What is Frugal, What is Innovation? Towards a Theory of Frugal Innovation

Abstract

Innovation in emerging markets offers fertile ground for theory development. In recognition of the growing trend in “frugal innovation” discourse among practitioners particularly in emerging economies, we parse “frugal innovation” into "frugal" and "innovation" separately and present the underlying meanings towards understanding "frugal innovation" in historical and contemporary contexts. We further develop a theoretical model of frugal innovation by applying existing theories to emerging market contexts. We do so by merging technology innovation, institutional innovation, and social innovation literatures to argue that frugal innovation lies at the intersections of these streams. We show how using the model to understand what the space currently looks like may help to offer a consolidated and encompassing theory of frugal innovation and aid in opening a research agenda.

Keywords: Frugal innovation, emerging market, resource constraints, affordability, institutional voids, theory