Disruptive innovation and dynamic capabilities in emerging economies: Evidence from the Indian automotive sector

The phenomenon of frugal and reverse innovation has brought emerging economies into focus. However, disruptive innovation (DI) is rarely observed in this context. This study outlines the evolution of DI in the Indian automotive sector through an instrumental case study. Our study reinterprets the phenomenon in the context of emerging economies by investigating how dynamic capabilities (DCs) at the firm level actuate DI manifestation, and offers a set of takeaways that focus on the dimensions of DCs required for such manifestation. In addition, we identify any additional constructs that may play a role in catalysing DI in emerging economies. While not hypothesised, we do find that larger firms actuate DI in emerging economies actively, and a turbulent or VUCA environment enables the identification of disruptive opportunities. Further, managerial implications include the importance of managing innovation policy in a turbulent environment and the necessity of different dimensions of DC as an overlay on the operational capabilities of a firm in achieving DI. •Varied dynamic-capability dimensions are necessary to manifest disruptive innovation.•Large domestic firms are key actors in disruptive innovation in emerging economies.•New market segments can be exploited by disruptive innovation.•Managing governmental policy is vital in emerging economies for disruptive innovation.•A VUCA environment is critical for disruptive innovation in emerging economies.