Innovating with Limited Resources: The Antecedents and Consequences of Frugal Innovation

Abstract

Frugal innovation is a resource scarce solution for emerging market firms. Based upon the resource-constrained innovation perspective, this research theoretically explores and empirically examines the drivers and consequences of frugal innovation. The results of a firm-level survey show that two types of frugal innovation (cost innovation and affordable value innovation) positively affect the performance of emerging-market firms. We also address the issues of how emerging-market firms deal with institutional, technological, and market constraints in emerging markets, and we show how these constraints drive frugal innovation. We find that emerging-market firms with higher levels of capability for institutional leverage and bricolage, and firms that face perceived dysfunctional competition, tend to generate more affordable, value-added new products. Overall, these findings have important implications for emerging-market firms seeking to conduct frugal innovation in resource-constrained emerging markets.

Insights on entrepreneurial bricolage and frugal innovation for sustainable performance

“…Through bricolage, knowledge generations enable organizations to break resource inertia and foster innovative creations (An et al, 2018; Ernst et al, 2015). Moreover, bricolage enables affordable and value‐added products with limited resources (Cai, Ying, Liu, & Wu, 2019). Through improvisation and experimental learning, firms with higher entrepreneurial bricolage are prone to devise low‐cost, value‐added products, and services for customers (Cai et al, 2019).…”

Public Administration and Values Oriented to Sustainability: A Systematic Approach to the Literature

“…In this period, 833 (40.87%) are set in the social context and address various issues, such as human resource management [81,82], organizational culture [79,83], social entrepreneurship [84,85], knowledge management [86], social learning [87], health care [88,89], social responsibility [77], education [90][91][92][93], and others. Around 26.7% of studies address the economic dimension in this period, highlighting the topics of performance [93][94][95], innovation [96,97], entrepreneurship [98], competitiveness [99,100], supply chains [101][102][103], and others. In the last decade, the environmental dimension (24.48%) reflects topics such as water management [104], sustainable policies [105][106][107], adaptation to climate change [108][109][110], eco-tourism [111,112], environmental responsibility [113,114], sustainable development [115][116][117], and the circular economy [118,119].…”

Sustainable Business Model and Corporate Performance: The Mediating Role of Sustainable Orientation and Management Accounting Control in the United Arab Emirates

“…Some studies observed that structural rigidity could impede some firms from innovating for customers with quite different needs, which is a result of insufficient "Research and Development (R&D)" capabilities for building high-tech innovative products [36][37][38]. In view of this, some scholars have argued for frugal innovation, which is mainly focused on achieving dramatically lower costs to meet the expectations of resource-constrained consumers, with a secondary focus on providing functionalities and features that are adequate to meet specific needs [10]. According to Zeschky et al [39] and Wan et al [40], the main aim of this kind of innovation is to provide a very low price with adequate quality to serve resource-constrained customers.…”

“…As a result of the dynamic and competitive nature that characterizes today's business environment [1], most companies have begun searching for an innovative business model as a strategy to achieve the objectives of their firm [2,3] with the aim of improving company performance [4,5], while some authors are of the opinion that this is for value creation [6,7]; Ballot et al [7] and Camison and Villar-Lopez [4] believe that this is for technology development and for the achievement and sustainability of competitive advantages [3,8]. In recent times, the issue of business model innovation (BMI) within the context of how firms innovate their ideas has gained tremendous attention from both academics and practitioners [1,9] and has also considered in regard to how to provide a solution to scarce resources, i.e., "frugal innovation" [10]. Meanwhile, over the time, the concept of BMI has been perceived from different dimensions among managers and researchers [10,11].…”

“…In recent times, the issue of business model innovation (BMI) within the context of how firms innovate their ideas has gained tremendous attention from both academics and practitioners [1,9] and has also considered in regard to how to provide a solution to scarce resources, i.e., "frugal innovation" [10]. Meanwhile, over the time, the concept of BMI has been perceived from different dimensions among managers and researchers [10,11]. However, Teece's [8] definition of a business model has been the most acknowledged definition, and it refers to a business model as " .…”