovation is similar to what happens in emerging markets with regard to the need to create their own surrounding ecosystems. What do you mean by this?
Khanna: We use the term emerging markets when we talk about developing countries, where basic standards and institutions are still being defined. But I would argue that you can have tech emerging markets too, where the ground rules for how to conduct business haven’t yet been specified. In the first case, society hasn’t set up the rules or they’re not being enforced. In the second, society hasn’t developed the intellectual understanding to specify and codify what it requires of innovative companies. In both instances, it’s a lawless frontier.