Rare gems or mundane practice? Resource constraints as drivers of frugal innovation

Abstract

Frugal innovation and related concepts are receiving increasing scholarly attention. While recent progress in the conceptualisation of frugal innovation as a phenomenon has been considerable, insights into the antecedents of frugal innovation remain relatively poor. We add to this literature by systematically conceptualising, theorising and empirically testing the relationship between resource constraints and the propensity of firms to produce frugal innovations, drawing on concepts of problemistic search and opportunity recognition. We distinguish two levels of resource constraints (firm-level and firm environment-level), and two types of frugal innovation (internally oriented and customer-oriented), while using managerial experience as a moderating internal factor. We find that firm-level resource constraints have a strong effect on the propensity of firms to engage in internally oriented frugal innovation, although only so for firms with experienced managers. This effect is lower when these firms operate in an environment that also faces high constraints. We find no effect of resource constraints on customer-oriented frugal innovations, but find a surprising negative moderating effect of managerial experience. We discuss the theoretical and policy implications of these findings for the frugal and wider innovation literature. This study is the first large-scale empirical investigation of frugal innovation that estimates its prevalence. We find that frugal innovation is quite common when using the widest definition of frugal innovation. The majority of frugal innovations are mundane internal efficiency upgrades through capital investment.

Sustainable leadership and heterogeneous knowledge sharing: the model for frugal innovation

“…They consume minimal necessary resources (Brem et al, 2017). Despite scant empirical evidence, the extant literature has confirmed risk-taking behavior, proactiveness (Dost and Khan, 2021), leadership (Iqbal et al, 2021a), university-industry relationship (Fischer et al, 2021) and firm-level resource constraints (Ploeg et al, 2021) as being strong antecedents of FI. However, Dwiedienawati et al (2021) recommended exploring further potential predictors of FI.…”

“…, 2021a), university–industry relationship (Fischer et al. , 2021) and firm-level resource constraints (Ploeg et al. , 2021) as being strong antecedents of FI.…”

Managerial Networking and Frugal Innovation: Situational Leadership Perspective

“…Previous studies have empirically confirmed various elements that significantly spur frugal innovation, i.e., internal capabilities, surrounding innovation ecosystems, and overarching institutional frameworks ( Fischer et al, 2021 ). Others include firm-level resource constraints ( Ploeg et al, 2021 ), internal and external sources of knowledge ( Dost et al, 2019 ), and bricolage capability ( dos Santos et al, 2020 ). Furthermore, transformational and sustainable leadership ( Iqbal et al, 2020b ; Lei et al, 2021 ) exhibited significant frugal innovation predictors.…”

Frugal innovation enablers, critical success factors and barriers: A systematic review

“…FI was initially proposed based on cost constraints to serve lowincome customers in DCs (Hossain, 2013) because innovation in developing economies is challenging due to the resources lack, infrastructure lack and limited access to this infrastructure and economic and financial constraints (Ahuja & Chan, 2014;Sun et al, 2016). However, in companies with experienced management, limited resources at the company level strongly influence the companies' willingness to participate in FI (Ploeg et al, 2020). In these conditions, it is necessary to improvise solutions using existing resources in a particular way to meet the challenges and opportunities in restricted environments (Santos et al, 2020).…”